Category: Executors and Administrators

B.C. Case Comment: Court Refuses to Remove Sister as Trustee of Brother’s Trust

November 12, 2021

What can you do when you want to provide for your children equally, but you are concerned that one or more of your children may not be able to handle their share of your estate? If a parent has these concerns, they may decide to put a share of their estate in trust (often in a trust set out in the will itself). However, the parent must decide who will act as trustee and manage that money on behalf of their child.

One option which may seem attractive initially is to make another child the trustee. However, the result is that one sibling is in control of the other sibling’s share of the estate.   This often leads to tension, disputes, and ultimately litigation.

This was the case in the recent B.C. Supreme Court decision of Parsons v. Zaranski 2021 BCSC 2092. In Parsons, the Deceased had three children. He left his estate to his three children in equal shares, but he left one son’s share in a trust. His daughter was named as trustee of this trust. The trust was discretionary, with so much of the income and capital to be paid as the trustee decides is advisable for the care, maintenance, and education and benefit of the beneficiary during his lifetime.

Unsurprisingly, disputes arose. The beneficiary sought to remove and replace his sister as trustee. His complaints fell within the following categories;

  1. Failure to report on the activities of the trust;
  2. Failure to provide adequate funds during the beneficiary’s times of need; and
  3. Making an improper investment with trust funds from which she may derive a personal gain

The overarching concern for the court on an application to remove a trustee is whether the trustee’s conduct is putting the assets of the trust or the purposes of the trust in jeopardy. Conflict or friction between the trustee and the beneficiaries, without more, is insufficient to justify removal. The decision to remove a trustee must not be undertaken lightly, and should only be done in the clearest of cases and when it is necessary to protect the beneficiaries or the purpose of the trust.

The Court dismissed the application to remove the sister as trustee.

First, the Court found that the sister provided regular and complete reporting to her brother.

Second, the Court held that the sister responded appropriately to her brother’s requests for assistance. The case is a reminder that the exercise of discretion by a trustee pursuant to the terms of a trust is entitled to deference. In Parsons, the Court put it this way (at para. 78): “I am satisfied that Tammy could, in exercising her discretion, have paid more to William through the years, but I am also satisfied that she could have paid less.”

Finally, while the Court had some concerns about an investment made by the trustee with trust funds (it was an “error in judgment”), it was made in good faith and the trust was never at risk because the trustee would have reimbursed the trust if the investment had failed.

This case is a cautionary tale of the animosity, resentment and tension which you may create by putting one child in charge of another child’s trust. However, it also serves as a reminder to beneficiaries that animosity, resentment and tension is usually not enough, on its own, to remove a sibling as your trustee.

B.C. to Allow Electronic Wills and Remote Witnessing of Wills

October 8, 2021

The Wills, Estates and Amendment Act, 2020 will significantly change how a person may make a will in British Columbia, effective December 1, 2021.

Previously, a will had to meet all of the following requirements in order to be valid in British Columbia:

  1. It had to be in writing;
  2. It had to be signed at the end by the will-maker, or the signature at the end had be acknowledged by the will-maker as his or hers, in the presence of two or more witnesses present at the same time, and
  3. It had to be signed by two or more of the witnesses in the presence of the will-maker.

The amendments will allow for the execution of electronic wills, which are wills that:

  1. Are recorded or stored electronically, which means in a digital or other intangible form by electronic, magnetic, or optical means or by any other similar means;
  2. Can be read by a person; and
  3. Are capable of being reproduced in a visible form.

This means that as of December 1, 2021, a person can prepare and electronically sign a will, with no physical paper copy having to exist.  The amendments allow for the use of an electronic signature, and for the execution of the will to be witnessed electronically (i.e. remotely, by video).

In order to amend an electronic will, a new will must be made.

The amendments reflect some of the temporary measures implemented during the Covid-19 pandemic by way of ministerial orders, to allow for remote execution of wills. According to the Canadian Bar Association (B.C. Branch), these new changes are intended to respond to concerns raised by the public and the legal profession about a lack of flexibility in the rules regarding wills.

