When a disappointed beneficiary brings a claim to vary a will, the executor should not pick sides between beneficiaries or use estate funds to finance litigation. Executors are expected to maintain an even hand as between the beneficiaries and take no position on the merits of the claim. An executor’s failure to remain neutral is a factor to be considered in fixing remuneration. BC executors are not entitled to compensation for time spent opposing a wills variation claim.
Son disinherited by father
The executor in Hautakoski Estate (Re), 2009 BCSC 868 took a very active role in defending a wills variation claim brought by a son who was disinherited by his father, Veikko Hautakoski. The executor was also Veikko’s solicitor. She had prepared Veikko’s Will in accordance with his instructions, which were to leave the bulk of his estate to his granddaughter in trust until she was 65 years old. The Will contained an express provision that Veikko’s son Harry and Harry’s wife were not to be beneficiaries because Veikko believed they were abusing drugs.
BC executor opposes disinherited son’s wills variation claim
Veikko died in 2005. In 2006, Harry commenced a wills variation action on the basis that he was not a drug addict. He named the executor as a defendant in that action because the Rules of Court required him to do so. The executor retained counsel in that action and took a very active role in defending it. The executor was “very concerned” that the will-maker’s wishes be carried out given that he was so adamant about his belief that his son and daughter-in-law were drug addicts. The wills variation action was settled by consent in 2009, with the Will being varied to provide Harry one third of the residue. The trust in favour of the granddaughter was varied so that she was to receive one third of the residue on her 25th birthday. The costs of all defendants were paid as special costs from the estate.
Beneficiaries challenge executor’s remuneration claim
There was no charging clause in the Will and the executor acknowledged she could not charge the estate for the professional work she took on. The executor claimed fees of $55,925.60, representing the maximum allowable fee under the Trustee Act of 5% on the capital value of the estate. She estimated that she spent approximately 150 hours on the file but admitted that much of that time involved the wills variation action. The beneficiaries argued that the executor’s work in relation to the wills variation claim was not required and that she should not be compensated for it. The beneficiaries took no issue otherwise with the executor’s discharge of her duties. Veikko’s over $1.1 million estate consisted primarily of a condo and bank accounts. There was a reasonable level of care and responsibility required of the executor and she displayed an acceptable level of skill in dealing with the assets.
Executors not entitled to charge fee for taking sides in estate litigation
The estate was competently managed, and the executor was entitled to be fairly compensated for her work in administering the estate. However, the executor misapprehended her role in relation to the wills variation claim and was not entitled to charge the estate for her work in that regard. The law is well settled that the primary duty of an executor is to preserve the assets of the estate, pay the debts and distribute the balance to the beneficiaries entitled under the will or, in accordance with any order made under wills variation legislation. Where proceedings are taken, all the executor need do is appear at the trial if required and deliver to the court the Letters Probate and financial documents showing the value of the estate. The executor in Hautakoski Estate went well beyond that role. She was required to maintain an even hand between the beneficiaries and take no position on the merits of the claim. If this executor had followed that course, the time spent by her would undoubtedly have been reduced. The Court concluded that 2% of the gross value of the estate ($22,370.38) was the proper executor’s fee for this estate. That the estate was not fully distributed and that there was a trust remaining for the will-maker’s granddaughter also supported remuneration at less than the 5% maximum. The beneficiaries were entitled to their costs of this application as special costs to be paid from the estate. The executor was not entitled to costs on this application.
Bottom line on lack of neutrality and BC executor’s fees
An executor should remain impartial and not pick sides between the beneficiaries in a wills variation proceeding. It should be a matter of indifference to the executor as to how the estate is divided; he or she need only comply with the terms of the Will or any variation of it made by a court. An executor who takes an active role in opposing a wills variation claim is not entitled to charge the estate for work in that regard.