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Wills, Estates & Trusts Law - Executors and administrators - Actions against - Personal liability - Duties

Thursday, February 09, 2017 @ 7:00 PM  

Appeal by the executrix from a judgment finding her liable for breach of trust. Pursuant to her father’s will, she and the co-trustee were directed to set aside $100,000 in a trust fund for their brother. The co-trustee was to be the trustee to invest those funds and make monthly payments of $500 to the brother. The co-trustee opened a non-registered investment plan of $100,000 with London Life. On the application form, he described himself as the annuitant and the appellant as the contingent policy holder. The monthly payments of $500 were made payable to the co-executor, who then paid the $500 to the brother monthly until 2014. Most of the money was used by the co-executor for his own purposes. The appellant argued that the application judge erred in concluding that she did not establish a trust fund, in holding her liable for losses caused by the co-executor and in not granting her relief from liability under s. 35(1) of the Trustee Act. The application judge rejected the appellant’s submission that she relied on the co-executor because of his qualifications in financial management. The application judge found she made insufficient inquiries of the co-executor or London Life as to the details of the $100,000. She was required to take real, active steps to ensure that the trust fund was set up in accordance with the Will, but she failed to do so. The application judge noted that there was no evidence establishing that the appellant had failed to act honestly, but found that she had not acted reasonably. He thus declined to exercise her discretion to grant relief under s. 35(1) of the Trustee Act.

HELD: Appeal dismissed. The application judge did not err in finding that the trust was not established. The direction to the bank did not mention any trust, trust fund, or the brother, and neither did the application to London Life. The application judge did not err in finding that the appellant was liable for any loss occasioned by the co-executor. The fact that the appellant thought that she was acting responsibly did not excuse her inaction. Her appointment as executor reflected the testator’s wish that both she and the co-executor administer his estate. As the appellant did not renounce the appointment, she was obligated to properly fulfill her duties as executor and estate trustee. Although the will did provide the co-executor with the responsibility for investing the monies in the trust fund, this did not absolve the appellant of her responsibility to ensure that the trust fund was properly set up. The application judge gave extensive and thoughtful reasons and was alert to the factual context. There was no basis on which to interfere with his decision denying the appellant relief under s. 35(1) of the Trustee Act.