Estate Litigation

Court Finds Passing Over Estate Trustee is Necessary to Resolve Sibling Estate Dispute

Posted on April 8, 2024
Doorkey representing estate litigation in a sibling dispute

Sibling estate disputes can be emotionally charged and legally complex, especially when disagreements arise regarding the administration of a deceased loved one’s estate. In Ontario, the role of an estate executor and trustee is pivotal in ensuring the deceased’s affairs are appropriately managed and their estate is administered in accordance with their wishes. However, in cases where conflicts emerge among siblings or other beneficiaries, the process can become contentious, leading to disputes over the trustee’s actions or lack thereof.

This blog post will consider the intricacies involved in an application to remove, or pass over, an estate trustee, through the lens of a recent decision from the Ontario Superior Court of Justice. This decision gives insight into the legal principles guiding such applications, and the steps involved in initiating and navigating the process effectively.

Daughters Nominated as Executors of Mother’s Estate

In the case of Sassano v. Iozzo, the applicant (“CS”) and the respondent (“GI”) were daughters of the deceased (“CNS”). CNS died on November 22, 2011, and left a last will and testament (the “will”) behind, which was dated April 1, 1998. The will was not challenged, and it appointed CS and GI as executors and trustees of the Estate. Neither CS nor GI applied for a Certificate of Appointment of Estate Trustee with a Will following the deceased’s passing, as the only assets were a property and a bank account which was jointly held with GI.

The principal asset of the Estate was a Toronto property (the “property”) that was purchased by the deceased and her late husband on August 7, 1981, as joint tenants. The couple began living in the property in 1981 and CS moved into the property following a divorce from her former spouse. CS claimed that she lived with her mother until she passed, during which time she provided “care, support, and companionship in her elderly years.”

Deceased’s Daughter Notifies Sister of Her Intention to Reside Elsewhere

The deceased’s will provided that CS was permitted to reside in the property until the earliest of four specified events occurred, specifically until her:

  • death,
  • remarriage,
  • entry into a cohabitation agreement, or
  • decision to vacate the property.

After such a triggering event occurred, the property was to be sold and the proceeds divided equally between the two residuary beneficiaries of the Estate.

CS deposed that since April 2023, she had notified GI of her intention to reside elsewhere, which activated the triggering provision in the will. This decision was due to her inability to maintain the property due to “physical limitations resulting from her medical conditions.”

Estate Executor Seeks Removal of Sister as Other Estate Executor

However, CS indicated that she had not received a response from her sister, GI, noting that she had not seen her sister since 2008, and had not talked to her since 2012. As such, CS commenced this Application seeking the following relief from the Court:

  • An Order removing Ms. Iozzo as an executor and trustee of the Estate;
  • An Order deeming that Ms. Iozzo has renounced as an executor and trustee of the Estate;
  • An Order granting Ms. Sassano leave to apply for a Certificate of Appointment of Estate Trustee with a Will in the Estate; and
  • An Order that Ms. Sassano’s costs of this Application be paid out of the assets of the Estate or out of the share of the Estate to which Ms. Iozzo has an entitlement as a residuary beneficiary.

The Court noted that GI did not appeal in the Application, despite being properly served, which led the Court to consider the presented evidence and applicable legal principles before making its decision.

Court Should Only Remove Estate Trustee on the “Clearest of Evidence”

Acknowledging its inherent jurisdiction to remove an estate trustee, the Court noted that GI had “not, at any time, assumed authority to administer the Estate.” As such, while she could not be removed as estate trustee, she could be passed over. Passing over an estate trustee is done on the same grounds as removing an estate trustee. Referencing previous case law, the Court highlighted the specific test for passing over a trustee, which requires that:

“a court should remove an estate trustee only on the “clearest of evidence”, so too they should be reluctant to pass over a named executor unless “there is no other course to follow… the wishes of the testator will generally be honoured, “even if the person chosen is of bad character.”

The Court also noted that an executor will not be passed over “simply because he or she is of bad character or bankrupt, or there is likely to be friction between co-executors” but a court may pass over any executor if they are in a “conflict of interest with the estate.” Furthermore, the Court emphasized the fact that when removing or passing over a trustee “the Court’s main guide should be the welfare of the beneficiaries.”

Court Finds Passing Over Estate Trustee “Necessary, as a Remedy of Last Resort”

In this case, CS presented evidence to the Court showing that her relationship with her sister had soured following a disagreement over where their mother should live when her health declined, which post-dated the execution of the deceased’s will.

Ultimately, based on the evidence and guiding legal principles, the Court found it necessary to pass over GI, given her inactivity and lack of cooperation in the administration process, in order to ensure that the estate could be properly administered, which included selling the property in question. The Court found that GI was “endangering the estate’s principal asset…by not taking any steps in collaboration with [CS].” Despite acknowledging that the deceased’s wishes to have both of her daughters as estate trustees should not be lightly interfered with, the Court determined that passing over GI as estate trustee was “​​necessary, as a remedy of last resort, for the Estate to be administered, including through the sale of the Property.” This decision also considered the welfare of the beneficiaries, particularly CS, recognizing her physical challenges and financial limitations in maintaining the property.

Pursuant to this finding, the Court made an order under section 37.4 of the Trustee Act that CS be the sole estate trustee.

Contact Campbell Litigation Lawyers in Kitchener-Waterloo for Advice on Estate Litigation

If you have questions about will interpretation, or are involved in an estate dispute with family members, knowing what steps to take can be difficult to determine. The seasoned estate litigation team at Campbell Litigation will work with you to develop a sound legal strategy to meet your estate litigation needs. Whether you are an executor or beneficiary, we will help you understand your obligations and rights and ensure that your claim is pursued, or defended, accordingly. To schedule a confidential consultation with a member of our estate litigation team, contact us online or by phone at 519-886-1204.