Often, estate disputes arise when family members cannot agree on how an estate should be distributed. Even if an individual takes appropriate steps to put a proper estate plan in place, that does not mean those left behind will not find something to disagree over. In some cases, a beneficiary might believe that an estate trustee is not taking the necessary steps to distribute the deceased’s assets according to their will.

In a recent Ontario Superior Court of Justice decision, three sisters were involved in a dispute over whether or not two of them, who were acting as co-trustees, were improperly withholding estate funds and preventing them from being distributed.

Two sisters appointed as co-trustees

In Hutchinson v Woodhouse et al., three sisters were involved in the dispute. Two of the sisters, “MW” and “JW,” were named as co-trustees of their mother’s estate. The third sister, “DH”, was not appointed as a trustee but was named as a beneficiary.

The parties’ mother passed away in May 2017, and each sister was named as a beneficiary in her will. The will stipulated that all of the deceased’s personal property, including “all articles of personal and household use or ornament and all automobiles and their accessories,” were to be divided amongst the three sisters. The two sisters who were acting as co-trustees were also each given an additional $5,000.

Beneficiary seeks share of property sale proceeds

Following the testator’s death, a piece of property she owned in Newmarket, Ontario, was transferred to the co-trustees and sold days later for $692,400. Despite requests to receive her share, the applicant, DH, had not been given her share of the sale proceeds and she retained legal counsel.

JW told the applicant that she was willing to distribute the estate’s proceeds but that her co-trustee, MW, refused to do so. JW also claimed that AW would not attend any meetings at the bank to help finalize the administration, as the estate required both co-trustees to sign off on any disbursements. JW added that if MW were to be removed as a trustee, JW would distribute the estate according to the will in her would-be position as sole trustee.

Ultimately, the matter made its way to Court. In February 2022, the Court ordered that $150,000 from the property sale proceeds be distributed equally to each of the three beneficiaries. Since then, AW has maintained her refusal to do so. AW has stated that she intended to distribute the funds when other estate issues could be worked out, specifically issues related to money held in GIC accounts.

Can investment account-related issues prevent other assets from being distributed?

The Court explained that, at the time of her death, the deceased had several investment accounts, each held jointly with one of the three daughters. The daughter named on each account is the named beneficiary of the accounts. Both JW and DH believed that the funds from those accounts should be transferred to the living joint account holder rather than forming part of the residue of the estate. MW claimed that the only reason the accounts were set up with joint holders was to allow the estate to avoid the probate process. She maintains that her mother intended that the funds be distributed amongst the beneficiaries.

Following the testator’s passing, the funds from the investment accounts were withdrawn from each account by the joint account holder and kept for their personal use. The accounts were later closed in the presence of all three parties.

Applicant claims all three sisters had an oral agreement to distribute funds equally

The Court considered MW’s position but noted that there was no written agreement to support her claim. Instead, MW stated that she and her sisters had an oral agreement that aligned with her position. The other two sisters disagreed with this claim, indicating that there was no such agreement to distribute the funds equally.

The Court pointed out that in the years following the deceased’s passing, MW did not take any legal steps to remedy the issues concerning the investment accounts. Nevertheless, she refused to distribute the rest of the estate. In fact, the Court found that MW did not share any details of her issues until this dispute was brought to trial.

Court replaces co-trustees with a third party

The Court acknowledged that it can impose terms and give directions in matters when an estate is not being managed in a just fashion. The Court acknowledged that the parties may have differing views about the proper administration of the estate. However, it is unreasonable for MW to refuse to distribute the proceeds from the sale of the property when the issue that she cited as a concern is not being litigated. The Court told MW that if she believed the matter relating to the investment accounts to be a serious one, she should take appropriate steps to reach a resolution.

The Court determined that it would be appropriate to remove the co-trustees from the account, but found that it would not be correct to only name the applicant as the trustee. Instead, the Court held that the co-trustees were to be replaced by a neutral third party to distribute the funds from the sale of the property.

Contact the Oakville Wills and Estates Lawyers at Campbells LLP for Advice on Family Estate Disputes

Estate disputes can easily arise, particularly when family members and loved ones have differing opinions as to how the estate should be distributed. If you are involved in an estate-related dispute, the skilled litigation lawyers at Campbells LLP can help. Our trusted team regularly advises clients on matters involving estate administration and we protect our clients’ rights while advocating for a favourable outcome. To learn more about how we can help you, call us at 905-828-2247 or complete our online form.