Dealing with Difficult Estate Executors and Trustees / Executor Removal
It is wonderful to be a beneficiary (inheritor) of an estate, provided that the executor (or trustee) of that estate is doing their job properly. In most cases, all a beneficiary has to do is receive some information, wait about a year, review the executor’s accounts, and finally accept funds or property. The executor is supposed to do the hard work associated with administering the estate while protecting the interests of the beneficiaries. When the estate is settled, an executor is often paid for their work.
When an executor does not do their job properly by failing to act or preferring their own interests, a beneficiary may have to assume a more active role. A beneficiary can apply to the court to either force the executor to make better decisions or to remove and replace them with someone better suited to the position. At Katzman Estate Law, dealing with executors who have made or will make selfish decisions represents about half of our practice.
An executor who knows that a beneficiary cannot afford to enforce their rights may be more likely to act selfishly. Katzman Estate Law is unique in that we will take executor removal matters on a contingency fee basis, meaning that a client may only be charged a percentage of their inheritance as the client draws funds from an estate.
Why would someone remove an executor or trustee?
Generally, the job of an executor is to take control of an estate, pay its debts, and then distribute assets according to a will or the law. It is not unusual for an executor to fail to perform one or more of these tasks, which is unfair to the beneficiaries. Common examples include:
- an executor failing to provide documents to beneficiaries, including bank statements and a list of estate assets. Beneficiaries are generally entitled to these documents;
- an executor helping themselves to estate funds;
- an executor moving estate funds into their personal bank accounts rather than a bank account set up specifically for the estate (this is called comingling funds);
- an executor failing to sell estate property within a reasonable amount of time;
- an executor failing to distribute estate funds or property within a reasonable period of time, which typically means more than one year;
- an executor driving an estate car or vehicle for personal use;
- an executor living in an estate house or estate building without taking legitimate steps to sell the property;
- an executor selling an estate house or other property to a relative or friend, rather than listing the property for sale publicly;
- an executor selling an estate house or other property to him or herself, rather than listing the property for sale publicly;
- an executor farming estate land him or herself instead of selling or otherwise transferring the farm; and
- an executor using estate land or buildings for personal storage or as a vacation house.
Many executors confuse their temporary control of trust property with permanent entitlement. The law has mechanisms to deal with these executors and a removal is often the best tool to stop the abuse of estate property.
A common misconception is that when a will provides an executor with “absolute discretion”, a beneficiary is powerless against an executor. In reality, the executor’s discretion must be exercised in a reasonable way and for the good of the beneficiaries. An executor may exercise his or her absolute discretion in a way that gets them fired and sued. After that, a new executor can be appointed to handle the estate and pursue the old executor for their misdeeds. Along with great power, executorship comes with great potential liability to the beneficiaries.
What should I do if an executor or trustee refuses to provide me with documents?
The beneficiaries of an estate may demand information regarding the administration of an estate from the executor at any time. Most often, this will relate to a copy of the will, a summary of estate accounts, and what decisions have been made regarding the Estate’s accounts. The court has described the failure to disclose estate financial information to beneficiaries as the cancer of estate litigation as it breeds mistrust. One judge wrote: “those who argue against openness often find themselves the subject of dark inferences.” The correct executor response to a request for information is “sure, what can I get you?”. If the response is a variation of “no” or “when I feel like it”, a beneficiary may have a problem.
Without this information, a beneficiary lives in the dark and has no evidence that an estate is moving forward properly. Problematically, such an estate is under the control of an executor who has already failed to comply with one of their core duties: the provision of information. This leaves a beneficiary to wonder about other rules an executor may be breaking and why they would not want to show their work. As the court said, this leads to mistrust and dark inferences. When a beneficiary is uneasy about the lack of information they are receiving, they call an estate litigation law firm like Katzman Estate Law to shine a light on the situation by compelling the production of information, removing the executor, or both.
What should you do before trying to remove an executor or trustee?
In the interests of time and expense, it is always better to try to fix a problem with a letter and negotiation before applying to the court. Katzman Estate Law starts almost every executor removal case this way, and occasionally the conduct improves. It may be enough for the executor to know that a beneficiary has hired a lawyer to ensure that things go smoothly. The legal fees associated with this role are modest. It will be obvious that the correspondence sent to an executor or their lawyer will be used against the them in court if the issues are not resolved peacefully.
