Removal of Estate Trustees – Recent Caselaw

The law concerning when a Court will and will not remove an estate trustee was recently reviewed by the Ontario Superior Court of Justice.

At issue were a series if disputes between step-brothers in connection with the estate of their late grandfather. The first grandson was a co-trustee of the estate. The second was attorney for the other co-trustee, their mother.  The terms of the will set up a trust from which income was to be paid to the mother for her lifetime with the capital paid out to the brothers on her death.

The step-brothers exhibited a long history of hostility towards each other and one complained that the other had acted contrary to the terms of the trust by, among other matters, failing to consult him with respect to investments made, reducing payments of interst to the mother and charging management fees to interest rather than to capital.

The Court reviewed the law concerning the power of the Court to remove trustees and reiterated that it will do so only on rare occasions as the Court will not lightly interfere with the wishes of the testator.  The guiding principles at all times remain (1) the welfare of the beneficiaries; (2) whether there is any danger to trust property; and (3) whether the trustee continuing to act is likely to prevent the trust from being properly administered.  The Court added that it will be more likely to interfere where the dispute is as between co-trustees as opposed to a trustee and beneficiary.

Here the Court treated the matter largely as a dispute between co-trustees given that the second brother acted as attorney for a co-trustee and because earlier minutes of settlement required that the first brother consult with him on certain matters before acting.  The Court found the first brother to be incapable of acting in the face of his conflict of interest as a beneficiary and his questionable actions in the administration of the trust.  Combined with what was certain to be continued hostility between the brothers, the Court found it was justified in these circumstances in removing the first brother and appointing a professional trustee.

Venables v. Gordon Estate

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: