Acting as an executor and/or trustee is a big job. If you have been appointed to act in either or both of these roles, it is important that you seek legal advice regarding the duties that accompany each of these roles and the options available to you should you want to later be discharged of such duties.
Executor vs. Trustee
While oftentimes the executor and trustee appointed under a Will is the same person or people, these are nonetheless different roles. An executor will administer the estate, which means his or her duties may include arranging the funeral and burial arrangements, obtaining a certificate of appointment (“probate”), paying the deceased’s debts and taxes, liquidating estate assets, and making distributions to beneficiaries among other tasks. While the executor generally holds the estate assets in trust until at the very least all debts and taxes of the deceased and estate have been paid, it may be the case that following the payment of debts and taxes all estate assets are to be distributed outright to a beneficiary or beneficiaries and the executor will have no further obligations to fulfill on behalf of the estate after making the final distributions.
In other cases, distributions to beneficiaries cannot be made outright and instead must be held in trust for an ongoing period of time. This is typically where the executor’s role either changes to one of a trustee (if it’s the same person), or the trustee takes over to manage the trust(s). Such trusts may be established where there are minor or disabled beneficiaries, or where the settlor (person settling a trust) or testator (person signing the Will) wants to protect a beneficiary that has creditors or has trouble managing money.
Careful Consideration must be given before Accepting or Assuming the role of Estate Executor and/or Trustee
It is relevant to understand the distinction between these two roles when considering what your options may be if you cannot continue to act in your capacity as an executor or trustee. Once you have started acting as an executor, it is not an easy process to be removed. To do so, you will need to apply to the court under section 37 of the Trustee Act (the “Act”). Accordingly, if you expect you may not be able to see this job through, you should carefully consider taking on this role in the first place. Even for simple estates, the process may take approximately one to two years. You should also understand that you do not need to formally accept your appointment as executor to assume this role. If you start completing jobs that are those of an executor, you could be deemed an executor de son tort, which essentially means that you will be considered to have accepted the role of executor through your actions regardless of your intentions. Thus it is important you get legal advice before completing any executor tasks to ensure you do not unintentionally end up taking on a job that you cannot simply remove yourself from.
Removing or Replacing a Trustee
Comparably, there are provisions in the Act that provide for how trustees can be removed and replaced, and the Will or other trust document can also make provisions for this. If you are a trustee but want to retire and/or be replaced, you should talk to a lawyer to confirm what your options are. Determining such options will require a careful review of the document establishing the trust (assuming there is one) and to the extent, such document does not provide for the circumstances at hand, an analysis of how the Act would apply to the facts of your case. This analysis will be informed by whether only one trustee or two or more trustees were originally appointed. If two trustees were originally appointed, there must continue to be two trustees or a trust corporation as trustee of the trust. Accordingly, if you are acting with another trustee and one trustee wants to step down, he or she cannot do so without a replacement to step in and meet the requirements of the Act. If both trustees originally appointed want to step down, typically the way to achieve this would be for one of the trustees to be replaced by two new trustees, and then the remaining original trustee would resign whereby the two new trustees would be the continuing trustees. Essentially, in some cases, a trustee can retire or be replaced rather simply in writing (through which the necessary parties simply sign off on the retirement or replacement), but in other cases, the Act will limit the trustees’ options for retiring and replacing trustees.
Retain Legal Advice Before Accepting or Assuming the Role of Executor or Trustee
Ultimately, being named in someone’s Will or other trust document as an executor or trustee does not mean you have to accept this role. It is important you get advice regarding the above before accepting or assuming either of these roles so that you can make an informed decision about acting. It is also important to seek legal advice if you have already started acting as an executor or trustee but want to resign so that you can ensure you are properly discharged from your office of executor or trustee. If you have questions in this regard and would like to talk to a lawyer in our estates group or if you are interested in learning about our estate trustee services, please reach out to us at 416-863-0125 or fill out the online form.