ESTATES: OUT OF THE ORDINARY PROBLEMS

PAPER 4.1

Professional Conflicts⎯Advising Personal

Representatives on Their Duties and Interests as
Beneficiaries

These materials were prepared by Kim A. Karras of Brawn Karras & Sanderson, South Surrey, BC, for the
Continuing Legal Education Society of British Columbia, June 2008.
© Kim A. Karras
 4.1.1

PROFESSIONAL CONFLICTS⎯ADVISING PERSONAL

REPRESENTATIVES ON THEIR DUTIES AND INTERESTS AS
BENEFICIARIES

I. Introduction......................................................................................................................... 1
II. Duties as Solicitor for the Personal Representative ............................................................. 2
III. The Client in Estate Administration.................................................................................... 4
IV. Duties of the Personal Representative ................................................................................. 6
A. Duty to Adhere to the Trust Document .............................................................................. 7
B. Core duties imposed by the Common Law .......................................................................... 8
1. Duty to Act Personally ................................................................................................. 8
2. Duty to Avoid Conflicts of Interest.............................................................................. 8
3. Duty to Act in Good Faith⎯The Duty of Care .......................................................... 9
4. Other Duties ............................................................................................................... 10
a. Duty to Act Impartially⎯The “Even-Hand” Principle ...................................... 10
b. Duty to Account ................................................................................................. 10
V. Personal Representative as a Beneficiary............................................................................ 11
VI. Personal Representative as a Controlling Shareholder and/or Director of a
Privately Held Company ................................................................................................... 12
VII. Courts’ Removal of a Personal Representative .................................................................. 13
VIII. Conclusion ......................................................................................................................... 14

I. Introduction
In a busy wills and estates practice, it is not out of the ordinary for appointments to be set without prior
consultation with the lawyer in expectation that that lawyer will meet with a personal representative in
what is anticipated to be a straight-forward “ordinary” estate matter. From time to time however we
encounter less than ordinary issues which may surface immediately at that initial meeting, or which are
discovered only after the lawyer begins working on the file. As solicitors practicing in this area, we must
be able to recognize those “out of ordinary” issues and provide the appropriate advice to our clients.
The topic of professional conflicts and advising personal representatives on their duties and interests as
beneficiaries is a broad one. This paper is intended to be only a summary review of the lawyer’s
professional duty to provide legal advice to his or her client as a personal representative, and explores the
duties of the personal representative, starting with a general overview of the solicitor-client relationship
and undertakes a summary review of the duties that the law imposes on personal representatives. It is
only when these duties are clearly understood that the lawyer will be able to adequately advise and
protect his or her client. The paper will very briefly consider two situations: the personal representative
as beneficiary and the personal representative as a controlling shareholder or director of a privately held
company, two scenarios which may give rise to “out of the ordinary” conflicts. Finally, the paper
considers the court’s role in the removal of a personal representative.
 4.1.2

Again, the paper is by no means an exhaustive review of any of these topics, but one that will
hopefully prompt you to undertake a thorough review of a number of papers and materials written in
this area.

II. Duties as Solicitor for the Personal Representative

The BC Law Society’s Professional Conduct Handbook (the “Handbook”) sets out in general a
lawyer’s duty to the client:
A lawyer should obtain sufficient knowledge of the relevant facts and give adequate
consideration to the applicable law before advising a client, and give an open and
undisguised opinion of the merits and probable results of the client’s cause. The
lawyer should be wary of bold and confident assurances to the client, especially
where the lawyer’s employment may depend on such assurances. The lawyer should
bear in mind that seldom are all the law and facts on the client's side, and that audi
alteram partem 1 is a safe rule to follow. 2
The Handbook describes the lawyer’s duties in respect of his or her knowledge, skill and competence,
quality of service and relationship to clients:
With respect to each area of law in which a lawyer practices, he or she must acquire
and maintain adequate: (a) knowledge of the substantive law, (b) knowledge of the
practice and procedures by which that substantive law can be effectively applied, and
(c) skills to represent the client's interests effectively. 3
Lawyers practicing in the area of wills, trusts and estate administration should have a full
understanding of the substantive law relating to the duties, responsibilities and potential liability of the
personal representative (that is, the administrator, executor and/or trustee); this is necessary for the
lawyer to be in a position to recognize those “out of the ordinary” issues and, in turn, to be able to
provide appropriate advice to their clients.
The lawyer must at all time be cognizant of the lawyer’s duty of confidentiality and to whom that
duty is owed:
A lawyer shall hold in strict confidence all information concerning the business and
affairs of the client acquired in the course of the professional relationship, regardless
of the nature or source of the information or of the fact that others may share the
knowledge, and shall not divulge any such information unless disclosure is expressly
1
or impliedly authorized by the client, or is required by law or by a court. 4
The duties of a lawyer in the administration of an estate will vary depending on whether there is a
corporate representative or a lay personal representative. Basically, the lawyer’s role is to advise the
personal representative on any legal matters that arise in the course of the administration. If an
experienced individual or corporation has been named as the executor of the will, the lawyer’s role
will be confined to legal matters. Where an inexperienced lay person retains a lawyer, that lawyer’s
role may be more extensive and may involve performing the functions of the personal representative. 5

