Are you wondering how to remove an estate trustee?
An estate trustee is appointed by a testator as their personal representative after their death. The estate trustee’s role is to apply for probate (if required), gather the assets of the estate, pay the debts of the deceased, maintain the accounts of the estate and distribute the assets of the estate.
There is testamentary freedom, meaning an individual can dispose of their assets in any manner in which they choose upon their death. Because of testamentary freedom, the testator’s choice of estate trustee is not interfered with lightly. However, certain circumstances necessitate the removal of an estate trustee, either voluntarily or involuntarily.
If an estate trustee is not able or does not wish to act, the trustee may simply renounce his or her appointment as long as the Certificate of Appointment has not been issued and no steps have been taken to administer the estate. In order to renounce his or her role, the estate trustee must file a Form 74.11 with the Court.
Voluntary Resignation | Remove an Estate Trustee
If the estate trustee wishes to renounce his or her role after commencing administration of the estate, he or she must resign. In order to resign, the estate trustee must make an application to the court under section 37(1) of the Trustee Act to be discharged from his or her duties.
The estate trustee is a fiduciary of the estate. As a fiduciary, there is a heightened duty to act honestly, in good faith and in the interests of the beneficiaries.
If the estate trustee is not fulfilling his or her duties and is not acting in the best interest of the estate, anyone with a financial interest in the estate can apply to the Court to have the estate trustee removed pursuant to section 37(3) of the Trustee Act.
The onus is on the applicant to persuade the court that the trustee should be removed. Some reasons for the removal of an estate trustee include:
- putting their interests ahead of the estate;
- making a profit from their position (beyond compensation for acting as trustee);
- mismanaging estate assets;
- engaging in misconduct that endangers the estate;
- unable to act impartially (due to a personal interest in the estate or marked hostility between the estate trustee and a beneficiary); and
- the estate trustee is bankrupt, has been convicted of a crime, is removed from the jurisdiction, or is incapable.
Certificate of Appointment of Estate Trustee
A certificate of appointment of estate trustee means that your promote application was accepted.
Minor issues such as friction between the trustee and the beneficiaries or a conflict of interest will likely not be sufficient to warrant removal of the trustee.
The court’s principal consideration is the welfare of the beneficiaries. Removing an estate trustee is primarily about protecting the beneficiaries and not about punishing the trustee. There must be clear evidence of necessity for removal of the estate trustee; the estate trustee’s acts or omissions must be of such a nature as to endanger the administration of the estate.
Each determination will depend on the facts of the case. If the estate trustee is removed, a new estate trustee will be appointed in his or her place.
Estate Trustee Vs Power of Attorney
If you want to decide between an estate trustee and power of attorney when planning, contact us. We can connect you with an estate lawyer in Vancouver or Toronto.
Libman v. Feldberg is an example of a case in which the estate trustee was removed involuntarily. In this case, Ms. Libman was the sole residuary beneficiary of her mother’s estate. The Will stated that the deceased’s personal effects were to be divided amongst Ms. Libman and the deceased’s grandchildren at Ms. Libman‘s absolute discretion.
The estate trustee ignored this direction and told the deceased’s niece to take whatever she wanted from the deceased’s apartment. Ms. Libman discovered that many of her mother’s belongings were missing including a candelabra, family photos, a fur coat, a diamond engagement ring and a gold bracelet. Ms. Libman accordingly brought an application to remove the estate trustee.
The Court found that the estate trustee acted in bad faith towards Ms. Libman, which resulted in such a strong degree of hostility and distrust that the estate trustee could not continue to carry out his duties in an impartial manner. As a result, the court removed the estate trustee.
Passing of Accounts | Remove an Estate Trustee
Regardless of whether the estate trustee is removed voluntarily or involuntarily, if he or she has commenced administration of the estate, the trustee must pass his or her accounts before stepping down. A passing of accounts refers to the formal process of obtaining the court’s approval of the estate accounts.
Frustrated beneficiaries should speak with a lawyer to determine whether bringing an application to have an estate trustee removed is a viable option in their case.
In conclusion, you should reach out to us if you want to remove an estate trustee or defend against that happening.
Author: Alistair Vigier, Clearway Law