by Ian Giroday
There are numerous possible reasons why a person who is, or is entitled to become, a personal representative of a deceased person’s estate should not be appointed as such or should be removed and replaced. This article sets out some common scenarios where a person could be passed over as a personal representative (where they have not yet been appointed) or removed and replaced (where they have already been appointed) and the mechanism for doing so. But first, some background information must be set out to inform the discussion.
What is a personal representative? A personal representative is a person appointed to administer the estate of another person. A personal representative can be the representative of a living person or a deceased person. In this article, we will be considering personal representatives of a deceased person.
A personal representative of a deceased person is known as an executor, in the case where they are appointed as such under the deceased person’s will, or as an administrator where the deceased died without a will or left a will, but those persons appointed to be executor or alternate executor in the will are unable or unwilling to act as such. If a person so appointed is unwilling to act, he or she can renounce their right to be executor so long as he or she has not commenced administering the estate.
Notwithstanding that the wording of the will refers to appointing an executor, it is the court that confirms that appointment through the process of an application for probate that results in a Grant of Probate. A Grant of Probate issued by the court is confirmation that the will probated is the last will of the deceased and the executor appointed in the will is the personal representative of the deceased and can administer the deceased’s estate. In situations where there is no will or where there are no executors named in the will who are able or willing to act, the court on application will appoint an administrator to act as personal representative of the deceased to administer the estate.
The role of a personal representative is significant. A personal representative generally has the same authority over a deceased’s person’s estate as the deceased person would have if living. The personal representative must exercise this broad power to:
(a) administer and distribute the estate in accordance with the directions set out in the will or, if no will, as set out by law;
(b) account to beneficiaries under the will or law, creditors of the estate and others to whom at law a duty to account is owed; and
(c) perform any other duties imposed on the personal representative by the will or by law.
A personal representative is typically appointed both as executor and trustee in the will. Where there is no such express appointment as trustee, the law makes a personal representative the trustee of a trust created by the will if another trustee is not appointed in the will, unless the court otherwise orders. Certain sections of the Trustee Act apply to a personal representative whether or not he or she is also a trustee. This includes section 99 of the Trustee Act, which requires a personal representative to have the estate accounts approved and consented to by all of the beneficiaries or approved (passed) before the court.
A trustee owes a fiduciary duty to beneficiaries of the estate he or she is administering. At law, this is a duty that requires utmost good faith and candour on the part of the trustee. It imposes on the personal representative of an estate the highest standard of care to act in the best interests of the beneficiaries. It includes a duty to the beneficiaries to follow the terms of the will and the requirements of applicable law, to not self-deal or when exercising the authority given to them, to not place their personal interest ahead of the beneficiaries beyond what the will or law provides.
With this background information, we can now turn to situations where it is appropriate to seek a court order to have a personal representative passed over or removed and replaced. One such situation is where the appointed executor does not apply for a grant of probate in a timely manner. We have seen various reasons why this has occurred. One is where the age and health (mental, physical or both) of the appointed executor is such that they are not capable or inclined to act. As noted above, such appointed person could renounce their appointment in favour of another person, but if they are unwilling to do so, a court order will have to be obtained. Another reason why an appointed person may refuse or neglect to act is where they have the benefit and use of the estate assets. For example, he or she may be living in the home owned by the will maker that is directed to be sold or otherwise has to be sold to enable the gifts made in the will to be fulfilled. Another example is where he or she has access to bank accounts that properly form part of the estate because they were joint owners of the those accounts with the deceased to assist the deceased with their finances or for estate planning purposes.
Another situation we see is where the appointed person has a conflict of interest between his or her personal interest and the interests of the estate. For example, where the deceased and the appointed executor jointly owned property, such as real property or bank accounts, the beneficiaries or creditors of the estate may be of the view that the executor’s title to that property was legal only, a means of estate planning (including possibly to avoid payment of probate fees) and that the beneficial interest to the property is solely that of the estate and is to be distributed in accordance with the will or law. Legal action on behalf of the estate to determine beneficial ownership may have to be brought against the appointed executor or administrator and that person obviously cannot act on behalf of the estate.
