In the recent decision of Lagrandeur Estate (Re), the Court considered when an estate trustee can be ‘passed over’ due to a conflict of interest.

Facts

Keisha Lagrandeur (“Keisha”) died on December 6, 2019, aged 41. Keisha had two boys aged 19 and 17 with her married spouse Gaetan Lagrandeur (“Gaetan”). At the time of Keisha’s death, she and Gaetan had been separated for five years, but their divorce had not yet been finalized.  At issue in the matrimonial proceedings were Gaetan’s custody and access to his sons, child support, and equalization of the net family property.

Since Keisha’s death, her children had been residing with Keisha’s friend/common law partner, Yvon Cloutier (“Yvon”).

Keisha left a Last Will and Testament dated September 21, 2004 (the “Will”), which appointed Gaetan as estate trustee and named him the sole beneficiary of her estate. She also signed an RBC Insurance Change of Beneficiary form dated April 22, 2019 (the “Policy”), which designated her two sons as 80% beneficiaries and Yvon as 20% beneficiary. The face value of the Policy was $800,000, and constituted the bulk of the assets at issue.

Gaetan applied for a certificate of appointment of estate trustee (i.e. probate), to which Yvon and Keisha’ adult son, Noah, filed a Notice of Objection on the basis that Gaetan was in a conflict of interest. Gaetan moved for directions on the issue of his application for probate, among other issues.

Analysis

A party seeking to pass over an estate trustee named in a Will faces a high bar, as the Court will not interfere lightly with a testator’s discretion in choosing executors and trustees, but can do so in a case of clear necessity. As the Court had concerns regarding the validity of Keisha’ Will, the Court also considered its authority to appoint estate trustees in the event of an intestacy under s.29(1) of the Estates Act, which gives the deceased person’s spouse a first priority. However, under s.29(3), the Court maintains an unqualified discretion in special circumstances to appoint such other persons as it thinks fit to administer the estate.

The Court found this was an exceptional situation and one in which clear necessity dictated that Gaetan not be appointed estate trustee of Keisha’s estate, as he had a clear conflict between his personal interest and his duty as executor. The estate administration would require the executor to decide whether to pursue a claim of retroactive child support and whether to continue a claim for equalization of the matrimonial property. These claims would be asserted against Gaetan personally. Gaetan had advised the court in his affidavit that such a claim was not permissible. The interest of the estate and Gaetan personally were therefore irreconcilable. In addition, Gaetan was in a conflict between his personal interest and the estate’s potential beneficiaries/dependants, as the affidavits filed by Noah and Yvon spoke of the strained relationship between  Gaetan and his children, and the little contact they had had over the past five years. The Court also had concerns regarding Gaetan’s bona fides, in particular, because he had stopped paying child support after Keisha’s death. The Court therefore ordered that Gaetan be passed over as estate trustee.

Take Away

While the Court will not interfere lightly with a testator’s choice of executor, or a spouse’s priority to administer an estate in the event of an intestacy, irreconcilable conflicts between the executor’s personal interest and those of the estate and its beneficiaries provide a valid basis for the executor to be ‘passed over’.