1 Literally interpreted “Hear the other side.”

2 Professional Conduct Handbook (“Handbook”), Chapter 1, Cannons of Legal Ethics, ¶3.
3 Handbook, Chapter 3 para. 1.
4 Handbook, Chapter 5 para. 1.
5 CCH – Canadian Estate Administration Guide – Volume 1 (“CCH”), ¶3055, at 927, and see CCH Checklist
of solicitor’s duties at ¶3060.
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It is important that the lawyer recognize early and disclose any reasonably foreseeable potential
conflicts of interest. On occasion it may be impossible for the lawyer to continue to act in any
capacity. For example, in the case of a contested will, the lawyer may find him or herself incapable of
acting if he or she was involved in the preparation of the will, as he or she may be a potential witness
to the testamentary capacity of the deceased and the presence or absence of undue influence. 6
The Handbook specifically provides that a lawyer who gives viva voce or affidavit evidence in a
proceeding must not continue to act as counsel in that proceeding unless (a) the evidence relates to a
purely formal or uncontroverted matter, or (b) it is necessary in the interests of justice. 7
It has been noted often in CLE papers that clients’ biggest complaint about lawyers handling estates is
the time it takes to get things done. 8
Mark Horne in a recent paper, “Keeping the Executor Out of Court,” written for the CLE course
Estate Litigation – 2007 Update, comments as follows:
Unfortunately, when lawyers are acting as executors or as agents performing
executor’s work, there can be regrettable delay in actively getting the estate
administration underway through simple neglect in attending to routine matters such
as ordering the wills search, sending letter of inquiry to financial institutions and
accountants and attending to the valuation of estate assets. During the initial several
weeks the executor and beneficiaries are quite content to leave the lawyer alone to
get the process underway, but a busy lawyer may too often be engaged in putting out
other fires for clients demanding immediate attention. Predictably, if nothing
material has happened on the estate file during that initial few weeks, the executor
and/or beneficiaries are inevitably disappointed and the lawyer is forced to play
“catch up” to try to rebuild a relationship of trust in an atmosphere already poisoned
with doubt. 9
Courts have also commented on the role of the solicitor where executors have been found liable for
losses to the estate. Master Bolton in Valencia v. Yaghdian, B.C.S.C. Vancouver Registry No. A921426
January 29, 1996:
The conduct of the Estate solicitor is the most astonishing feature of this entire
unhappy story. It seems to me that much of the misconduct on the part of the
executors is understandable, coming from laymen who are relatively ignorant of the
law and confident of the purity of their own intentions and their ability to give effect
to the wishes of their friend Mr. Ayanian [the deceased]. On the evidence, there is not
much doubt that both Mr. Deragopian and Mr. Yaghdjian [the co-executors] genuinely
believed that there was no conflict … They were obviously wrong, but why their
solicitor did not forcefully tell them so is quite beyond me. There is evidence that the
solicitor did discuss the conflict of interest with both executors on “various
occasions,” and advised Mr. Deragopian at least once that he should pay up the
arrears or renounce as executor. If this is indeed the only advice that was given, it is
appallingly inadequate.
I doubt if all the evidence relevant to these issues of advice and instructions have been
laid before me. I am thus unable to determine whether the fault was essentially that
of Mr. Deragopian alone, or the executors’ together, or the solicitor’s alone, or some

6 CCH at ¶3055, at 927.

7 Handbook, Chapter 8 - Lawyer as an Advocate – Lawyer as a Witness, ¶9.
8 James Baird, “Getting the Grant” paper for CLE Society of BC, Wills and Estate Planning Basics, October
2006 (“Baird”); Mark Horne “Keeping the Executor out of Court” paper for CLE Society of BC, Estate
Litigation 2007 Update (“Horne”).
9 Horne at 2.1.7.
 4.1.4

combination of these possibilities. It may well be that these issues will have to be
explored further in an action between solicitor and client, but for my purposes the
precise location of the fault is irrelevant. So far as the passing of accounts is
concerned it is sufficient to conclude that most of the legal fees paid by the executors
were spent in a manner which damaged, rather than advanced, the interests of the
estate. 10
Thus, the lawyer who falls short of fulfilling his or her duties to his or her clients while practicing in
the area of estate administration, not only does a disservice to the client, the estate, and the
beneficiaries; he or she also runs the risk of incurring liability for solicitor’s negligence.

III. The Client in Estate Administration

When a solicitor is retained by a personal representative to obtain a grant and to provide legal services
in the administration of an estate, the client is the personal representative and not the estate (Bott v.
Macaulay (2005), 18 E.R.R. (3d) 15 (Ont. S.C.J.)).
Although it should be obvious to most of us, it is surprising how often I hear or see letters wherein it
is stated that a lawyer represents the estate. The estate is not a legal entity. This basic concept deserves
repeating as it is from this understanding (as to who your client is) that you will be able to deliver and
meet your duties to the client and to advise the client and provide undivided loyalty as required by the
rules that govern our conduct.
The solicitor’s role is to act as solicitor for the personal representative, not the beneficiaries and not
the deceased, even where a solicitor has acted for the deceased for many years and/or drafted the will.
This can create difficulties if a conflict arises between the personal representative and the beneficiaries.
The beneficiaries should be advised to retain independent counsel if a conflict arises. 11
If more than one person appears in your office at that initial meeting, consider whether there are any
conflicts. “Deal with the parties as you would on any other file paying attention to the Law Society
rules for representing multiple parties. Consider dealing only with the personal representative at the
initial interview. This makes it clear who the lawyer is acting for and avoids problems later on it the
personal rep has a falling out with other family members who may take a view that they too were
represented by the lawyer.” 12
It is to the personal representative that you owe your duty of confidentiality. It is the personal
representative who you take your instructions from and who you have an obligation to report to.
While you may write to beneficiaries in the estate, you are doing so on behalf of your client. 13
Briefly, on the topic of communications with beneficiaries, as the lawyer representing the personal
representative you should make it abundantly clear in any communication with the beneficiaries that
you do not represent them. In his paper, “Keeping the Executor out of Court,” Horne suggests from
the outset that the beneficiaries’ expectations should be managed:
It is often the beneficiary who is disaffected through an executor’s failure to engage
the beneficiary in the decision making during the estate administration who later
complains about a breach of duty or the executor’s compensation sought. All too

