How powerful is an estate trustee?

An estate trustee (executor) is the true owner of a property of which he is trustee and, therefore, can effectively act like the true owner, according to a ruling that has been greeted with dismay in some quarters. The estate litigation team at Rogerson Law have years of experience advising and representing trustees and trust beneficiaries.

What’s the background?

The testatrix in this case died leaving three sons who were to inherit her house. The will named one of them, Antonio, as estate trustee. An estate trustee (ie executor) of an estate has legal and administrative obligations including to collect in and preserve the estate, realise the assets, pay all debts and liabilities and distribute the net proceeds between the estate beneficiaries.

In his capacity as trustee, Antonio registered a Transmission by Personal Representative to take title to the house, and later mortgaged the property. Following unsuccessful personal litigation, an application was brought to have the house sold to enable a $1.5m judgment against Antonio to be paid.

Another son, who lived at the property with his wife, counter-claimed – claimed sole entitlement to the property on the basis that that there was an agreement that after their mother’s death, the Property would be his. Importantly, the will included a provision that Antonio had the ability to postpone the division of real property indefinitely.

What did the court decide?

The court rejected the claim and found that “it could not be said that Antonio had no interest in the Property that entitled him to grant the Mortgage”. The court relied on section 62 of the Land Titles Act which provides that in respect of registered dealings with land, the person registered in the place of a deceased owner (in this case, Antonio as estate trustee) is in the same position as if that person had taken the land under a transfer for valuable consideration.

The Property had therefore vested in him as the estate trustee on his mother’s death and he therefore had the legal right to grant the Mortgage. The Mortgage was binding on the whole of the Property. The court made clear that where a will gives the estate trustee a power to sell property at such times and in such manner as the estate trustee sees fit, the Estates Administration Act does not limit the scope of that power by requiring that the property vest after a specific period of time.

In addition, the court found that the beneficiaries’ entitlement under the will did not amount to a property interest in the property, rather a contingent interest in the residue of the estate.

What does this mean?

Until the court reaches a different conclusion, an estate trustee is the true legal owner of the trust property until such time as it is sold. This means estate trustees are in a powerful position – certainly in relation to beneficiaries. Anyone making a will is therefore advised to exercise caution when considering who to appoint as an executor.

How can we help?

If you are considering make a will; or if you are a beneficiary of a will and you believe you have a valid claim against an estate, contact the experienced probate and estate litigation lawyers at Rogerson Law for urgent advice. The sooner you act the better.

Rogerson Law Group provides probate & estate administration and litigation services in the entire GTA including Toronto, Scarborough, Mississauga, Vaughan, Brampton, Richmond Hill, Etobicoke, and Barrie and surrounding areas with offices located in downtown Toronto, Barrie, and associated offices in Ottawa.

Contact us now at enquiries@rogersonlaw.com

1Di Michele v. Di Michele, 2014 ONCA 26

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