April 13, 2015

Two recent court cases look at the perils of choosing multiple estate trustees and attorneys for property.  Often a testator will choose two or more of their children to act as co-estate trustees.   They may feel that it would offend one of their children to not appoint them as an estate trustee or that if their adult children do not get along, appointing more than one may force them to work together resulting in an efficient estate administration.  However, as many estate planners and litigators know, appointing adult children, who do not get along with each other or with some of the beneficiaries, can be disastrous.  When estate trustees cannot get along, often the administration of the estate is prolonged, becomes more expensive and the estate trustees (or attorneys) find themselves in court.

In Irwin v. Ruberry, the testator appointed 3 of his 5 children as estate trustees. The testator died in 2008 and a probate certificate for all three trustees was granted in 2008.  However, 7 years later, a relatively straightforward estate was still not administered.  By 2010, one son sought permission from the court to resign due to the bickering between his co-estate trustees, his brother and sister.  Trespass notices were sought, taxes never filed, and the main estate asset, a house, remained unsold for a number of years. The co-estate trustees could not even agree on who to retain as an estate solicitor.  The court described the animosity between the brother and sister co-estate trustees as “difficult to watch”.

The estate trustees were ordered to pass their accounts. The co-estate trustee filed objections to her co-trustee’s accounts.  Due to the hostility between the co-estate trustees, there was no narrowing of the passing of accounts issues and the court had to make several determinations with respect to a multitude of issues.  Multiple court appearances were required.  The court went on determine a joint account formed part of the estate and dealt with various reimbursement issues that the co-estate trustees could not agree about.  In the end, the estate trustees were ordered to cooperate to produce final accounts, pay the outstanding tax liabilities and return to court to pass the estate’s final accounts.

The court referred to another recent case, Sitko v. Gauthier, as “a cautionary tale for those who take on the role of attorney in the face of hostile family members who are still actively involved in the care of the grantor.” In a passing of accounts application involving attorneyship accounts, the animosity between co-attorneys resulted in a 5 day trial.  As the related cost decision made clear, a $25,000 accounting issue resulted in a 5 day trial and almost $90,000 in legal fees incurred by the objector.  The court, referring to the proportionality factors, awarded $5,000 plus disbursements to the objector.  Justice Fitzpatrick went on to state: “In my view a passing of accounts is a process whereby an interested third party can ensure that private economic or personal oversight by a fiduciary over a beneficiary is conducted in a reasonable manner with an emphasis on how money is being spent on the beneficiary’s behalf.  It is not meant as a vehicle to air long standing personal vendettas or to attack the conduct of another which had no impact on the beneficiary at issue.”

As these two cases demonstrate, testators should refrain from appointing estate trustees who do not get along.  If beneficiaries are also hostile to the appointed estate trustees, a professional or unrelated estate trustee should be considered.