10 at ¶40-45.
11 CCH at ¶3055, at 927.
12 Baird at 4.2.3.
13 R.C. (Tino) DiBella, “How to Administer an Estate: From Collecting the Assets to Passing the Accounts,”
CLE Wills and Estate Planning Basics, October 2006.
 4.1.5

often an executor seems to relish the power of his legal authority and overlooks the
fiduciary principle that he is acting in the interests of others. 14
Horne suggests certain strategies: (i) communication noting that “the path to litigation against an
executor often starts with the complaint: I never knew what he/she was doing …”; (ii)
consultation⎯advising the personal representative to consult with beneficiaries, especially when a
major asset is being realized, inviting comments and proposals helps to reassure the beneficiaries that
the personal representative is acting in their interests; and (iii) Keeping open the possibility of more
formal involvement of the beneficiary in proposed decision with the utilization of deeds of
arrangement⎯which “is no more than a formalized consent document through which the beneficiaries
direct a course of action which might otherwise contravene the terms of the will or trust.” 15 If “the
input of the beneficiaries has been sought on whether and what to sell, they are less likely to later
complain and arguably the executor is in a better position to seek relief from any breach of trust.” 16
Finally, the lawyer should not assume that the client will take on the task of personal representative.
Before the client decides to act they must be advised of the extent of their duties and liabilities. They
must consider if they disagree with any of the terms of a will or want to challenge the will in some
way. If so, they should not be acting as personal representative.
Because the personal representative is the client and not the estate, it follows that it is the personal
representative who is personally liable for his or her solicitor’s proper account, although he or she will
be entitled to be indemnified from the estate assets for the legal fees and expenses provided they are
reasonably and properly incurred and do not relate to work that the personal representative should
have performed him or herself. 17
Whether an estate trustee is entitled to an indemnity or reimbursement for fees incurred in retaining a
lawyer to assist the estate trustee is a matter between the estate trustees and the beneficiaries and is
determined at a passing of account or by agreement with the beneficiaries. Where a beneficiary wishes
to challenge a solicitor’s fees, the beneficiary must challenge the fees by way of a passing of accounts. 18
The right of a trustee to be indemnified is incorporated in statute: Trustee Act, R.S.B.C. 1996, c. 464, s.
95:
Implied indemnity of trustees
95. A trustee, without prejudice to the provisions of any instrument creating the
trust, is chargeable only for money and securities actually received by the trustee even
though the trustee signed a receipt for the sake of conformity, and is answerable and
accountable only for the trustee's own acts, receipts, neglects or defaults, and not for
those of other trustees or a banker, broker or other person with whom trust money or
securities may be deposited, nor for the insufficiency or deficiency of securities or any
other loss, unless it happens through the trustee’s own willful default, and may
reimburse himself or herself, or pay or discharge out of the trust premises, all expenses
incurred in or about the execution of his or her trusts or powers.
From the outset you should make it abundantly clear to your client the services that you are in a
position to provide, what services you will not be providing, and the anticipated legal fees and
expenses which will be incurred. From the outset you need to manage the client’s expectations. When

14 Horne at 2.1.7.
15 Horne at 2.1.9.
16 Horne 2.1.8.
17 CLE Probate and Estate Administration Practice Manual ¶17.4, citing Re Lloyd Estate (1954), 12 W.W.R. 566
(N.S.) 445 (Man. C.A); Re Roemer Estate, [1982] 2 W.W.R. 566 (Sask. C.A.); Bott v. Macaulay, supra at 17.2.
18 Widdified on Executors and Trustees, 6th ed. (Carswell: Toronto, 2006) (“Widdifield”), at 4-6.
 4.1.6

“out of the ordinary” issues arise, the client needs to be advised that this may lead to what the client
will see as “out of the ordinary” legal expenses.