These changes certainly will provide greater flexibility and ability to the public to make wills, both during and outside of a pandemic.  However, as electronic wills become more common, problems may arise.

The possible existence of an electronic will creates uncertainty as to what document is actually the last will of a deceased person. Is there a more recent will stored on the deceased’s phone, tablet or laptop? Is there a document found somewhere in the deceased’s email inbox or in the cloud? Hopefully one of the witnesses to an electronic will would come forward and notify others of the existence of the document, but this may not always happen.   Moving forward, what will the expectation be on personal representatives or others to conduct searches of the deceased’s electronic devices, email inboxes, etc… for possible electronic wills?

We currently have a voluntary wills registry in B.C., which allows a will-maker to register a record of where to find the original copy of their will upon death. When dealing with an electronic will, there is no original physical copy of the document. In any event, the registry is not mandatory. This may create further uncertainty, especially when there is a physical will registered with the wills registry, but the possibility of a subsequent electronic will somewhere in the digital world that has not been registered.

If you choose to make an electronic will, you should at minimum make clear to the named executor that the document exists, and where it can be found (and ideally provide them with a copy).

Bernard and Honey Sherman Estates Update: Supreme Court of Canada Releases Decision Allowing Public Access to Estate Files

June 11, 2021

This morning the Supreme Court of Canada released its decision on the sealing of the court files relating to the estates of Bernard and Honey Sherman, the wealthy victims of murders that remain unsolved, and that were widely reported in the media. I previous wrote about the case here, after the Supreme Court of Canada heard submissions on whether the media ought to have access to the court files.

The Supreme of Canada dismissed the appeal brought by the trustees of the estates. The Court held that the sealing orders should not have been issued by the lower court, and the files were open to the public. The decision of the Supreme Court of Canada can be found here: Sherman Estate v. Donovan 2021 SCC 25

There is a strong presumption in favor of open courts. Court openness is a constitutional guarantee. Public scrutiny can cause inconvenience and even embarrassment to those who feel that the court system has intruded on their private lives. However, the Court confirmed that this discomfort is not enough to overturn “the strong presumption that the public can attend hearings and that court files can be consulted and reported upon by the free press.”

The court confirmed that there may be exceptional circumstances which justify a restriction on the open court principle.  An applicant for a sealing order or similar relief must demonstrate that openness presents a serious risk to a competing interest of public importance. This is a high bar.  Next, the applicant must show that the order is necessary to prevent the risk, and that the benefits of the order restricting openness outweigh its negative effect.

The estate trustees in the Sherman case argued that the concerns for (1) privacy, and (2) public safety were important public interests that are at such serious risk that the files should be sealed.

With respect to privacy concerns, the respondents to the appeal argued that virtually every court proceeding requires some intrusion on privacy.  The Court held that proceedings in open court can lead to the dissemination of highly sensitive personal information, that could result in discomfort or embarrassment, or even an affront to dignify. In the latter case, an exception to the open court principle may be necessary.

However, the Court was not convinced that there was such a risk in these circumstances. The Court is not concerned with the mere fact of the dissemination of sensitive personal information – this happens in almost every court proceeding. The focus must be on the impact of the dissemination. The trustees failed to show how the lifting of the sealing order engages the dignity of the affected individuals. The Court observed that “the information in the court files about which the Trustees are concerned must be sufficiently sensitive in that it strikes at the biographical core of the affected individuals.” The trustees also failed to establish that there was serious risk of physical harm to the affected individuals.

The court did not accept that the matters in a probate file are quintessentially private or fundamentally administrative.  The information contained in the files did not reveal anything particularly private about the affected individuals. It was acknowledged that there was near certainty that the media would publish at least parts of the estate files. Again, the risk of inconvenience and embarrassment resulting from publication is not enough.

