All About Estates

Can You be Removed as a Trustee Without a Replacement?

The recent case of Novak v. McDougall, (2019 SKQB 261), confirms that when you have accepted an appointment to be trustee, you may not be able to have yourself removed from that appointment without a suitable replacement.

The applicant in this case, a beneficiary of a “Henson” trust (basically defined as being entitled to distributions from a discretionary trust but having no vested interest in the trust assets) set up by his father, wanted his sister removed as executrix of the trust. The applicant also disputed the quantum of his sister’s fees as executrix.

His sister opposed the application, but she did explore options to determine whether some or all her responsibilities of her trusteeship could be designated to another trustee.

What appears to have been the trigger point of this dispute that the applicant was denied certain disability payments from a government agency when his sister reported that he was a beneficiary of trust but failed to specify that he was a beneficiary of a Henson trust. According to the applicant, his sister was failing to take reasonable steps to ensure that the applicant would continue to receive government payments.

The Court found it unnecessary to determine whether the executrix (sister) should be removed as a trustee. Citing case law, the court stated that trustees cannot be removed unless the court appoints a new replacement trustee. With a replacement trustee, the court cannot remove her, even if in the court found that she was not performing her functions according to the standards the law expects of her.

The applicant has proposed tow alternate trustees, one being the Public Guardian and Trustee, but the court was not prepared to appoint either. The Public Guardian and Trustee would not accept the appointment and in the instance of the other suggested alternate, the court simply found her unsuitable: lack of support for her qualifications and her relationship to the applicant – she was his fiancée and there were concerns raised in court about her preoccupation about the applicant’s inheritance.

After a detailed review of all the evidence, the Court agreed that the executrix did overcharge the estate and altered her compensation accordingly. Notably, the exercise the court engaged in to determine an appropriate fee may be a valuable reference when trying to establish executor fees.

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About Steven Frye
Baker Tilly WM LLP is a leading, independent audit, tax, and business advisory firm based in Vancouver and Toronto, serving clients across Canada. Drawing on well-trained teams across a variety of disciplines, we ensure the alignment of our professional’s skills and experience with client requirements, resulting in exceptional service and business outcomes.

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