IV. Duties of the Personal Representative

Once a personal representative takes on the role of executor or is appointed as administrator by the
Court, there will be certain duties imposed at law on that personal representative. The personal
representative must be made aware of these duties before he or she agrees to act. The lawyer must also
remind the personal representative of these duties as appropriate throughout the course of the
administration of the estate. As noted at the outset, the lawyer needs to be intimately aware of these
duties in order that he or she may properly advise his or her clients and protect their interests [and at
least indirectly, the lawyers’ interests as well].
Both the CLE Probate and Estate Administration Practice Manual and CCH Canadian Estate
Administration Guide contain comprehensive listings of the duties of the personal representative from
taking possession of control of assets, safeguarding assets, paying debts, notifying beneficiaries to duties
imposed at law acting personally acting impartially. 19
The duties of a personal representative are generally administrative in nature. However, many
executors or administrators who are acting for the first time are unaware of both the scope of their
duties and the options available to them in the performance of those duties. It is the solicitor’s role to
advise the personal representative on both of these issues. 20
Whereas the executor has the right to deal with the assets in the estate immediately upon death (as the
executor’s authority arises from the will).an administrator derives his or her title and authority solely
under a grant from the court, and therefore has no legal right to deal with any matters in the estate
until a court appointment is made.
On the topic, Widdifield on Executors and Trustees states:
The duties of an executor and trustee are basically similar, the principal difference
being that the office of executor is a short term one which ends upon completion of
administration of an estate, whereas the duties of a trustee may be much broader and
include investment and management of the estate over a prolonged period. Basically,
both executors and trustee are fiduciaries and are subject to the same rules of law
except where statue provides otherwise. 21
A personal representative is firstly an executor and then later, a trustee of the estate. The general
consensus of most practitioners is that a personal representative becomes a trustee once he or she has
completed his or her duties by collecting all of the assets and paying the debts of the estate. The
personal representative then holds the remaining assets as trustee for the estate, and distributes the
assets in accordance with the will or laws of intestacy. 22
If the executor does not fulfill his duties, or in carrying them out, appears to do so
negligently or in bad faith, then the executor can be held accountable for any loss
which results from his breach. Additionally, once liability has been determined, the
executor must place the trust estate in the same position as if the breach had not
occurred, unless the executor is relieved of liability by the courts.

19 See CLE Probate and Estate Administration Probate Manual ¶1.7 and CCH list of administrative duties ¶4000, at 930-36.

20 CCH at ¶4000.

21 Widdifield ¶8.7.1 at 8-18.

22 Trevor Todd, www.disinherited.com/articles_removing .htm, “Removing and Replacing Executors.”
 4.1.7

While the boundaries of an executor’s duties and responsibilities are not necessarily
always clear, there are certain principles to which any executor must adhere if he
wishes to avoid personal liability. While seemingly simple, these principles are
frequently a basis for claims against executors who do not understand or simply do
not follow, the most basic rules. 23
It is therefore critical from the outset that the solicitor advise the personal representative of his or her
duties and as to the risk of personal liability.
Personal Representatives as Fiduciaries
In Waters’ Law of Trusts in Canada, it is written:
The executor and the administrator are truly fiduciaries; in these cases the same
meaning is given to the term as it has in connection with trustees. But this may
largely be due to the fact that the administration of testamentary and intestate affairs
has for so long been supervised by the courts of Chancery or Equity that Equity
itself treated the executor, the administrator, and the trustee as performing similar
duties involving the same standard of behavior. 24
As fiduciaries, this requires of each of the personal representative and the trustee act disinterestedly,
that they derive no profit through their office other than that which the settlor, the deceased, or
statute has conferred upon him, and that they delegate only the administrative duties of their office. 25

A. Duty to Adhere to the Trust Document

On an intestacy, the personal representative as administrator must be aware of the rules imposed upon
an administrator under the Estate Administration Act, R.S.B.C. c. 122 and the Trustee Act, R.S.B.C. c.
464. The executor too should be aware of the provisions under these acts and in addition has a duty to
adhere to the provisions of the trust document⎯the will. The executor/trustee must understand the
scope and provisions of the will and the trusts set out therein.
The extent of discretion that may be exercised by an executor/trustee will be limited by the scope of
the powers conferred upon the executor/trustee by the trust instrument, and by statute. In order to
determine the scope of a particular power, the executor/trustee must look to the language of the trust
instrument to ascertain the nature and the purpose of the power. 26
It is almost trite to point out that executor’s authority arises from the will under which he is
appointed. That may be extremely simple, or may contain complex trust provisions which will
necessitate the ongoing involvement of the executor over many years. The provisions must be
respected and followed unless varied by the Court or by consent of all the beneficiaries. The executor
must read the will and thoroughly understand its contents in order to ensure that he or she is dealing
with the assets in a manner that has been authorized. The lawyer has a duty to his or her client in
assisting them in achieving this understanding.
An executor may incur liability for simply failing to follow the terms of the will. 27 Again, it is the
solicitor’s duty to ensure that the personal representative is aware of, and understands, these
responsibilities.