In the end, the estate files will show the type of information found in any probate file. They may shed light on the relationship between the deceased and the affected individuals, in that we will see who they named as beneficiaries of their estate, and who they trusted to administer their estate. The only difference between this case and any other probate application is the high profile murders and intense media interest which will result in a larger audience for what are, in the normal course, publicly available documents. In those circumstances, a sealing order was not appropriate.

Recent B.C. Case Illustrates Importance of Documenting Transactions Between Family Members

June 11, 2021

All too often, transactions between family members (loans, gifts, property transfers, etc…) are not properly documented or are not documented at all. I see this repeatedly in transactions between parents and children.  The other children (i.e. the transferees’ siblings) seek to challenge the transaction after the parents’ deaths, so that the transferred asset forms part of the parents’ estates, causing fractures within the family.

This was the case in the recent B.C. Supreme Court decision in Cadwell Estate v. Martin 2021 BCSC 1089.   The Court observed:

[1] As this case shows, when a significant financial transaction is casually entered into between parents and their adult children, tragic consequences may occur, if the terms of the transaction are not clear to the members of the family at the outset, or are not properly, legally documented

In 2004, Bill and Ruth Cadwell (the parents) paid $170,000 to their daughter and her husband (the defendants). The payment was used to assist with the purchase and construction of a new house by the defendants. The house was modified to include a suite suitable for the parents.

The house was built, and the defendants and the parents moved into the house in 2005. No agreement was put in writing. Bill Cadwell died in 2007. Ruth Cadwell lived in the suite for 12 more years until she died in 2019.

The $170,000 payment lead to “considerable friction over the years” between various family members, and eventually lead to this litigation.

The plaintiff (the executor of Ruth Cadwell’s estate) claimed that the payment was an equity investment in the property, or that a resulting trust in the property was created. In the alternative, the plaintiff claimed in unjust enrichment, or for repayment of the amount as a loan, with interest.

The defendants said that the payment was a loan, which was paid off by notional payments of rent applied against the loan over the years. In the alternative, they argued that the loan claim was statute barred because the limitation period had expired.  The defendants relied upon a loan repayment schedule document initialed by Bill Cadwell. The plaintiff argued that this document was a forgery, created for the purpose of the litigation.

The Court concluded that there was no equity investment. While Ruth may have referred to the payment as an “investment”, that was not sufficient to establish that the parents were investing the $170,000 to acquire a beneficial interest in the property. The Cadwells had some business experience. They knew they were not going to be registered on title. There was no evidence of any discussions regarding proportionate ownership shares, sharing of expenses, etc…  On the evidence, the parents did not expect to have an ownership interest in the property. Instead, they expected to remain in the suite, free of charge, for some period of time, and the parents would be able to rely upon the defendants for help as needed.

The Court concluded that the parents intended the $170,000 payment to be a loan. The next issue was whether there had been repayment. The Court concluded there was no agreement for repayment by way of notional rent.

The Court held that the repayment schedule document was a forgery: “it represents the agreement that the defendants wish they had made with the Cadwells, but did not make.” It’s existence did not make sense in the circumstances, which included a conversation that Ruth surreptitiously recorded between her and one of the defendants, in which she asked for the return of her money.  The plaintiff went so far as to call an expert in computer fonts, who testified that the font used for the repayment schedule document did not reach public use until January 2007 (the defendants claimed the document was prepared in 2004).

However, the defendants were fortunate because the Court held that the claim was statute barred. The former Limitation Act applied to the claim, and so the six-year limitation period for the demand loan began to run on the day the loan was made. It should be noted that the current Limitation Period provides for a two year limitation period, which starts on the date that a demand is made.

As a result, the defendants did not have to repay the $170,000 amount due to the passage of time, even though they attempted to rely upon a forged document at trial (although they were not awarded their costs at trial due to their conduct).

There is a lesson here.  As observed by the Court:

[11]         As I am confident that everyone involved now recognizes, it would have been quite easy to document an agreement about the payment at the outset, thereby avoiding years of conflict.

