Today’s blog has been written by Latoya Brown, Associate, at Fasken LLP

In Part 1 of this series, we explored the importance of selecting the right trustee, using Jones v. Jones[1] to highlight what can go wrong when a trustee lacks a clear understanding of their fiduciary obligations. In this follow-up, we turn to what happens after the appointment—how trustees can fulfill their duties effectively and avoid the kind of litigation seen in Iannace v. Iannace[2].

The recent Ontario Superior Court decision in Iannace v. Iannace offers an example of how a trustee’s conduct can jeopardize the integrity of the estate and the trustee’s own position.

• Case Summary: Iannace v. Iannace, 2025 ONSC 2542

This case arose from a will challenge brought by Frank Iannace, who was disinherited under his father Mario’s 2020 will (the “Will”). The Will named Frank’s brother, Peter Iannace, as both sole beneficiary and estate trustee. Frank alleged undue influence, pointing to Peter’s dominant role in the Will’s execution: he was present throughout, acted as translator, and ignored the drafting lawyer’s advice to have the Will executed independently.

While the court did not make a final ruling on the Will’s validity, it found that the circumstances raised sufficient suspicion to shift the burden of proof to Peter at trial.

Of concern to the court was Peter’s conduct after the Will was executed:

• He mortgaged estate property for over $1 million without notifying Frank or seeking court approval.
• He encumbered estate assets while litigation was pending.
• He failed to preserve the estate’s value or act impartially as trustee.

The court granted a Certificate of Pending Litigation on one estate property and ordered the preservation of proceeds from a corporate sale to protect Frank’s potential interest.

Justice Myers emphasized that even if a trustee believes they are the rightful beneficiary, they must act with fairness, transparency, and fiduciary restraint until the dispute is resolved. The concern is not simply about “execution before judgment. It is protecting a party from the non-speculative risk that a fiduciary is acting in conflict of interest to favour himself and leave the corpus of the fiduciary estate empty.”  Importantly, Justice Myers clarified that the court was not finding that the applicant (the disinherited beneficiary) was likely to win or even had a strong case. However, the claim was credible and deserved to be heard, particularly because the trustee had ignored legal advice and taken unilateral, undisclosed actions—including mortgaging estate property—despite knowing that his authority was being challenged. Justice Myers concluded that this was not the proper stance of an estate trustee who knows that his authority is under legal scrutiny.

Iannace v. Iannace is a reminder that trusteeship is not just about managing assets—it’s also about managing conflict with integrity. Trustees must exercise restraint, transparency, and fairness, even when they are personally invested in the outcome of a dispute. Below are the key takeaways from Iannace v. Iannace that trustees should keep in mind.

• Key Takeaways for Trustees

1. Fiduciary Duties Continue During Litigation

• Trustees must continue to act in the best interests of the estate—even when they are personally involved in a dispute. This includes preserving estate assets, avoiding self-dealing, and maintaining Impartiality. Litigation does not suspend a trustee’s fiduciary obligations; in fact, it heightens the need for caution and transparency.

What trustees should do:

• Avoid making unilateral decisions that could affect the estate’s value.
• Refrain from encumbering or disposing of estate assets without notice to all interested parties.
• If litigation is pending, consider seeking court directions before taking any significant steps.
• In Iannace, Peter’s decision to mortgage estate property without notice or approval was a breach of fiduciary duty that prompted the court to intervene.

2. Transparency Is Non-Negotiable

• Trustees must keep all beneficiaries and challengers to the Will informed about the administration of the estate. This is especially critical during litigation, when trust is already strained. Major financial decisions—such as selling or mortgaging estate property—require full disclosure and, in many cases, court approval.

What trustees should do:

• Provide regular updates to beneficiaries.
• Share financial statements, valuations, and legal developments.
• Notify beneficiaries before taking any action that could materially affect the estate.
• In Iannace, Peter’s failure to inform his brother about the mortgage and other financial dealings was a key factor in the court’s decision to preserve estate assets.

3. Impartiality Is Essential

• Where a trustee is also a beneficiary, they must administer the estate impartially. Courts are quick to intervene when a trustee appears to be using their position to advance personal interests or disadvantage other beneficiaries.

What trustees should do:

• Separate personal interests from fiduciary responsibilities.
• Avoid making decisions that disproportionately benefit themselves.
• Consider appointing a neutral third party if impartiality is in question.
• Peter’s dual role as sole beneficiary and trustee did not excuse his failure to act impartially. His conduct raised serious concerns about fairness and bias with the court.

4. Courts Will Step In to Protect the Estate

• When a trustee’s actions threaten the integrity of the estate or the fairness of the litigation process, courts have broad powers to intervene. This includes freezing assets, issuing Certificates of Pending Litigation (“CPL”), and ordering the preservation of proceeds.

What trustees should do:

• Avoid any conduct that could prejudice the outcome of a will challenge.
• Consider preserving the status quo until the dispute is resolved.
• Be prepared to justify all actions taken during the administration.
• In Iannace, the court issued a CPL and ordered the preservation of corporate sale proceeds to protect the estate from further risk.

5. Understand and Respect Fiduciary Duties

• Trustees must act with care, diligence, and loyalty to the estate and its beneficiaries. This includes seeking professional advice when needed and following it. Ignorance of the law or poor judgment is not a defense.

What trustees should do:

• Consult estate lawyers, accountants, and financial advisors.
• Document the advice received and the rationale for decisions.
• Avoid acting on assumptions or personal preferences.
• Good record-keeping is essential. Trustees should maintain detailed records of all decisions, communications, and transactions. This protects them if their actions are challenged and ensures transparency throughout the administration.

What trustees should do:

• Keep a trustee journal or log.
• Retain copies of correspondence, invoices, and professional advice.
• Prepare regular accounting for beneficiaries and the court, if required.
• While Jones v. Jonestaught us the importance of choosing the right trustee, Iannace v. Iannacereminds us that even the right choice can go wrong if the trustee fails to comply with their duties. Trusteeship is not a passive title—it is an active role of stewardship, which requires transparency, prudence, and impartiality, especially in the face of conflict.
• Stay tuned for Part 3!

 

 

[1] 2025 ONSC 695

[2] 2025 ONSC 2542