23 E.Jane Milton, “Executor’s Liability,” Estate Litigation – 2003 Update, October, 2003 (“Milton”), at 2.1.2.
24 Waters at 40.
25 Waters at 45.
26 Widdifield at 8-1.
27 Milton at 2.1.2.
 4.1.8

B. Core duties imposed by the Common Law

In Waters’ Law of Trusts in Canada, it is stated that:
The obligation which lies at the base of trusteeship has resulted in there being three
fundamental duties applicable to all trustees. First, no trustee may delegate his office
to other; second, no trustee may profit personally from his dealings with the trust
property, with the beneficiaries, or as a trustee; third, a trustee must act honestly and
with that level of skill and prudence which would be expected of the reasonable man
of business administering his own affairs. 28

1. Duty to Act Personally

This duty prohibits a fiduciary from delegating his discretionary responsibilities to an agent. The
personal representative entrusted with title to and control of another person’s property for the benefit
of others undertakes to carry out his tasks personally and in the best interest of the beneficiaries and
with care appropriate to looking after the property of another. Thus a fiduciary cannot delegate to
another the responsibilities entrusted to him or her. 29
In Haughton v. Parker (1995), 6 E.T.R. (2d) 221 (Ont. C.A.) leave to appeal to S.C.C. refused (1995), 9
E.T.R (2d) 154, the executor had an obligation to carry out specified decision-making duties imposed
under a will. The testatrix’s will directed that the price of certain cottage property be fixed by an
independent valuator chosen by her trustee. The executor permitted the deceased’s daughter to choose
a valuator. It was the daughter who wrote to him and gave him instructions to carry out the
valuation. The daughter then exercised the option given to her in the will to purchase the cottage
property based on the valuator’s appraisal. The Court set aside the sale and ordered an appraisal to
determine the current market value of the property. The court stated:
It has been the law for centuries that executors, while they can delegate
administrative duties to others, must personally carry out specific decision-making
duties imposed upon them under a will. It is most important that this rule be
adhered to strictly where a prospective delegate, as a result of being a beneficiary
under the will, has an interest in the outcome of the decision. The fact that no real
damage may be suffered by other beneficiaries is irrelevant. If the possibility of
damage exists, the delegated act cannot stand. If it is irretrievable, the executor could
be liable for the resultant damage suffered by other beneficiaries. 30
It is understandable how an unsophisticated personal representative could fail to appreciate that such a
course of action would be improper. It is the solicitor’s duty, on an ongoing basis throughout the
administration of the estate, to ensure that the client understands his or her obligations.
2. Duty to Avoid Conflicts of Interest
This duty is also referred to as the duty of loyalty. This duty requires a trustee to act gratuitously and
exclusively for the benefit of the beneficiaries and prohibits the trustee from obtaining any personal
benefit from the trust property 31

28 Waters at 852.
29 M. Elana Hoffstein and Rosanne Rocchi, “Trusts and Estates that Control Corporation,” 10th Annual
Estates and Trusts Summit, November 5, 2007 (“Hoffstein”), at 5.
30 at 34.
31 Carmen S. Theriault, “Trusts and Privately Held Companies” for Pacific Business and Law Institute
Conference: Trusts: The Thorny Issues, May 14, 2007 (“Theriault”), citing Geoffrey Dyer and Sheila M.
Crummey, “Trust-Controlled Private Corporations: Interplay of Trust Law and Corporate Law,” Senior
Estates and Trust Practitioners Forum, October 2007, at 1.
 4.1.9

A personal representative should not use his position for his own private purposes or gain. He must
always put the interests of the beneficiaries first, as it is for their benefit that he acts. To this end, the
personal representative may not sell his own assets to the estate nor may he buy the assets of the estate
or trust without prior court approval 32 .
“A trustee must not permit his or her own interest to conflict in any way with his or her duty to the
beneficiary who he or she serves.” 33 A personal representative must be a neutral party in any question
or conflict as between beneficiaries. When the estate is involved in litigation, the executor may not
take a position which favours on beneficiary over another. 34
As a personal representative may not be aware of the nature of a conflict of interest, or recognize
circumstances in which a conflict may arise, it is part of the solicitor’s duties to educate the client in
this regard.
3. Duty to Act in Good Faith⎯The Duty of Care
The duty of care requires a personal representative to perform his obligations and exercise his
discretion with a level of skill and prudence that would be expected of a reasonable business man
administering his own affairs. 35 A personal representative, as a fiduciary and trustee, must carry out
his tasks honestly, in good faith, and with care.
The Supreme Court of Canada (Dickson J.) in Fales v. Canada Permanent Trust Co., [1977] 2 S.C.R.
302, has stated: “Traditionally, the standard of care and diligence required of a trustee in administering
a trust is that of a man or ordinary prudence in managing his own affairs.” 36 In an effort to remove a
trustee’s exercise of discretion from judicial review, trust clauses have been drafted with adjectives
giving trustees “absolute,” “uncontrolled,” or “responsible” discretions. The Court has stated that:
The weight of authority to the present, save in the granting of relief under remedial
legislation such as s. 98 of the Trustee Act, has been against making a distinction
between a widow, acting as trustee of her husband’s estate, and a trust company
performing the same role … Every trustee has been expected to act as the person or
ordinary prudence would act. This standard, of course, may be relaxed or modified
up to a point by the terms of a will … But however wide the discretionary powers
contained in the will, a trustee’s primary duty is preservation of the trust assets, and
the enlargement of recognized powers do not relieve him or the duty of using
ordinary skill and prudence, nor from the application of common sense. 37
In light of the above statement, it has been suggested that a trustee may be required to adhere to the
ordinary standard of care regardless of how wide his discretionary powers are. 38
The Court retains an inherent jurisdiction over the actions of trustees and will normally require that a
trustee discharge his duties with good faith and with the standard of care of a reasonable and prudent
man of business. However, where a trustee is granted powers which are to be exercised at his