Case Comment: No Executor’s Fee for Executor who Breached Fiduciary Duty

June 4, 2021

Under the B.C. Trustee Act, an executor is entitled to remuneration for administration of an estate, unless the Will states otherwise. However, executors should not expect to receive a fee regardless of their conduct. Executor misconduct, for example breach of fiduciary duty, may disentitle the executor to any fees, despite their efforts and time spent to administer the estate.

The B.C. Supreme Court recently considered executor misconduct in the context a passing of accounts and approval of executors’ fees in Zaradic Estate (Re) 2021 BCSC 1037. In Zaradic, The sole beneficiary was a friend of the deceased. The joint executors were a husband and wife, who were also friends of the deceased.  The executors sought to pass their accounts, which included payment of an executors’ fee.

The Trustee Act provides that an executor is entitled to remuneration of up to a maximum of 5% of the gross aggregate value of the estate (including all capital and income) unless the will provides otherwise. In Zaradic, the Will allowed for the executors to claim a fee up to 10%.

The criteria for determining an appropriate fee includes:

  1. The magnitude of the trust;
  2. The care and responsibility involved;
  3. The time occupied administering the trust;
  4. The skill and ability displayed; and
  5. The success achieved in the final result.

The beneficiary argued that the executors ought to be denied any fees for administering the estate by reason of their alleged breach of trust in attempting to sell the deceased’s house to their daughter for roughly 50% of its market value. The beneficiary had to commence a legal action and obtain a certificate of pending litigation to prevent the sale of the deceased’s home. The executors had also loaned their daughter $13,000 of estate monies to ensure she had enough money to complete the sale.

The executors tried to place the blame on (1) their experience with property ownership generally, and (2) a notary who allegedly advised them to take this course of action. The property eventually sold for fair market value, but the beneficiary incurred legal costs in order to make sure that this happened.

The Will provided as follows with respect to remuneration:

. . . My trustees may claim remuneration for acting as Trustees in the amount of Ten Percent (10%) of the net value of the residue of my estate to be shared equally between them, in lieu of any Executor or Trustees Fee’s.

The executors argued that this wording meant that they were entitled to a 10% fee regardless of their conduct. The Court did not agree. The Will said that the executors may “claim” for remuneration, but the amount of the fee was not fixed and had to be approved by the court if the beneficiary did not agree.

In terms of the amount of the fee, the Court concluded that the actions of the executors in relation to the attempted sale for less than market value to their daughter were “an egregious breach of their fiduciary duty,” which disentitled them to any fee.

The executors were denied any fee for their time spent administering the estate.  While there was a measure of care and responsibility involved in handling the estate, the executors’ efforts were a “dismal failure” when it came to the skill and ability displayed and the success achieved.  In other words,  all of their time and effort spent on the estate was eclipsed by their breach of fiduciary duty.

Disputes Between Co-Trustees: Adding a Trustee to Break the Deadlock

May 21, 2021

I am often contacted by one co-executor or co-trustee, who is frustrated with the conduct of the other co-executor or co-trustee. The client feels strongly that they cannot continue to work with the other person. These concerns commonly arise when siblings are asked to work together to administer a trust or estate, most often when there are two co-trustees or co-executors. In those circumstances, if there is a disagreement then there is no majority, resulting in a deadlock.

The concerning conduct expressed by the client falls on a spectrum. There may be concerns about misappropriation of trust assets, which would fall at the more serious end of the spectrum. The co-trustees may simply not like each other and not enjoy working together, which would be at the less serious end of the spectrum.

Usually a client’s concerns fall somewhere in the middle. Often the co-trustees will be critical of one another. They may each have a laundry list of concerns and criticisms. When making recommendations to a client as to how to proceed, the same considerations usually arise.  Has the conduct in a given case reached the point that removal and/or replacement of a co-trustee or co-executor is necessary? Or are the disagreements so trivial that the parties are expected to resolve matters and work together without the assistance of the court? There is also the question of remedy.  Should a trustee be removed (and if so, which one), or should an additional trustee be added to break the deadlock?

