When an executor is also a beneficiary, what are the costs implications following his or her participation in a wills variation proceeding?An executor is a trustee, and accordingly owes a fiduciary duty to the beneficiaries of an estate. An executor is generally reimbursed in full by the estate for all costs incurred in the fulfilment of that role. The question is whether the list of things that an executor may properly do in their role as executor includes opposing an application for a variation of the will of the deceased. What are the costs implications where that person is acting more as a beneficiary rather than as an executor?
Will naming son as both executor and beneficiary
Throughout their 53-year marriage, the spouses in Erlichman v. Erlichman Estate, 2002 BCCA 160, had no children together. Each had a biological child from a previous relationship. The husband’s original will left one-half of his estate to his spouse, outright, and the other half to his biological son. Less than three months before his death, the husband made a new will: he again left one-half of his estate to his biological son, outright, but changed it so that his spouse was bequeathed with only a life estate in the income of the other half of his estate. His biological son was named as executor in both wills.
Executor-beneficiary opposes wills variation claim
The surviving spouse commenced a wills variation action application on the basis that her husband’s will failed to make adequate, just and equitable provision for her. At trial, the son argued that the surviving spouse was of advanced years, unsophisticated in business affairs, and should not be burdened with the management of money. The trial judge was persuaded by the executor-beneficiary’s argument, but the Court of Appeal found that the learned trial judge did not give sufficient weight to the legal and moral obligations owed by the will-maker to his spouse. The will was varied so that the surviving spouse received half of her husband’s estate for her own use absolutely.
Executor-beneficiary and widow each awarded costs of wills variation claim
Saunders J.A. (with whom Levine J.A. concurred) concluded that the claim was against the estate, the executor properly defended the will, and the issue in the case arose from the provisions of the will. She therefore ordered that the costs of all parties in the proceedings be paid by the estate, to fall ratably on the whole of the estate as provided by what is now WESA s. 65 of the Wills, Estates and Succession Act, SBC 2009, c. 13.
Why is this decision of note?
There is a robust line of authority which indicates that an executor-beneficiary cannot recover from the estate his or her legal costs flowing from his or her participation in a wills variation proceeding. For example, in Doucette v. Clark, 2008 BCSC 506, Metzger J. declined to award executor-beneficiary costs to be payable out of the estate:
[16] I do not accept the argument of counsel for Diane and Louie that executor-beneficiaries are permitted to defend a WVA Action in the manner that Diane and Louie did here in order to “give voice to the testatrix” and then to claim their costs from the estate. Had they merely presented to the court the testatrix’s letter explaining her reasons for effectively disinheriting John, they may have been acting as neutral executors. However, they went beyond that neutral role. They participated as parties who testified, called witnesses, challenged the credibility of the other parties, and made submissions. The fact that I varied the will in a way that preserved some recognition of the testatrix’s testamentary autonomy does not change this result. The law requires an executor to remain neutral. Counsel for the executors did not cite any authority, with the arguable exception of the last paragraph of Erlichman discussed above, that would permit an executor to enter the fray of a WVA proceeding at the cost of the estate with the explanation that it was to defend the testatrix’s intentions.
Bottom line on costs to executor-beneficiary following a wills variation claim
While the Court of Appeal in Erlichman found it to be appropriate in the circumstances to award costs to an executor-beneficiary following his unsuccessful opposition of a wills variation claim, the more prevalent line of authority stipulates that an executor-beneficiary cannot recover from the estate legal costs flowing from his or her participation in a wills variation proceeding.
