Navigating the Complexities of Estate Management & Fiduciary Duties in Ontario
In Ontario, estate trustees are held to high standards of conduct, known as fiduciary duties. Breaching these duties, even inadvertently, can lead to serious legal consequences.
The Role of an Estate Trustee is More Than Just Paperwork
Being named in a will as an executor might feel like an honour, but it comes with significant legal responsibility. In Ontario, estate trustees are responsible for administering the estate in accordance with the deceased’s will and Ontario law, primarily the Succession Law Reform Act (SLRA) and the Estates Act.
The core duties of an estate trustee are that they must locate and secure all assets of the deceased, obtain a Certificate of Appointment (probate) if required, pay the deceased’s debts and taxes, and distribute the estate to the beneficiaries as outlined in the will.
This process often involves dealing with banks, the Canada Revenue Agency (CRA), real estate agents, and legal professionals. While it may seem administrative on the surface, it’s a legally regulated process requiring strict attention to detail.
Legally, a trustee’s authority comes into effect upon the death of the testator, but actions like selling property or distributing funds usually require court approval or a Certificate of Appointment. Acting prematurely—or mismanaging even minor assets—can open the door to personal liability. You could be sued, or worse.
Fiduciary Duties require a High Standard of Care
The concept of fiduciary duty lies at the heart of estate administration. A fiduciary is someone entrusted with power over another’s interests—and in the case of estate trustees, that power must be exercised in good faith.
Of course, trustees must always act in the best interests of the beneficiaries, and this also means they cannot favour one beneficiary over another. Nor can they personally profit from their role, unless specifically permitted by the will or a court. This includes avoiding conflicts of interest and maintaining impartiality. Neglecting to do so can result in the removal from the role of trustee
Trustees must manage the estate with the same care as if it were their own estate being managed, which includes safeguarding assets, keeping accurate records, and ensuring that any investments made on behalf of the estate are reasonable.
Failure to act in good faith can lead to claims for breach of trust. For example, in Zimmerman v. McMichael Estate, 2010 ONSC 2947, the court found that the trustee’s lack of recordkeeping and delays in administering the estate amounted to a breach of fiduciary duty—leading to a personal costs order against the trustee.
Beneficiaries have the right to review how the estate is being managed, and courts can order a formal passing of accounts to ensure transparency.
Common Pitfalls and How to Avoid Them
Even well-meaning estate trustees can run into legal trouble if they don’t understand their obligations. Here are some common issues we see in practice—and how to steer clear of them.
When multiple trustees are appointed, decision-making must be unanimous unless the will states otherwise. Disagreements between co-trustees can delay administration and lead to court battles. In such cases, mediation or court intervention may be necessary.
A trustee may encounter claims that the will is invalid due to lack of capacity or undue influence. While such issues are typically raised before probate, they can delay administration significantly.
Estate trustees are responsible for filing the deceased’s final tax return and may need to file additional returns for the estate. Misreporting income or missing deadlines can result in penalties.
In addition, failing to pay the Estate Administration Tax (formerly known as probate fees) properly or on time can lead to complications with the court and the CRA.
When Things Go Wrong: Breach of Fiduciary Duty
As mentioned previously, if a trustee fails in their duties—whether through negligence, inaction, or misconduct—they may be removed by the court and ordered to repay losses from their own funds.
Beneficiaries who believe a trustee has breached their duties can apply to the court for removal of the trustee, a passing of accounts, and/or financial compensation (surcharge) against the trustee
But not every mistake constitutes a breach. If a trustee can show they acted in good faith, sought professional advice, and kept records, courts are less likely to impose penalties. However, deliberate misconduct is treated far more severely.
Protecting Yourself as a Trustee or Testator
Whether you’re drafting a will or preparing to act as an executor, there are steps you can take to minimize legal risks and ensure your intentions are honoured.
Many estate issues arise from poorly drafted wills or misunderstandings about roles. A lawyer can help clarify proper trustee appointments and explain executor compensation terms, so nobody is confused about their roles or responsibilities. In complex or high-value estates, it may even be wise to appoint a trust company as co-trustee. This can reduce family friction and ensure professional administration.
When people feel informed and respected, they’re less likely to challenge decisions.
Conclusion: Fiduciary Duties Are Serious Business
Acting as an estate trustee in Ontario is a demanding responsibility—not a symbolic role. Trustees have legal, financial, and ethical obligations that require diligence and sometimes, tough decisions. On the other side, testators must think carefully about who they appoint and how they structure their estate plan to minimize disputes.
If you’ve been appointed as an estate trustee or are drafting your will and need guidance, our team at Vice & Hunter is here to help. With decades of experience in estate litigation and administration, we provide the clarity, protection, and support you need to navigate the complexities of estate law with confidence.
