While an executor is generally reimbursed in full by the estate for all costs incurred in the fulfilment of that role, an executor cannot ordinarily recover from the estate legal costs flowing from his or her opposition of a wills variation application.
For example, in Chan v. Lee Estate, 2004 BCCA 644, the plaintiff sisters brought a wills variation application to vary their father’s will over the objections of the defendant brothers who were both executors and beneficiaries under their father’s will. The defendant brothers were substantially favoured by their father’s will and strenuously opposed their sisters’ application. The sisters’ application to vary the will was successful, and they sought costs against the brothers personally. The brothers’ position was that costs to the sisters should be paid out of the estate.
Entitlement to costs incurred in performing duties as executor
An executor is a trustee, and accordingly owes a fiduciary duty to the beneficiaries of an estate. The law requires an executor to remain neutral. An executor is only entitled to costs from the estate where those costs were incurred in the execution of his or her duties as an executor. When he or she incurs costs wearing the other hat – that of a beneficiary – the neutrality is lost, and costs ordinarily do not come out of the estate (though there are rare exceptions).
Executors attacking entitlement of beneficiaries denied costs
In the Chan reasons on costs, Mr. Justice Hood concluded that the defendant brothers were personally liable for the sisters’ costs, commenting on the brothers’ involvement in the wills variation proceedings as follows (at para. 8):
I observe also that at trial it became very clear to me early on, and not just from their Statement of Defence, that the Defendant brothers were attacking the entitlement of the sisters and defending their own inheritance as beneficiaries and not as Executors. There was nothing neutral or unbiased about the positions maintained by them. Thus, in my view, as unsuccessful parties, the Defendant brothers own costs, and those which they must pay the Plaintiffs, are payable by them personally. These costs are not recoverable from the Estate.
Mr. Justice Hood found that it would be unjust to permit the defendants to take a position qua beneficiary at trial, and to then have their costs paid out of the estate when they lost, thus reducing the successful plaintiffs’ ultimate distribution from the estate.
The Court of Appeal upheld the denial of costs from the estate to the executor-beneficiaries.
Bottom line on executor’s legal costs following opposition of a wills variation application
An executor is only entitled to costs from the estate where those costs were incurred in the execution of his or her duties as an executor. The list of things that an executor may properly do in their role as executor does not include opposing a wills variation application. Where the executor is also a beneficiary and enters the fray of a wills variation application, his or her costs do not ordinarily come out of the estate.