The content of this article is only applicable to Ontario, Canada
The role of an estate trustee is often a difficult one, depending on the size and complexity of the estate they are administering. Despite the honest and best efforts of the estate trustee, they may misinterpret the will and, in so doing, take steps contrary to the testator's wishes.
Although hindsight is 20/20, McDougall Estate, 2011 ONSC 4189 (CanLII) is a case in which some fairly simple lessons can be learned about steps that should be taken to protect the Estate Trustee from personal liability when interpreting a will. Nugent McDougall passed away in Toronto on October 7, 2008. He left a holograph (handwritten) will and codicil (together the “Will”) that did not name an estate trustee. After applying for and being appointed to be the estate trustee, Mr. McDougall’s friend, Delgado Chambers, interpreted the will as saying that she should make a donation to an eye clinic in Jamaica for which the deceased had a passion. She decided to make a $10,000 donation.
When Pearl McDougall, Mr. McDougall's sister and beneficiary, later objected to the donation, the issue became whether the Will authorized the estate trustee to make the charitable donation. Ms. Chambers told the court that she advised Ms. McDougall of her intention to make the donation and she agreed to it. Ms. McDougall vehemently denied this.
The court found that on reading the Will as a whole, the testator intended to make a charitable gift for eye and glaucoma research. However, as no amount was stated, the charitable donation failed.
Here are some steps the estate trustee, Ms. Chambers, could have taken to protect herself and the estate's assets:
1. Seek the advice and service of a lawyer whose practice focus is wills and estates to assist you in preparing a will: Portions of the will were illegible, ambiguous and the subject charitable gift was eventually found by the court to have failed because no dollar amount was stated, although the court felt there was evidence the testator intended for the donation to be made. Furthermore, one of the principle parts of a will is the appointment of an estate trustee to carry out the instructions in the will and to generally wrap up the testator’s affairs. It is also arguable that the estate trustee should have sought legal advice in interpreting the will, in light of the obvious problems with it, before attempting to carry out its instructions.
2. Get a court order confirming interpretation: This may seem self-explanatory and is related to lesson 1 above, but when an estate trustee is in doubt about will instructions, they should ask the court to help them in interpreting the will.
3. Have the beneficiary sign off: The estate trustee in the case at hand testified that she had advised and obtained consent from the sole beneficiary to make the controversial donation. The easy thing to do would have been to have the beneficiary sign an appropriately worded document to evidence their knowledge and consent to the donation.
4. Obtain Estate Trustee (Executor) Insurance: ERAssure executor liability insurance insures estate trustees for personal liability and defense costs should they face litigation regarding decisions they make in the course of administering an estate, which also expose the estate to potential legal expense.
This article should not be relied upon as legal advice - the comments may not be applicable to you and may not be up to date. If you have any questions, you should contact a lawyer.