May 28, 2024

Many testators find it difficult to select an estate trustee for their estates when drafting a will. In some cases, a parent may worry that his or her children are already busy with work and with their own children, and do not want to burden them by naming them as estate trustee (“ET”) in the will. In other cases, testators worry that by naming only one of their children as ET in their will, they are planting the seeds of a later conflict that will erupt after their death, when the siblings who are not selected to serve as ET feel slighted or believe that they would do a better job than the one selected. In cases where a testator knows that the estate will be very large or will include complex assets, such as shares of  corporations, real property or securities, the testator may feel that his or her heirs may not have the expertise needed to properly manage the estate and deal with the assets in a tax-efficient manner.

In the scenarios noted above, a testator may find that the better option can be to name a professional ET in his or her will rather than one of the beneficiaries or another friend or relative. The professional ET chosen is often a lawyer, in some cases the lawyer that assisted the testator with drafting the will. In the later cases noted, large estates with complicated financial assets, the testator may name a financial institution, trust company or bank as ET, often one that they have an ongoing relationship with. This can be especially helpful if there is a family investment portfolio or business that is being maintained  as a going concern rather than being liquidated and sold: using a solicitor or financial institution that is familiar with the business can ensure a smooth transition and minimize issues that can cause extra costs or inefficiencies. Many of the banks and financial institutions that do this sort of work maintain a large team of trust officers that manage the estates, often with a law or finance and accounting background.

The professional ET will have to go through the same application process as a regular ET, and will have the same rights, obligations, liability and entitlement to compensation

In other instances, a professional ET is asked to step in once a conflict has arisen, as a way to ensure that the estate will be properly administered during the conflict and sometimes to bring the conflict to an end. A significant disagreement or breakdown in communication between beneficiaries and an ET, or between co-ETs, can result in a deadlocked estate or in the commencement of litigation between the parties, which can often take several years to resolve. In these cases, sometimes a helpful compromise can be to “outsource” the role of the ET to a professional, third party ET, with no involvement in the conflict or litigation. An experienced estate litigator will often be the best candidate, as he or she would be able to participate in the litigation and properly advocate for the estate’s interests, without needing to take a side, ands without any personal or emotional investment in the outcome of the conflict or litigation. Often the neutral, objective perspective of a professional ET is exactly what is needed to lower the heat and ensure that the estate continues to be managed properly and efficiently, notwithstanding the ongoing disagreements and litigation between the parties, that could otherwise drag on for years, severely depleting the assets of the estate.

The appointment can be as ET, or if needed, can be as an “estate trustee during litigation”, a narrower role, that is not intended to administer the final distribution of the estate’s assets, but rather just to take responsibility for the estate’s administration while the conflict remains in litigation. In either case, the fees of the ET or ETDL will usually be paid from the estate’s assets. If there is already an ET that has obtained a certificate of appointment of estate trustee, a court order will be required for the proposed professional ET to replace him or her, even if all parties have consented to the new appointment. Likewise, a court order is required to discharge the previous, outgoing ET that is being replaced. Both orders are generally obtained at the same time, and often with the consent of all parties.