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Case Brief - When can you replace an estate trustee?

In Viertelhausen v. Viertelhausen, 2020 ONSC 6744, the Ontario Superior Court considered an application to replace an estate trustee due to an alleged conflict of interest and personal animus.

The Facts

Bote Viertelhausen ("Bote") had a stroke in 2016. Following the stroke, his health declined significantly as Bote experienced psychiatric and other medical issues. His driver's license was taken away.

In September 2017, Bote's brother Bill found him living on the streets in Toronto. Bill convinced Bote to return home to Aurora. The medical issues continued and Bote was declared incapable of managing his property or personal care in January 2018. Bill is later appointed Bote's guardian.

Bote died unexpectedly in an Ottawa nursing home in September 2019. Bill obtained a certificate of appointment of estate trustee without a will later that year. In January 2020, Teresa - Bote and Bill's niece - began an application to remove Bote as estate trustee.

Teresa now seeks an order to replace Bill as the estate trustee. She alleges that Bill is in a conflict of interest because he was previously involved in litigation with Bote. She also alleges that Bill cannot be an impartial estate trustee because of a personal animus between the two of them, and suggests that Bill's conduct was improper when he previously administered his deceased mother's estate.

Issue

Should Bill be removed as estate trustee?

Analysis

The Law

According to Rule 75.04 of the Rules of Civil Procedure and s. 37(1) of the Trustee Act, an estate trustee can be removed and replaced if there is a financial conflict of interest.

The case law similarly makes it clear that an estate trustee can be removed if it's in the best interests of the beneficiaries. See Crawford v Jardin, [1997] O.J. No. 5041 (Ont. Ct. (Gen. Div.)) citing Letterstedt v. Broers (1884), 9 App. Cas. 371 (P.C.).

Teresa also cites the case of Borisko v. Borisko, 2010 ONSC 2670, in which an estate trustee was removed after a series of incidents resulting in a loss of confidence among the beneficiaries.

Application

Justice R. Ryan Bell found that there was no reason to remove Bill as estate trustee.

There were many problems with Teresa's application. In addition to procedural issues, Teresa's evidence also relied heavily hearsay. She had no evidence that Bill improperly handled his mother's estate, and in fact Bill agreed to accept less compensation as trustee than he was entitled to.

The "prior litigation" between Bill and Bote was a minor dispute about paying off a mortgage that resulted from Bote not replying to legal correspondnece. Bill then ensured that funds were properly deposited into Bote's investment accounts.

Teresa also alleged that Bill committed a fraud on the court by obtaining the original certificate of appointment without serving her notice. But it turned out that she was given notice - she signed the registered mail delivery and relevant information was sent to her lawyer.

Bell J. found that Borisko does not apply here because that was a case where the relationship broke down between the estate trustee and all beneficiaries, whereas here there is only an issue with Teresa and there is no evidence to support her allegations.

Decision

Accordingly, Bell J. dismissed Teresa's application.

If you seek to replace an estate trustee, then you need to have well-documented, well-supported evidence of a conflict of interest and/or misconduct on their part. Allegations and personal conflict are not enough.

Patrick Hartford

Patrick Hartford

Patrick is the Founder of NoticeConnect.

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