When administering an estate, the Executor has a duty to remain
a neutral representative of the estate. Administering an estate
often involves financial expenses, including professional fees for
lawyers and accountants. The law recognizes that reasonable
professional fees for lawyers and accountants are recoverable from
the estate's assets in priority to beneficiaries.
However courts, including the BC Court of Appeal, have set
limits on the expenses for which the Executor may be reimbursed. In
the case of Wilcox v. Wilcox, 2002 BCCA 574, the court
found that executors who are also beneficiaries of the estate must
separate the legal costs incurred to protect their personal
interests and those of the estate.
In Georganes v. Bludd, 2014 ONSC 4655, a ruling of the
Ontario Superior Court reinforced that executors should think
carefully about who their expenses are benefitting. In
Georganes, a dispute began among four beneficiaries of a
will, Timothy, Brian, Melissa, and Tara, over who held a beneficial
interest in one of their late father's assets, a residential
property. Tara claimed the property had been transferred to her
during their father's lifetime, while the other three argued
the interest in the property should be equally divided amongst the
four beneficiaries. The disagreement resulted in litigation that
was costly for all parties involved and eventually the matter
Brian and Timothy were the Executors. Melissa was not an
Executor, and had hired her own lawyer for the property battle.
Melissa paid for her own legal fees. Brian and Timothy, on the
other hand, had caused the estate to pay their legal fees in excess
of $50,000 in their litigation with Tara. After Melissa became
aware of this, she launched a lawsuit to recover the funds. The
court found that the estate had no obligation to pay Brian and
Timothy's legal fees, because the fees were incurred to protect
their personal interests in the Estate as beneficiaries. The court
 Where an estate trustee incurs legal fees to protect
both his own personal interest in an asset and the estate's
interest, he has a duty to separate the legal costs incurred in
The court concluded that Brian and Timothy were required to
repay Melissa her share of the legal costs. Executors who are also
beneficiaries of an estate should be diligent in keeping their
personal interests separate from the estate's interest. In
particular, Executors must ensure that they are not directing the
estate to pay legal fees for services that benefit the Executor,
rather than the estate.
* Special thanks to articling student Tara Busch for
assisting in the preparation of this post.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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High net worth families often use family trusts for estate and succession planning. But because they are deemed to have sold all of their assets on each 21st anniversary, family trusts in effect have a tax life span of only 21 years.
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