All About Estates

Trustee’s Personal Liability – It Could Go on for Years!

Take the case of Estate of Ronald Alfred Craymer v Hayward et al, 2019 ONSC 4600,

The Craymers were married in the 1980’s. It was a second marriage for Mrs. Craymer and a fourth marriage for Mr. Craymer. At the time of their marriage, Mrs. Craymer had three adult children of her own and Mr. Craymer had four adult children. The Craymers were married for thirty-two years until Mrs. Craymer passed away in 2016. Mr. Craymer passed away in early 2017.

All of Mrs. Craymer’s children maintained a close relationship with Mrs. Craymer and Mr. Craymer over their thirty plus years of marriage. Ms. Hayward, (Mrs. Craymer’s daughter) and her family, were very close to the Craymers spending much time together. None of Mr. Craymer’s children maintained a close relationship with the Craymers in the thirty plus years they were married. Mr. Craymer’s children had only re-established contact since being notified by Ms. Hayward that they are the beneficiaries of their father’s estate.

In late 2006, the Craymers executed Powers of Attorney naming each other as their Attorney’s for Property and Care, and each naming Ms. Hayward, as their alternate Attorney. The terms of the Power of Attorney for Property allowed for Ms. Hayward to make gifts of Mr. Craymer’s property to relatives so long as there remained sufficient funds to properly care for the incapable person. Under Mr. Craymer’s Will, also executed in late 2016, if Mrs. Craymer was to survive him, she was given the entire residue of his estate, subject to any debts. If she were to predecease him, only then would Mr. Craymer’s assets go to his own children.

In late 2016, Mr. Craymer suffered a stroke that left him incapable and a permanent resident of a long-term care facility. Mrs. Craymer was then called upon to exercise her authorities under her Power of Attorney until she died. Mrs. Craymer acted as Mr. Craymer’s Attorney for Property and Personal Care without input or assistance. No request was made during Mrs. Craymer’s tenure as Attorney for Property, for an accounting.

During the year 2011 during her term as the Attorney for Property, Mrs. Craymer also transferred the marital home that was held jointly solely in her name. “for natural love and affection.”

Mrs. Craymer passed away suddenly in 2016. Ms. Hayward acted as Mrs. Craymer’s Estate Trustee and Mr. Craymer’s Attorney for Property. Mrs. Craymer’s assets were distributed to her children, as contemplated in Mrs. Craymer’s Will. At the time of Mrs. Craymer’s passing, she had assets of over $1 million which included the marital home.

Mr. Craymer passed away a few months’ later, in 2017. Following Mr. Craymer’s passing, Ms. Hayward, through her counsel, served a Notice of Application for a Certificate of Appointment of Estate Trustee with a Will. This served as notice to Mr. Craymer’s children that Ms. Hayward was applying to be the Estate Trustee for Mr. Craymer.

Mr. Craymer’s children, the beneficiaries under Mr. Craymer’s Will, received a letter from Ms. Hayward’s lawyer with the initial estate accounting. The initial Estate Accounting reports identified Mr. Craymer’s assets to be approximately $35,000.

Upon learning of the reported value of their father’s estate, one of Mr. Craymer’s children took immediate action (“Plaintiff”). The Plaintiff sought the removal of Ms. Hayward’s as Mr. Craymer’s Trustee, and he brought a motion to compel the Passing of Accounts in relation to Mrs. Craymer’s spending while she was Attorney for Property in relation to Mr. Craymer.  The Plaintiff contended Mrs. Craymer was required to maintain records of her spending. The Plaintiff took the position that her failure to do so renders her, and her Estate, liable for any expenses that cannot be explained. The Plaintiff took the position that he was entitled to a Passing of Accounts, and one is clearly justified in the circumstances of this case. The Plaintiff pointed to the following facts to justify the motion:

1) At the time of the Mrs. Craymer’s passing, Mr. Craymer reportedly had assets of $9,965.74, whereas Mrs. Craymer had assets of $1,063,674.00.

2) After Mr. Craymer’s stroke, Mrs. Craymer, as Attorney for Property, took her husband’s name off the title to their matrimonial home.

3) While Ms. Hayward acted as Mr. Craymer’s Attorney for Property, Mr. Craymer’s bank account appreciated at a rate in excess of $3,000 per month. Thus, presumably, during the almost ten years Mrs. Craymer acted as Mr. Craymer’s Attorney for Property, his savings would have been in excess of $360,000 if managed in the same way.

4) Mr. Craymer was also believed to have a hobby farm with more than 100 acres of land.

Ms. Hayward took the position that it would be unfair to expect her on behalf of the Estate, to provide an accounting for all Mrs. Craymer’s spending in her capacity as Mr. Craymer’s Attorney for Property. There is no indication that detailed records were kept. Given that she had nothing to do with the spending, there is no way in which she would be able to provide an accounting. Moreover, the process would leave her personally liable on behalf of the already administered Estate, for actions that had nothing to do with her.

The Court noted that the conduct of an Attorney for Property is governed by the provisions of the Substitute Decisions Act (the “SDA”). An attorney is a fiduciary whose powers and duties must be exercised and performed diligently, with honesty and integrity and in good faith, for the incapable person’s benefit. An attorney must, in accordance with the regulations established pursuant to the S.D.A., keep accounts of all transactions involving the grantor’s property. An attorney for Property, the Court observed, who fails to retain receipts supporting substantial cash withdrawals or expenses charged against the incapable person’s property has not adequately carried out his/her duties and will be held personally liable for the unsubstantiated withdrawals.

There is no statutory requirement for an Attorney for Property to pass accounts. The requirement to pass accounts can only be triggered upon Application of the SDA, wherein the Court may order that “all or a specified part of the accounts of an attorney or guardian of property be passed”. In Ontario, there is no statutory limitation period for the passing of accounts. Accordingly, the only bars are the equitable defences of laches (unjust delay) and acquiescence.

The Court sympathized with the Plaintiff as he could not be blamed for bringing the action in the manner that he did. The delay is understandable when considered in context. It was only after receiving the documentation provided by Ms. Hayward (on behalf of Mr. Craymer’s Estate) that the Plaintiff realized that there were potential issues with the Estate and with the actions of Mrs. Craymer as the Attorney for Property.

Nevertheless, the Court felt a requirement to produce an accounting at this point would result in a clear injustice as between the parties.

The court noted that Ms. Hayward was hardly able to account for Mrs. Craymer’s spending while she was alive. Yet, to require a passing of accounts at this point would subject every line of Mrs. Craymer’s spending (as Attorney for Property) Moreover, as the Estate Trustee, Ms. Hayward would be liable to account for any unexplained expenditures. The Court further noted that it was unclear that the spending was spurious given the nature of the relationship between Mrs. Craymer and Mr. Craymer. Mrs. Craymer would have been spending the money as his wife as much as his Attorney for Property. The failure to keep detailed accounts is hardly suspicious given the circumstances

Interestingly, the Court did note that that the transfer of the matrimonial home by Mrs. Craymer appeared to be highly suspicious, and absent an explanation for the transfer, an adverse inference will likely be drawn. In the Court’s opinion the outstanding action was the more appropriate forum in which to adjudicate these issues.

The Estate has already been ordered to produce and disclose any information that may assist the Plaintiff with the litigation. The Plaintiff will have the opportunity to discover any parties with relevant evidence in order to establish its case. The onus will be on the Plaintiff to make out the claim, fairness would require such.

In the end, the Court did not order a passing of accounts.

Nevertheless, this is a cautionary tale for when acting as an estate trustee, circumstances can lead to unsettled and unsettling consequences!

Happy Reading

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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