32 Milton at 2.1.3, citing Ex Parte Lacey (1802), 31 E.R. 1228; Ex parte James (1803), 32 E.R. 385; Campbell v.
Walker (1800), R Ves. Jun. 678 (Eng. Ch. Div.).
33 Hoffstein at 5.
34 Milton citing Re Patton (1971), 19 D.L.R. (3d) 497 (Ont. H.C.).
35 Theriault at 4, and Hoffstein at 5.
36 at 315.
37 at 316.
38 Widdifield 8.5 and Hoffstein.
 4.1.10

discretion, the court traditionally will not interfere unless the trustee has not turned his mind to the
exercise of his discretion or has acted unfairly or in bad faith. 39
The solicitor must make the client aware of his duty of care. If the solicitor becomes aware of any
intended course of action which may breach the personal representative’s duty of care, the solicitor
must act to ensure that the personal representative is aware of, and acts in accordance with, such
duties.
4. Other Duties
It has been said that the above described three duties are the core duties of trustees; there are, however,
several other duties of a personal representative.

a. Duty to Act Impartially⎯The “Even-Hand” Principle

This duty requires that fiduciaries do not give preferential treatment to any single beneficiary or group
of beneficiaries. This duty comes into play where there is more than one beneficiary of a trust and the
terms of the trust do not authorize a different treatment of beneficiaries. 40
In Waters, the principle of holding an even hand is described as follows:
It is a primary duty upon trustees that in all their dealings with trust affairs they act
in such a way that, if there are two or more beneficiaries, each beneficiary receives
exactly what the terms of the trust confer upon him and otherwise receives no
advantage and suffers no burden which other beneficiaries do not share. In this way,
the trustees act impartially; they hold an even hand. The settler or testator may
choose to give disproportionate interests to various beneficiaries…[T]he duty of the
trustees to carry out the terms of the trust as they find them, and to ensure that in
the administration of the trust they do not give advantage or impose burden when
that advantage or burden is not found in the terms of the trust. 41
The difficult of maintaining an even hand frequently becomes an issue where a will contains a trust for
the benefit of several parties in succession, and the executor, as trustee, must make decisions as to the
nature of investments that are to be held, or the amounts of the trust fund that are to be expended on
the current beneficiary. 42
Also, it is not uncommon that a trustee may have a stronger affinity and/or closer relationship with
some beneficiaries than others. In these circumstances, it is even more important that the solicitor
ensures that the client understands the requirement to treat all beneficiaries equally.
b. Duty to Account
The personal representative has the duty to maintain proper accounts, that is, the duty to maintain
accurate and complete records of all transactions relating to the estate. “The duty to account is central,
for it allows the beneficiary to assure himself that the executor is properly carrying his duties.” 43

39 Widdifield at 8-5 citing Haasz, Re, [1959] O.W.N. 395 (Ont. C.A.); Edell v. Sitzer (2001), 55 O.R (3d) 198
(Ont. S.C.J.), aff’d (2004), 9 E.T.R. (3d) 1 (Ont. C.A.), leave to appeal refused (2005), 2005 Carswell Ont 96
(S.C.C.).
40 Hoffstein at 15.
41 Waters at 966-67.
42 See Milton at 2.1.2, Lauer v. Stekl Estate (1974), 47 D.L.R. (3d) 286 (B.C.C.A.) and Nichols v. Central
Guaranty Trust Co. (1995), 13 B.C.L.R. (3d) 137 (S.C.) for discussion on the rule.
43 Milton at 2.1.4.
 4.1.11

The duty to account is “the duty of a trustee or other accounting party to have his accounts always
ready, to afford all reasonable facilities for inspection and examination, and to give full information
wherever required.” 44 The scope of the duty is broad and requires the trustee to produce all
documents relating to the trust and its administration within a reasonable time of receiving a
beneficiaries’ request 45
A trustee who acts (or neglects to act) in accordance with the duties imposed by law may be personally
liable for a breach of trust, and may be required to compensate the estate or a beneficiary for any loss
suffered as a result of that breach. 46
Although it may seem to be common sense, the lawyer would be remiss to fail to explain the nature of
the duty to account to his or her client.

V. Personal Representative as a Beneficiary

In Waters it is written “The rule against conflicts exists in order to prohibit a fiduciary from being in a
position where it will be systematically unclear whether or not he performed his fiduciary duty to act
in what he perceived to be the best interests of the beneficiary. A conflict, therefore, is a situation
which is liable to create conflicting motivational pressures.” 47
Notwithstanding this broad proposition, a personal representative who is also a beneficiary of the
estate may however wear two hats. Merely because a personal representative is also a beneficiary is
not in and of itself a bar to the personal representative acting. He is, however, bound to wear only the
hat of the personal representative when he carries out any duty of the personal representative. “His
management must be scrupulously objective; he must act only in the best interests of all the
beneficiaries, and he can be held to account if his conduct falls short of that standard.” 48
The BC Supreme Court has held that it was not a conflict of interest where the executor appointed
under the deceased’s will was also a beneficiary, and the removal of the trustee was not granted
(Gillespie v. Gillespie, unreported, February 13, 1991 Vancouver Registry No. C851522).
In Gillsepie the BCSC cited Saunders v. Halom (1986), 8 B.C.L.R. (2d) 117 at 127:
… The court is loath to interfere with the discretion exercised by a trustee in a case
where the trustee and the beneficiary are the same person. That is so even where
there are residuary beneficiaries, and the trustee might exhaust the estate by using all
the capital for his or her own purposes if intervention would be inconsistent with
the intention of the testator, to draw from the language of the will.
Something more that the executor/trustee’s dual role had to be shown to establish the personal
representative’s unfitness to act as executor. However, the client should be made aware that this is an
instance where increased care is warranted.

