The Ontario Superior Court of Justice has held that executors of
an estate are entitled to hire investment counsel to assist them in
making investment decisions, and the fees for doing so should not
be deducted from their compensation: In the Estate of
Alaine Jackson Young, 2012 ONSC 343.
A trust company was one of two succeeding estate trustees
with a will in the Estate of Alaine Jackson Young. The estate
trustees sought an order passing the accounts of the estate for a
four year period. The only objection, which came from the
Children's Lawyer, was that investment management fees charged
to the capital of the estate should have been deducted from the
compensation paid to the trustees. Up to 2008, the trustees had
been investing the estate's assets in a pool of so-called
"Common Funds" that the trust
company managed. After the trust company wound up
the funds it had to determine how to invest the Estate's
assets. Neither estate trustee had investment expertise. The
estate trustees therefore retained a specialist private investment
counsellor to provide investment counsel and manage the
estate's investments. They obtained the written consent of
all of the suijuris beneficiaries to the
appointment, and negotiated a discount on the manager's usual
The Children's Lawyer argued that management of assets is a
core function of a corporate trustee. It asserted that the estate
should not have to bear the additional expense that was
necessitated by a unilateral business decision to discontinue the
Common Funds. The trust company, for its part, pointed to the
great sophistication and complexity of the investment world, and
also noted that if the fees were deducted from its compensation it
would be left with nothing for all of its other services.
The Court disagreed with the Children's Lawyer's
position. It held that on the evidence, neither trustee had
the necessary investment expertise to prudently manage the estate,
and that the trust company's decision to engage private
investment counsel and manager was reasonable and prudent.
The Court also agreed, based on prior authority, that trustees are
entitled to be fully indemnified for all costs and expenses
properly incurred during the course of administering the
"In my view, in today's complex and sophisticated
investment market executors should be entitled to hire investment
counsel to assist them in making investment decisions and the fees
for doing so should not be deducted from their
The Court's conclusion was reinforced by reference to s.
27.1(1) of the Trustee Act, which contemplates that an
executor may engage an investment advisor in order to manage the
estate's assets as would a prudent investor.
The Court concluded that courts are willing to allow payment of
investment consulting fees as a proper expense of the estate where
the services rendered are clearly beyond the expertise of the
trustee and the fees are otherwise reasonable and proper.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).