Estate Planning

Estate Trustees Beware!

By Hull and Hull LLP

When I think about the trend in case-law surrounding costs generally, I would expect that any well-advised named estate trustee would think carefully about taking on the job.  This thought was reinforced when I read the decision of DeLorenzo v. Beresh.

This case dealt with a passing of accounts, where the estate trustee did not distribute the trust to a beneficiary in accordance with the timeline in the Will. The estate trustee used estate funds to pay his legal fees incurred in connection with litigation.

The Court acknowledged that generally speaking, the parties properly represented by a lawyer on a passing of accounts are awarded full compensation for their legal expenses from the estate. However, when there is litigation that relates to the question of whether or not the trustee has properly discharged his duties different considerations apply.  In contentious legal proceedings the general rule is that the successful party is awarded its costs, on the lower party and party scale, to be paid by the unsuccessful party.  

The Court found that in this case the outcome of the litigation may have a bearing as to what costs each of the parties should be required to bear.  Its view was that it would be inequitable to have the estate trustee pay his legal costs from the estate funds and require the applicants, whose funds are tied up in estate, to bear their own legal costs while the litigation is proceeding.  An order was therefore made requiring the estate trustee to repay to the estate all legal fees paid from the estate with respect to the outstanding litigation, with interest. 

This decision represents a good further cautionary example to estate trustees about the personal expense and risk involved in taking on such a role. While I appreciate and understand the Court's reasoning, I fear it may lend, along with the several other recent decisions, to the result of people having less and less incentive to assume the onerous responsibility of being an estate trustee. 

Have a good day,

Natalia R. Angelini - Click here for more information on Natalia Angelini.

Full post as published by Toronto Estate Law Blog on December 07, 2010 (boomark / email).