To Be or Not to Be, the Estate Trustee

Published on: August 2022 | What's Trending

Malang, Indonesia - 4 May 2021: William Shakespear line art portrait

A testator’s freedom to appoint their estate trustee is foundational. Courts are bound to the presumption that a testator’s choice of trustee is appropriate, absent compelling evidence to the contrary. A recent decision by the Superior Court of Justice confirmed that an estate trustee’s lack of specialized knowledge about the estate’s assets is not a sufficient basis for removing the estate trustee chosen by the testator.

Meuse v. Taylor, 2022 ONSC 1436 concerned the estate of Mary Sullivan (“the Estate”), who passed away in April of 2020. The primary asset of the Estate was a portrait, purportedly of William Shakespeare and painted during his lifetime (“the Portrait”). If authentic, the Portrait had an appraised value of $50 million USD. The Portrait was acquired by Mary through her late husband, Jim Sullivan, who had inherited it through his mother. The Portrait’s history traced back to the Sullivans’ ancestors, who acquired it through a neighbour of William Shakespeare in the late 16th to early 17th century.

The primary concern in administering the Estate lay in obtaining the greatest value for the Portrait. In addition to the Estate, several other parties claimed an ownership interest in the eventual proceeds of sale of the Portrait. When Jim Sullivan signed a deed of arrangement that confirmed his ownership of the Portrait, he did so in the presence of representatives of four other families who may have a claim to ownership. The deed contemplated that the Portrait would sell for $20 million and at least $12.5 million of the proceeds would be divided among the families.

In addition to the families, individuals such as the applicant claimed to have loaned money to Jim Sullivan which would be repayable on the sale of the Portrait. Professional services firms, including a law firm and Mr. Taylor’s accounting firm, also claimed to have provided services in connection with the Portrait for which they were owed payment. The law firm’s claim was secured by a registration under the Personal Property Security Act and a court order which prevented the Portrait from being sold, transferred, moved, or encumbered without the consent of the law firm or another court order.

At the time of the application to remove him, the sole Estate Trustee was David Taylor, the long-time accountant of Mary and Jim Sullivan. The residual beneficiaries of the Estate were three charities, who supported the application. The application was brought by Jim Meuse, who wished to remove and replace Mr. Taylor as the Estate Trustee. Mr. Meuse asserted that Mr. Taylor lacked the necessary qualifications to acquire a fair market value for the Portrait. He further alleged that Mr. Taylor had attempted to transfer the Portrait’s ownership at below-market value, thereby failing to carry out his fiduciary duties as Estate Trustee.

In considering Mr. Meuse’s application, the Court reviewed the legal principles that have emerged from the case law which emphasize the high threshold for substituting a testator’s choice of Estate Trustee. These were summarized in Johnston v. Lanka, 2010 ONSC 4124 as follows:

  1. “The court will not lightly interfere with the testator’s choice of estate trustee;
  2. Clear evidence is required that removal of the trustee is necessary;
  3. The court’s main consideration is the welfare of the beneficiaries; and
  4. The estate trustee’s acts, or omissions must be of such a nature as to endanger the administration of the trust.”

Thus, in the absence of strong evidence that the testator’s choice of trustee will jeopardize the proper execution of the estate, Courts are unlikely to entertain such applications.

In its analysis of Mr. Taylor’s actions as Estate Trustee, the Court considered and rejected multiple allegations advanced by Mr. Meuse.

The crux of Mr. Meuse’s application centred around the apparent lack of Mr. Taylor’s competency involving Elizabethan artwork, and in particular, the steps he had taken to sell the Portrait thus far, and his personal evaluation of the Estate’s worth. In rejecting these allegations, the Court held that one need not be a subject matter expert in the Estate’s assets to qualify as Estate Trustee. The administration of the Estate extended beyond just the sale of the Portrait and involved legal, accounting, tax, and insurance issues. The Court noted that obtaining advice from outside experts was necessary and to be expected. Moreover, the evidence demonstrated that Mr. Taylor had achieved a great deal concerning the administration of the Estate in his short stint as Estate Trustee. Importantly, the appointment of Mr. Taylor by both Mr. and Mrs. Sullivan indicated that they were confident in his ability to manage the Estate in accordance with their wishes.

In the absence of evidence to substantiate Mr. Meuse’s bald assertions, the Court dismissed the application and ordered Mr. Meuse to pay $40,000 in substantial indemnity costs to Mr. Taylor. Due to the nature of the serious accusations levied by Mr. Meuse, along with a lack of evidentiary foundation, the Court felt that a higher cost award was justified.

This decision serves as a reminder of the law’s unwillingness to interfere with the decision-making abilities of individuals in the administration of their estate as well as the significant costs that can be incurred in litigating unfounded applications.

Anne Kennedy would like to thank our summer student Guneet Saini for her assistance in writing this blog.