The B.C. Supreme Court recently considered these issues in In The Matter of The Estate of Jean Maureen Dahle, Deceased 2021 BCSC 718. The Court considered a dispute regarding the administration of an estate and a trust. In her will, the deceased named two of her six children, Tim and Martin, as co-executors. They were also named as co-trustees of a trust established in the will for the benefit of their brother with developmental disabilities (Nickey).

Tim and Martin both brought applications to have the other removed as executor of the will and trustee of the Nickey trust.

Before judgment (but after submissions), the brothers reached an agreement that a trust company would be appointed as a third trustee of the Nickey Trust, and that a majority of the three trustees will have decision making power. This would break the deadlock between the two brothers.

However, they were unable to reach a similar agreement with respect to administration of the estate. Neither of the brothers had sole decision-making power. They were required to act unanimously.  There was a “significant sense of distrust” between the brothers, which had continued for five years (since the deceased’s death) and had delayed administration of the estate.

Each brother provided a long list of complaints about the other. The Court observed that neither brother had conducted themselves completely appropriately, and they both were critical of the other for behavior that they themselves engaged in.

Much of the animosity between the brothers came from differences of opinion regarding what was in Nickey’s best interests, including living and care arrangements.  Other complaints included dealing with real property without unanimous agreement – dealing with rental monies, handling repairs and maintenance, and entering into tenancy agreements and collecting damage deposits.   There was also a criticism of the “tone” of certain communications. The Court agreed that they were “confrontational”, but did not warrant removal. There were other examples of stubbornness and refusal to communicate property. However, the Court also observed that the brothers were capable of agreeing on matters when required to do so.

The judgment includes a helpful discussion of the law on removal and replacement of executors and trustees. A testator is entitled to choose their executors and trustees. The court should not interfere lightly with this decision. Categories for removal of an executor include (1) endangerment of trust property, (2) want of honesty, (3) want of proper capacity to execute duties, and (4) want of reasonable fidelity. The welfare of the beneficiaries is a key consideration. Unreasonable delay and failure to distribute an estate may be grounds for removal. Executors are not expected to be perfect, and not all acts of misconduct will lead to removal. Animosity among co-executors may be relevant, but will not be determinative. This may be relevant to an ability to carry out their duties effectively and efficiently.

In Dahle, the Court concluded that it was in the best interests of the beneficiaries to add a third party professional trust company as an additional executor of the estate. The Court observed that adding a third trustee, and not removing either of the other two trustees, would respect the deceased’s wish to have her two children involved in decisions relating to admisntration of her estate. This arrangement would also encourage the brothers to act reasonably, failing which the unreasonable brother will be overruled by majority.

Case Comment: Estate Recovers Assets Misappropriated by Power of Attorney

April 16, 2021

Clients often contact us following the death of a family member, when they are surprised to discover how little is left in the deceased’s estate. While a capable independent adult is entitled to deplete their estate during their lifetime as they see fit, there may be concerns with elderly, incapable or otherwise vulnerable persons and “missing” assets. In the most egregious cases, there may be misappropriation of funds by a person in a position of trust, such as a person named in a power of attorney or committeeship order. After death, an estate can recover assets that are misappropriated from the deceased during their lifetime.

This was the case in the recent decision of the B.C. Supreme Court in Sarzynick v. Skwarchuk 2021 BCSC 443. In Sarzynick, the court considered a dispute between two siblings over the estate of their mother. In 2007, the mother and father made wills and also executed powers of attorney authorizing their son to act on their behalf. The father died first. When the mother died four years later, most of her assets had been depleted. The daughter argued that her brother had misappropriated large sums of money for his own use which belonged to his mother (and should form part of her estate).  The son denied this, but the court ultimately found that he was not a credible witness.