44 Maclennan J.A. in leading Canadian case Sanford v. Porter (1889), 16 O.A.R. 565 (Ont. C.A.) at¶ 21 as cited
by Waters at 1063-64.
45 Waters, at 1064.
46 Theriault citing Waters at 1208-11.
47 at 918.
48 Waters at 9.
 4.1.12

VI. Personal Representative as a Controlling

Shareholder and/or Director of a Privately Held Company
In the past year there have been several articles written which address the issues surrounding the duties
of a personal representative where the estate holds shares in private corporations. These articles
review the relevant case law:
1. M. Elena Hoffstein and Rosanne Rocchi, “Trusts and Estates that Control
Corporations,” written for and presented at 10th Annual Estates and Trusts Summit
November 5, 2007;
2. Shelley M. Crummey, “Estates and Trusts Holdings Shares of Private Corporations:
Selected Issues, Trusts and Privately Held Companies” Estates, Trusts & Pension
Journal Volume 26 Number 3, June 2007;
3. Geoffrey Dyer and Sheila M. Crummey, “Trust-Controlled Private Corporations:
Interplay of Trust Law and Corporate Law” paper presented to the Senior Estates and
trust Practitioners Forum, October 2007; and
4. Carmen S. Theriault, “Trusts and Privately Held Companies” for Pacific Business and
Law Institute Conference May 14, 2008, Trusts: The Thorny Issues.
A comprehensive review of these issues and the relevant case law is beyond the scope of this paper. It
is strongly suggested that the above references be reviewed.
Where the personal representative as trustee for an estate holds the controlling shares of a private
corporation, Canadian cases have held that trustee as fiduciary has an obligation to ether appoint
himself or a nominee to the board of directors in order to properly supervise the investment of the
trust or estate. 49
In her paper Sheila Crummey writes:
By serving in the dual capacity of trustee and director of the trust-controlled
corporation, the trustee owes fiduciary duties both to the beneficiaries and to the
corporation which can occasionally conflict. Trust law imposes fiduciary obligations
on the trustees to maintain an even hand between the life tenant and the
remainderman, to avoid conflicts of interest and to account to the beneficiaries,
among others. The director of the corporation owes a duty to act at all times in the
best interests of the corporation. The interaction of these two bodies of law can raise
thorny legal issues which are seldom, if ever, contemplated when the testator signs
the will.
The general duties imposed on directors of a corporation are set out in corporate legislation. The
Canada Business Corporations Act, R.S. 1985, c. C-44 (the “CBA”) provides:
122(1) Every director and officer of a corporation in exercising their powers and
discharging their duties shall
(a) act honestly and in good faith with a view to the best interests of the
corporation [emphasis added]; and
(b) exercise the care, diligence and skill that a reasonably prudent person
would exercise in comparable circumstances.
Similarly the BC Business Corporations Act, S.B.C. 2002, c. 57 provides:
142(1) A director or officer of a company, when exercising the powers and performing
the functions of a director or officer of the company, as the case may be, must

49 Crummey at 315, citing Butt v. Kelson, [1952] 1 Ch. 197 and Kordyban v. Kordyban (2003), 13 B.C.L.R. (4th)
50 (C.A.).
 4.1.13

(a) act honestly and in good faith with a view to the best interests of the
company,
(b) exercise the care, diligence and skill that a reasonably prudent individual
would exercise in comparable circumstances,
(c) act in accordance with this Act and the regulations, and
(d) subject to paragraphs (a) to (c), act in accordance with the memorandum
and articles of the company.
The Supreme Court of Canada has interpreted the statutory provisions under the CBA in Peoples
Department Stores Inc. (Trustee of ) v. Wise, [2004] 3 S.C.R. 461 at 32
The first duty has been referred to in this case as the “fiduciary duty.” It is better
described as the “duty of loyalty”… This duty requires directors and officers to act
honestly and in good faith with a view to the best interests of the corporation. The
second duty is commonly referred to as the “duty of care.” Generally speaking, it
imposes a legal obligation upon directors and officers to be diligent in supervising
and managing the corporation’s affairs.
Whereas under trust law as reviewed earlier in this paper, we have seen that it is clear that a personal
representative as trustee must exercise his powers in the best interests of the beneficiaries and in
accordance with the terms of the trust document, directors and officers of a corporation owe a
fiduciary duty to act bona fide and in the bests interests of the corporation. One can envision
circumstances where these duties may be in direct conflict. For example, a director has a duty to keep
corporate financial information confidential; as a trustee he has a duty to account to beneficiaries
relating to the administration of the trust. The Trustee as a director of a controlled corporation has
the discretion to declare dividends or if in the best interest of the corporation to retain profits as
corporate surplus, or invest in some other manner. Where a trustee is obligated under the trust
document to distribute income from the corporation to a beneficiary holding a life estate, his decision
to do so without taking into account the best interests of the corporation may conflict with his duty
to the corporation. 50
In conclusion, it has been summarized that a “trustee’s actions must be guided by a consideration of
the duties owed in both corporate and trust law, the nature and extent of the power that is being
exercised, the provisions of the trust instrument, and the relevant circumstances of the particular
situation.” 51
As demonstrated above, circumstances may arise where the trustee is placed in an awkward or
inherently untenable position due to conflicting loyalties. The solicitor must ensure that the client is
aware that such circumstances may arise, and be prepared to properly advise the client in such
instance.

