An estate trustee may decide to forego passing their accounts because of the associated costs and seek a release from the estate’s beneficiaries instead. However, when the capacity of a beneficiary is in question, a release may be set aside.
In Foisey v. Green, the Public Guardian and Trustee (“PGT”) as litigation guardian for Ms. Foisey sought to set aside a release she signed three months before she was found to be incapable of managing her property. The PGT sought to have the estate trustee, Ms. Green, pass her estate accounts. The PGT did not allege any wrong doing by the estate trustee but wanted confirmation that Ms. Foisey had received her full entitlement. However, Ms. Green had kept no records and relied on the signed release in reply to the PGT’s enquires.
Ms. Green administered her brother’s estate. The only beneficiaries of the estate were herself and Ms. Foisey. Ms. Green was estranged from Ms. Foisey and tracked her down through a private investigator. Ms. Foisey was residing in a long term care facility and had long standing mental health issues. Ms. Green and her lawyer both provided evidence that they gave Ms. Foisey the option of seeking a passing before the court but she opted to provide a signed release instead.
Within three months of signing the release, Ms. Foisey, was assessed as incapable of managing property. The PGT became her statutory guardian and enquired about the funds she received from her brother’s estate. Ms. Green and her lawyer relied on the signed release, noted that Ms. Foisey met with the estate trustee’s lawyer who explained her options to her, and that no one raised any issues about Ms. Foisey’s capacity at the time she signed the release.
However, the court found that they were a number of “red flags” that should have alerted Ms. Green to her sister’s possible lack of capacity. Ms. Foisey was part of a voluntary trustee program since 2006, has a history of mental health issues, resided at an assisted living facility, and was 77 years old. She also did not receive any independent legal advice.
Even though there was no evidence of wrong doing on Ms. Green’s part, the court ordered Ms. Green to pass her accounts. However, if she was able to informally satisfy the PGT that an accounting was not needed; the PGT could file a consent order dispensing with the passing.
The court went on to note the importance of keeping records. If Ms. Green had kept records, she would likely have been able to answer the PGT’s enquires without a formal passing.
A formal passing is not always necessary but sometimes the short cut approach results in greater costs to all parties. When seeking a release, the estate trustee should provide records and some type of accounting to the beneficiaries, especially, when a vulnerable beneficiary is providing a release.
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