Sometimes, a letter is ineffective at resolving improper executor conduct. Especially as it relates to documentary disclosure, an executor may have already received and ignored advice from their own lawyer. A stubborn executor is unlikely to be persuaded by a letter from an opposing law firm. When negotiations break down, the letters from us go before an Ontario court that will want to see that we tried to work things out on our own first. We will want to show the court that a resolution was impossible because of the executor.
What steps are involved in removing an executor or trustee?
The major steps for an executor removal case are as follows:
- Initial call with a lawyer: A potential client will call our law firm to inquire about their issue with an executor. This call to Katzman Estate Law is free and confidential. The caller will be put in touch with a Katzman Estate Law lawyer. Quite often, we explain to our callers that an action taken by an executor is normal and our involvement is unnecessary. For example, probate can take several months and a beneficiary cannot generally expect to be paid within the first year of the a deceased’s death. If there is an issue that requires further investigation or we see an obvious problem, the lawyer will go over what they plan to do if they are retained.
- Meeting with the lawyer: The client will meet the lawyer either in person or remotely to sign a retainer and formalize our representation. We will go over whatever documents or facts are available.
- Send letters: We send letters to the executor or their lawyer introducing ourselves and making requests for documentation. If appropriate, we indicate how we expect the estate to be administered or what conduct we question. Rarely do we call for the resignation of the executor in our first letter. We follow up with our requests to demonstrate that we are either being ignored or that we received unsatisfactory responses. If the situation improves, no further steps may be necessary. If the problem does not get fixed, we have what we need to apply to the court.
- Materials are drafted: We will draft and submit two documents to the court. The Notice of Application identifies what we want from the court and the Application Record contains our evidence, including a sworn statement from our client.
- Examinations: If necessary, the parties are asked questions by lawyers from each side in front of a court reporter. Transcripts are generated and are made available to the court. We prepare our clients thoroughly for an examination. There is no such thing as too much preparation for an examination.
- Factum: This document contains our written argument, which helps the court decide our case.
- Final hearing: The matter is decided by a judge.
Cases may settle at any stage of this process.
How do you win an application to remove an executor or trustee?
The deceased’s decision to appoint someone as executor in their will has substantial weight, meaning it can be difficult to persuade a court remove an executor. It must be readily apparent from the evidence that if the removal request is not granted, the estate will likely be improperly administered. Importantly, mere personal friction with the executor will not be enough to convince the court that a removal is necessary. A mere conflict of interest may not be enough as the interests of the executor are never perfectly compatible with beneficiaries; executors are allowed to charge estates for their work after all. The conflict must be significant and problematic.
What is the cost of removing a trustee?
Like most legal matters, the costs someone will incur are largely relative to the complexity of the case and how aggressively the parties litigate. If the parties plan to exchange written material without cross-examining each other, a trustee removal can cost about $15,000 to $25,000. If the parties file multiple rounds of documents, attend court several times to argue over procedure, and cross-examine each other on their material, the cost can exceed $75,000.
At Katzman Estate Law, we advance our cases as fast as the court system will permit. Since we have handled numerous executor removals in the past, we have a wealth of precedent documents from similar cases that will save our clients thousands in legal expenses.
In certain circumstances, Katzman Estate Law will take on executor/trustee removal cases on a contingency fee basis, which means that we would only bill you as you receive money from an estate.
What happens after an executor is removed?
After a removal, if one or more executors are still in place, the estate can continue to be administered by the remining executors. If all of the executors are removed, a new executor will need to be appointed by the court. Katzman Estate Law always seeks to install the new executor at the same time as the removal.
The old executor or executors can then be required to pass their accounts, meaning they will have to detail each transaction made during their control of the estate. If the court disapproves of a transaction, the court can order that money be repaid to the estate.
Katzman Estate Law offers free consultations for cases involving problematic executors. We can be reached at 844-602-4242. On your first call, you will have an honest conversation with an estate litigation lawyer about whether you may be successful with your case.
We have offices in Windsor, Chatham, Sarnia and the Greater Toronto Area, but also have the technological resources to represent anyone for an Ontario matter.