In a recent Ontario decision, the court ordered that a father be “passed over” as estate executor of his wife’s estate, finding him to be in a conflict of interest.
Testator Passes Away in Car Accident
The testator died on December 6, 2019 in a motor vehicle accident at the young age of 41. She had two sons, aged 19 and 17.
The testator and the sons’ father were married in 2003 and separated in 2014, but their divorce proceedings had not been resolved at the time of the testator’s death, so they were still legally married. Several financial matters remained unresolved in the divorce proceedings.
At the time of her death, the testator was involved in a common law relationship with a new partner.
The sons reported having a strained relationship with the father following the separation.
Testator Leaves Behind Testamentary Documents
The testator had a will dated September 21, 2004. In it, she had designated the father as the executor of her estate and as her sole beneficiary.
The testator also had a life insurance policy worth $800,000. The testator had signed a change of beneficiary form for the policy on April 22, 2019, which left 80% of its funds to her two sons and the remaining 20% to her common law partner.
The testator’s entire estate was worth approximately $1,066,780.
Family At Odds Over Administration of the Estate
The older son and the testator’s common law partner objected to the appointment of the father as the estate trustee. They submitted that the father was in an irreconcilable conflict of interest, and that it would be inappropriate for him to be appointed. Because of the unresolved divorce proceedings, they noted that the estate had claims against the father personally, and that appointing him as estate trustee would give him the authority to discontinue those claims. They also submitted that the father’s lack of good faith in addressing issues in the divorce proceedings made him an unsuitable choice to direct the estate.
In contrast, the father sought to be appointed estate trustee. He submitted that the objections by the son and the common law partner were not “true objections”. He argued that his appointment as estate trustee would not preclude his sons or the partner from pursuing their various claims against the estate.
The parties thus applied to court seeking directions.
What Does It Mean For An Executor to be “Passed Over”?
The court cited previous case law from the Ontario Court of Appeal which established that a party seeking to have an estate trustee who has been named in a will “passed over” faces a high bar. In that decision, the Court of Appeal explained that a court should not lightly interfere with a testator’s discretion in choosing an executor.
However, in another Ontario decision, the court considered whether a conflict of interest arising from an estate trustee’s personal interest in the estate was an appropriate basis upon which to “pass over” an estate trustee named in a will. In deciding that it was appropriate, the court stated:
“In the case at bar the perceived conflict of interest is between the executor and his interest in his personal capacity. If the action is instituted by the applicants it would be against the respondent. It is self-evident that the respondent, in his capacity as executor, cannot conscientiously (as a plaintiff) attack the gift and the transfers of securities to himself while at the same time maintaining in his personal capacity that the gifts and transfers were proper. That will not be a potential conflict; it will be actual. In making such a finding I in no way prejudge the case. I simply find the respondent cannot conscientiously act as a plaintiff (in his capacity as executor) in a case in which he will be the defendant. I find I can make that finding now, and I so find; therefore, the application is not premature. The passing over of the respondent is therefore justified and clearly necessary.”
Court Rules That Father Should be “Passed Over” as Executor
After considering all the circumstances, the court stated:
“I find that this is an exceptional situation and one in which “clear necessity” dictates that [the father]’s application to be appointed as the estate trustee of the Estate of [the testator] must be denied.”
The court reasoned that the father had a clear conflict of interest with the estate because of the unresolved financial issues in the divorce proceedings, which included retroactive child support. Additionally, the court found that the father was in conflict with the estate’s potential beneficiaries and dependants because his relationships with the sons and the common law partner were strained. Finally, the court observed that the father seemed either unwilling or unable to put his children’s financial best interests ahead of his own.
As a result, the court ordered that the father be “passed over” as estate trustee.
Get Help
Estate disputes are complicated: they involve high levels of emotion, usually by individuals who are grieving the loss of a family member or who are dealing with a loved one who is very ill. Such disputes can become quite lengthy and can take months or even years to resolve, prompting individuals to take sides, creating acrimonious divisions, and eating into the value of an estate.
At Campbells LLP, our team of compassionate and highly skilled Oakville estate litigation lawyers have been assisting clients with estate disputes and resulting litigation since 1999. We are proud of the strong, long-lasting relationships that we build with our clients and provide a steady sounding board and legal advice to guide them through what can be one of the most emotionally draining times in their lives. With our help, we can ensure that the legacy of our client’s loved ones is carried out exactly as they wished, that their health and well-being is taken care of, and that their estate is protected.
At Campbells LLP, our exceptional estate lawyers can represent you in all estate litigation matters. We know that many individuals work during the week and cannot meet during the day. One of our lawyers would be pleased to meet you in the evening or during the weekend, by appointment, if your schedule so requires. Contact us online or at (905) 828-2247. We look forward to speaking with you and going through this process by your side.