The author takes a particular interest in reported cases of lawyers acting as estate trustees in Ontario. The author has acted in this capacity and estate trustee during litigation on a number of occasions, particularly when sizable estates have gone awry and an alternative is sought to an institutional trustee.
In theory, a trustee, whether layman, trust company or lawyer, is impressed with the highest duty of care with respect to the stakeholders’ interests in the estate. He/it is a fiduciary. You cannot delegate. You cannot self-serve.
In practice, the courts have exhibited leniency to non-professional estate trustees and, at times, have given complete relief under section 35 of the Trustee Act R.S.O. 1990, c. T.23.
Against this background of lofty duties for professional estate trustees, one maxim could be relied upon – regardless of the morality or legality of behavior, if there has been no harm to the estate, there has been no foul. Well, that’s no longer true with lawyer estate trustees.
In LSUC v Cengarle 2012 ONLSHP 96 (CanLII), we have a new twist. The lawyer/estate trustee loaned estate funds to his own firm’s employee on a partially secured basis. The loan was in fact fully repaid. Nonetheless, on a complaint to the Law Society of Ontario, the lawyer was found to have engaged in conduct unbecoming a lawyer. The court was not interested in whether the loan was prudent or secured. The rule of thumb of “no harm, no foul” was ignored and the lawyer’s record tarnished.
So here is a yet another distinction between a lawyer acting as estate trustee and a layman that could spill over into other professions. Consider accountants acting as estate trustees. Something to keep in mind for lawyers and other regulated professional when considering to act as executor/estate trustee.