Family, Estates & Trusts 



When Can the Court Remove an Executor or Trustee?

A will-maker is entitled to appoint whom they would like to administer their estate, and that discretion should not be lightly interfered with. That being said, in some cases, animosity and delay in handling the estate may make it necessary to apply to the courts to remove a personal representative appointed in a will. In this post, we will discuss the grounds to remove an executor or trustee in BC by examining Nieweler Estate (Re), 2019 BCSC 401, a recent estate litigation matter.

Recent BC application to remove an executor

The dispute in Nieweler Estate arose between three siblings (Ingrid, Edward and Stephan) who were named as co-executors in their father’s Will. The Will provided that the residue of the father’s estate was to be divided into equal shares for each of the three siblings. The Will did not contain a majority clause, which meant that the co-executors were obliged to act unanimously in the discharge of their duties and obligations. The three siblings started to disagree with respect to the handling of the estate shortly after their father died. Stephan and Edward applied to remove Ingrid as executor. After being served with the application, Ingrid applied to remove Stephan, arguing that during discussions about listing one of the estate properties for sale, Stephan had indicated that he would not agree to any sale unless certain conditions were met.

Alleged misconduct of co-executor

The allegations against Ingrid were much more extensive. Ingrid’s alleged misconduct included:

  • refusing to agree to sell a commercial property owned by the estate unless the other executors agreed to unreasonable conditions completely unrelated to the sale;
  • unilaterally changing the locks and moving into estate-owned property;
  • having her husband scuttle a prospective real estate transaction with respect to the property;
  • providing false information to the bank that held the mortgage on the property and inviting the bank to foreclose on the mortgage; and
  • withdrawing substantial amounts of cash from family-owned company bank accounts without authorization or disclosure.

Note that the court considered the last allegation of misconduct on the application to remove Ingrid, even though the bank accounts were privately held family companies which were not part of the estate; the court viewed it as relevant to show Ingrid’s attitude to her siblings and her ability to carry out the duties as a trustee.

Guiding principles to remove an executor or trustee

In Nieweler Estate, Mr. Justice Myers affirmed some of the general principles with respect to the duties of a personal representative and the test to remove an executor or trustee if they are not meeting those duties. Here are the key points:

  • An executor is obliged to settle the affairs of the estate and distribute to beneficiaries. A power to retain an asset does not override that duty.
  • The main guide in exercising the Court’s discretion to remove trustees is the welfare of the beneficiaries. It is not the interests of a particular beneficiary that are to be considered, but rather the benefit of the beneficiaries collectively.

Grounds to remove an executor or trustee

Whether the application to remove an executor or trustee is brought under the Wills, Estates and Succession Act, the Trustee Act, or the inherent jurisdiction of the court, there are four categories of conduct that will the warrant removal of an executor:

1.         Endangerment of the trust property;

2.         Want of honesty;

3.         Want of proper capacity to execute the duties; and

4.         Want of reasonable fidelity.

Mr. Justice Myers was careful to emphasize that animosity between the executor and a beneficiary is not on its own sufficient to warrant removal of an executor. However, animosity between co-executors can be relevant to whether it is reasonable to expect they can work effectively and efficiently together to carry out their duties. See here for our previous discussion of a case in which one co-executor was removed due to a stalemate between the co-executors that brought the handling of the estate to a grinding halt.

All four grounds to remove an executor present in Nieweler Estate litigation

All four of the types of conduct that justify removal of Ingrid as an executor were present in the Nieweler Estate litigation, but Mr. Justice Myers was unable to find a rationale to remove Stephan. While it was inappropriate for Stephan to take the position he did with respect to listing one of the estate properties for sale, he eventually resiled from his position and the property was listed and sold. His conduct was nowhere near as serious as Ingrid’s and he did not put estate property at risk as Ingrid did. In the result, Ingrid was removed as executor and Stephan and Edward remained as co-executors. Stephan and Edward’s special costs of the application were ordered to be paid from the estate.

Take home point on when the court can remove an executor or trustee

If co-executors cannot work together to carry out their duties in administrating an estate, the welfare of the beneficiaries may be harmed. Unreasonable delay, failure to act, and dishonesty may constitute grounds to remove an executor to protect the interests of the beneficiaries.

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