VII. Courts’ Removal of a Personal Representative

In McKay v. Howlett Estate, 2003 BCCA 28, Ryan J.A. (orally) stated that the authority to remove an
executor is found in part in the inherent jurisdiction of the court.
Courts are very hesitant to interfere with the discretion of a testator to name an executor, and good
reason must be shown for believing that the interests of the persons entitled under the will are in
danger (Re: Estate of Andre Jaques Blitz, 2000 BCSC 1596, quoting Feeney’s Canadian Law of Wills (4th
ed.) 2000 para 8.12).

50 Theriault at 13 citing David Hughes, “Trust Principles and the Operation of a Trust-Controlled
Corporation” (1980), 30 University of Toronto Law Journal 151 at 166.
51 Theriault at 23.
 4.1.14

The leading case in BC is Conroy v. Stokes, [1952] 4 D.L.R. 125 (B.C.C.A) 52 where the BC Court of
Appeal considered whether trustees appointed under a will should be removed from office and a new
trustee appointed under the Trustee Act. The Court held that to warrant such an intervention there
must be a finding that the conduct of the trustees has endangered the trust property, or has shown a
want of honesty, or of proper capacity to execute the duties of the office, or of reasonable fidelity. 53
In Oates v. Baker (unreported) June 11, 1993, Vancouver Registry No. A931565 (B.C.S.C.), the
petitioners sought to have the executor named in a will passed over pursuant to s. 99(1) of the Trustee
Act and s. 7 of the Estate Administration Act. In this case the named executor did not apply for a grant
of letters probate until three years after the death of the testator; the named executor was a creditor of
the estate and there was hostility between the named executor and one or more named beneficiaries.
The petitioners asserted that they were going to sue the named executor for wasting assets.
Notwithstanding, the Court held that “… the acts and omissions complained of by the petitioners do
not support the conclusion referred to in the Conroy test. Nor is the removal of the named executor
required for the welfare of the beneficiaries.”
The cases show that courts are reluctant to remove an estate trustee. “That is because a priority is to
respect the testator’s decision to appoint that person.” (Veitch v. Veitch Estate, 2007 BCSC 952).
“The Court should not lightly interfere with the discretion exercised by the person in choosing the
person of persons to act as his executors and trustees…It seems to me that such an interference with
the discretion and choice of a person in preparing his last will and testament must be not only well
justified but, as has been said before, must amount to a case of clear necessity.” (Laidlaw, J.A. at 889-90
in Re Wiel, [1961] O.R. 888 (O.C.A.), as cited in Estate of Joan Maki, 2007 BCSC 1034 June 22, 2007,
Vancouver B.C. P070268. at ¶ 13).
Animosity or hostility between the executor and a beneficiary is not sufficient on its own to warrant
removal of an executor. (Veitch at ¶ 20 citing Letterstedt v. Broers (1884), 9 A.C. 371 at 389 (P.C.)).

VIII. Conclusion
This paper is meant to be an overview of only some of the areas in which the duties of the personal
representative may be problematic.
It is critical for the solicitor to ensure that his or her client, the personal representative, is made aware
of the general nature of his or her duties. This is particularly important where, as is often the case, the
personal representative is a friend of the deceased with little or no real experience in such matters.
While many of these potential pitfalls may be avoided entirely by what may seem to the trained
solicitor to be merely common sense, it must be remembered that the client may not so easily
recognize potential problems. It is the solicitor’s role to ensure that the client understands the client’s
role.
In the event that the solicitor fails to recognize conflicts, the solicitor is in breach of his duty to the
client. In the event that the client faces legal action as a result, it can be safely assumed that the client’s
finger will point squarely at the solicitor.

52 See also Hall (Public Trustee of ) v. Hall, [1983] 45 B.C.L.R. 154, Vancouver Registry No. A830152;
Weinstein v. Weinstein unreported September 19, 1996 Vancouver, CA020853 (BCCA); Re: The Estate of
Theresa Mario, Deceased, unreported, Kamloops No. 26742, November 16, 1998; Seaton Estate (2003), 188
B.C.C.A 28; Baulne v Burtch et al 2003 BCSC 86,7 April 28, 2003 Kelowna S56281; VanKoughnett & Others
v. Austin, 2006 BCSC 1856.
53 As applied in Re: Estate of Andre Jacques Blitz, Deceased, 2000 BCSC 1596 at 22.
 4.1.15

Accordingly, a solicitor should communicate in writing to the client setting out the client’s obligations
as a personal representative. The solicitor should be aware of circumstances that have arisen, or are
likely to arise, in which the client’s duties will likely come into conflict.
A proactive approach to such matters will minimize the likelihood of confusion on behalf of the
client, claims against the personal representative, and ultimately, letters by the solicitor to PLI. 54

54 I would like to thank my associate, Joe Berta, for his invaluable contribution in the editing the paper.