Justice Strathy of the Superior Court of Justice ordered that Mr. Zimmerman repay nearly $500,000 in compensation he took as an attorney for property. The judge also ordered that he personally pay the legal costs of the other side amounting to $284,362.19. What happened?
Husband loves his wife and wants to protect her in case he dies prematurely. His concern is his wife's inexperience in handling large sums of money. Husband's advisors counsel him to leave sufficient money in trust for his wife and out of the trust's income pay her a monthly allowance. To cover any unforeseen contingencies, his trustees could be given discretion to draw upon the capital of the trust under certain situations. She is the sole beneficiary of the trust so everybody is happy ... right? Maybe not.
Control from beyond the grave is often intolerable for beneficiaries unable to access their inheritance. Those appointed to ensure the responsible administration of an estate may or may not have done anything wrong. Nevertheless, the beneficiaries' resentment often stirs controversy and their frustration, mistrust and hostility can result in their asking the court to remove Estate Trustees.
Situations arise where legal title may be in one person's name, but the courts presume there was a decision to create a trust so that the equitable or beneficial ownership really belongs to another. Let's take a look at the recent British Colombia Supreme Court case of Borkenhagen v. Kessler.
Trustees have a duty to act with loyalty, prudence and good faith. Executors who breach their fiduciary duty risk being removed. So let’s review how that might take place.
As chair of B'nai Brith Canada's Trusts & Estates Group I oversee the committee that chooses the subject matter and format of the continuing legal educational programs offered every year to the lawyers and accountants of our community. We choose topics that are relevant to the profession and to the Jewish community. This year we are examining whether a clause in a will that disinherits a child for marrying outside the faith is legal.
The Zimmerman v. McMichael Estate 2010 CarswellOnt 3481, 2010 ONSC 2947, 57 E.T.R. (3d) 101, 103 O.R. (3d) 25 is instructive for those reviewing the Ontario law regarding the duty of an attorney for property to account, the extent of that fiduciary duty and the consequences for failing to account.
Very often a parent appoints the favourite child to manage the parent’s property (“power of attorney”) or be the executor under the parent’s will. Perhaps the child is honest but has no idea what obligations are involved with being an attorney for property or as an executor and fails to keep proper records. Perhaps that child is very dishonest and the lack of records is simply his way to hide the improper use of his parent’s money. So what typically happens?
Executors often want to buy assets belonging to an estate. Beneficiaries often suspect the executors of wrong doing. So I often am asked whether it’s legal for an executor to buy an asset from the estate. The short answer is maybe, possibly, but not usually. it would be prudent to for all the beneficiaries to obtain independent legal advice. Furthermore, the purchase price should be somewhat more then fair market value. With all these arrows in his/her quiver the trustee might be well advised to seek preapproval of the sale from the court by bringing an application for the opinion, advice and direction of the court under Rule 14.05(3)(d), and under section 60 of the Trustee Act, R.S.O. 1990, c. T.23.
Probate in Ontario is called "a certificate of appointment of estate trustee with a will". This article addresses what steps have to be taken in Ontario to stop the process of getting a Will probated.