The court held that the son owed fiduciary duties as (1) executor of his father’s estate, and (2) his mother’s attorney. As attorney, he had an obligation to act in good faith in his mother’s best interests, to avoid personal gain from her property, and to account for all property.  The court held that he breached his fiduciary duties. He failed to keep (or disclose) financial records. This breach went to “the core” of the fiduciary relationship as attorney. He also breached his fiduciary duty of loyalty when he misappropriated funds for his own benefit.

The court went on to consider the appropriate remedies. This included a constructive trust over certain assets which properly belonged to the estate, and disgorgement of profits. Fortunately in this case many of the assets (monies) were held in trust, and so there was not the added complication of having to collect upon a judgment against an impecunious defendant who may have spent or hidden all of the assets that he took. The estate was entitled to recover over $440,000 from the son. The estate was also entitled to the appreciation in value of certain real property. Finally, the estate was entitled to special costs due to the son’s behavior during the litigation, which included a flagrant disregard for his disclosure obligations.

B.C. Court Intervenes to Uphold Bequest To Charity

March 26, 2021

It is common for will-makers to make bequests to charitable organizations in their wills. But what if the charity that is named as a beneficiary no longer exists at the date of the will-maker’s death? Over time, charities may be dissolved or cease to exist, change names or structures, or otherwise be replaced by successor organizations.  If a will-maker intends to make a charitable bequest, but the charity named in the will no longer exists at their death (or no longer exists in that name or form), what happens?

This issue was recently considered by the B.C. Supreme Court.  In Galloway Estate v. British Columbia Society for the Prevention of Cruelty to Animals 2021 BCSC 413, the deceased left shares of her estate to certain charitable organizations “that are in existence as at the date of [her] death,” including “Pacific Coast Public Television Association” (“PCPTA”).

PCPTA was registered as a Canadian charity so that persons could donate to the commercial-free educational channel, KCTS 9, or PBS Channel 9. The problem was that PCPTA (the beneficiary named in the will) was dissolved in 2018, and therefore that particular entity no longer existed at the deceased’s death.  KCTS also had changed its name to Cascade Public Media (“CPM”), and CPM continued to operate KCTS 9.

The executor needed directions from the court:

  1. Does the gift to benefit PBS/KCTS 9 fail because PCPTA no longer exists; or
  2. Can the PBS gift go to CPM instead?

The court applied the “cy-pres doctrine.”  The cy-pres doctrine determines what happens when property that has been dedicated to charitable purposes cannot be applied in the manner intended by the donor. Where the purposes or objects of a charitable trust have become impossible or impracticable to accomplish, the court may intervene and alter the purposes of the trust. The courts may implement modernized or modified objects that are “as near as possible” to the original purposes. The order must depart from the intentions of the settlor only to the extent required to remove the problem.

If it is not impossible or impractical (which the courts interpret broadly) to accomplish the purpose of the charitable trust, then the court cannot intervene.

In Galloway, the court concluded that the gift would go to CPM. The deceased intended to benefit the PBS channel, and CPM was now the entity that performed that role. CPM assumed responsibility for PCPTA’s obligations.

The court distinguished another case, Re Eberwein Estate 2012 BCSC 250. In that case, the deceased made a gift to a charity called “Aid to Animals in Distress,” which she donated to during her lifetime. The charity ceased to exist prior to the deceased making her will and her death. That gift was not subject to the cy-pres document (and the gift failed) because the court was unable to determine an alternative charity to which the gift should go.

If it appears that a specific charitable bequest may fail because the named charity no longer exists, in certain circumstances the court may intervene and give effect to the will-maker’s charitable intention by modifying the will to, for example, make the bequest to a successor charity, or a nearly identical charity.

Covid-19: B.C. to End Suspension of Time Limits for Commencing Legal Proceedings on March 25, 2021

March 12, 2021

On March 26, 2020, the Minister of Public Safety and Solicitor General took the exceptional step of suspending limitation periods to commence court proceedings in British Columbia. A previous post about this order, and the effect of the order on estate matters, can be found here: https://www.bcestatelitigation.ca/wills-variation/covid-19-b-c-suspends-time-limits-for-commencing-legal-proceedings/

The provincial government has now announced that they are lifting the suspension, and that limitation periods will resume running on March 25, 2021 (one year after the suspension was put in place).

My colleagues Brian Cheng and Taahaa Patel, articled student discuss the end of the suspension of time limits for commencing legal proceedings in B.C. here: https://owenbird.com/the-limitation-period-suspension-ends-on-march-25-2021/

The key point is this: while the suspension was in effect, any running of a limitation period was paused. When the suspension is lifted, the limitation period will resume running.

The Law Society of British Columbia has published helpful guidelines (with examples) which can be found here: https://www.lawsociety.bc.ca/about-us/covid-19-response/guidelines-for-calculating-bc-limitation-periods/

In my previous post, I noted that executors should consider the effect of the suspension (and now the end of the suspension) on estate administration matters, most notably distribution of estate assets to beneficiaries. Beneficiaries (or other potential claimants) should similarly be aware of the lifting of the suspension, so that they do not miss a deadline to bring a claim.

The Wills, Estates and Succession Act [SBC 2009] Chapter 13 provides that the personal representative of a deceased person must not distribute the estate of the deceased person within 210 days following the date of the grant of probate or administration, absent a court order or the consent of the beneficiaries.  This is so that potential claimants can bring claims before estate assets have been distributed, some of which must brought within 180 days of the issuance of the grant (most notably wills variation claims).  I warned that executors should obtain advice before distributing assets even after 210 days, if the 180 day deadlines have been suspended. Once the suspension is lifted, the 180 day and 210 day periods will resume running (or start running, if the period would have started during the suspension).

The Final Hurdle: Passing of Accounts and Determining the Executor’s Fee

December 17, 2020

Once contentious estate claims have been determined, such as challenges to the validity of a will or wills variation claims, there is one final hurdle for the executor: the passing of accounts and determination of the executor’s fee.

The B.C. Trustee Act provides that a personal representative is entitled to remuneration to a maximum of five percent of the gross aggregate value, including capital and income, of all of the estate at the date of the passing.  An executor is also entitled to a fee for annual care and management of the estate which must not exceed 0.4% of the average market value of the estate assets.

In determining the fee payable, the court will consider the magnitude of the trust or estate, the care and responsibility involved, the time occupied in administering the trust or estate, the skill and ability displayed, and finally, the success achieved in the result. The fee is to be determined based upon the reasonable value of the services rendered, subject to the five percent cap.

If the beneficiaries do not consent to the form of accounts and the fee sought by the executor, then the executor must seek the approval of the court.

If there have been contentious court proceedings relating to an estate, there may be lingering resentment or continued conflict when the matter proceeds to the final passing of accounts. This gives the parties one last thing to fight about.

This was the case in the recent decision of In the Matter of the Estate of Nehar Singh Litt, deceased 2020 BCSC 1921. In Litt, the executor was one of six beneficiaries, all of whom are siblings. The deceased had left each of his four daughters $150,000. The residue of the estate (the total estate was valued at $9 million) was left to his two sons. The daughters brought a wills variation claim, and the court divided the estate 60% in favor of the daughters, and 40% in favor of the sons. I previously wrote on this decision in a post found here. The judgment in the wills variation matter can be found here.

The executor sought to pass his accounts, and he sought total remuneration of $654,449.34 for both parents’ estates.  The court observed that there was “considerable animus” between the executor and his siblings, and so it was not surprising that the executor was not able to obtain the consent of the beneficiaries to the fee that he sought and a hearing was required.  The court heard evidence and reviewed each factor over a three day hearing. Although the executor displayed skill and ability in handling the estate, and achieved success overall in maximizing the estate’s assets and income over a period of three years, the court held that the remuneration sought was excessive, and reduced the executor’s fee to $400,000.