A final scenario we have seen is outright self-dealing by the appointed executor or administrator. This may take the form of taking as their own estate property (usually money) rather than distributing it to the beneficiaries. But it can take other forms as well, such as intermingling estate funds with their own for some personal benefit, such as earning interest on the mingled funds for their own benefit, or paying lower management fees to a money manager, or preferring their own family member beneficiaries to the other beneficiaries.
So what can an interested person, such as a beneficiary or creditor of the estate do when faced with a situation such as described above? They can apply to court for a court order to pass over the person entitled to be or become the personal representative. If the personal representative has already been granted probate or administration of the estate, a court application to have him or her removed and replaced can be brought.
The authority to bring such an application before the court in British Columbia is set out in the Wills, Estates and Succession Act (“WESA’) at sections 158 and 159. Section 158 provides that a person having an interest in an estate may apply to the court to remove or pass over a person otherwise entitled to be or to become a personal representative. The court may remove or pass over such a person for various reasons expressly stated in section 158, but the stated reasons do not limit the court’s jurisdiction to order that a person be removed or passed over if the court considers that such person should not continue as personal representative or be granted probate or administration. Stated reasons in section 158 as to when the court may order removal or passing over include if the personal representative or person entitled to become the personal representative:
(i) refuses to accept the position or to act as personal representative without renouncing;
(ii) is incapable of managing his or her own affairs;
(iii) has been convicted of an offence involving dishonesty;
(iv) is an undischarged bankrupt; and
(v) is unable to make the decisions necessary to discharge the duties of personal representative, is not responsive, or is otherwise unwilling to or unreasonably refuses to carry out the duties of a personal representative;
to an extent that the conduct of the personal representative hampers the efficient administration of the estate.
Guidance as to what factors a court will consider in exercising its jurisdiction to pass over or remove a personal representative and substitute a new one can also be found in case law. The leading case in British Columbia on this issue remains the 1952 British Columbia Court of Appeal decision in Conroy v. Stokes. In that case, the court noted that the overarching principle which has led the courts to remove and replace trustees is the welfare of the beneficiaries of the trust estate, which must be taken to mean “the benefit of the beneficiaries collectively.” In cases of positive misconduct the courts have no difficulty in ordering the removal of trustees who have abused their trust. But it is not every mistake or neglect of duty on the part of a trustee which will lead the court to remove a trustee; the trustee’s acts or omissions “must be such as to endanger trust property, or to show a want of honesty, or a want of proper capacity to execute the duties or a want of reasonable fidelity” (citing Letterstedt v, Broers (1884)). The main point to be taken from this leading authority is that the courts will not lightly interfere with a will maker’s choice of personal representative.
From Conroy v. Stokes and more recent court decisions it is clear that personal hostility between the personal representative and the beneficiaries or tardiness or even neglect alone will not usually suffice to compel a court to remove a personal representative unless neglect is persisted in. On the other hand, where there is a want of fidelity, conflict of interest, personal gain at the expense of the estate or where the assets of the estate are endangered or impaired by the personal representative it is likely that a court order can be obtained removing and replacing him or her.
Of note is that a court order removing a personal representative does not remove that person as a trustee. A court application to pass over or replace a person as personal representative can be brought together with an application to have them removed and replaced as a trustee pursuant to sections 30 and 31 of the Trustee Act.
Section 159 of WESA provides for the appointment of a substitute personal representative. If the court passes over or removes a personal representative, the court must appoint another person who consents to act as the substitute personal representative unless the administration of the estate is complete or the court does not consider a new appointment necessary. If the personal representative is removed as trustee the court may concurrently appoint the substitute personal representative as trustee under the Trustee Act in place of the trustee being removed. A grant of probate or administration to a former personal representative is revoked on the appointment of a substitute personal representative.
Sections 160 and 161 of WESA address the issue of the estate of the deceased person vesting in the personal representative, including a substitute personal representative. If a person is appointed as the personal representative (including as the substitute personal representative) of a deceased person, the estate of the deceased person vests in the personal representative without any further declaration or order of the court. If a person is removed as the personal representative of a deceased person, the estate of the deceased person ceases, without any further declaration or order, to be vested in that person. A person who ceases to be a personal representative must provide the substitute personal representative, within 30 days of the order making the substitution, the property comprising the estate and any records and documents relating to the estate and its administration that are in his or her possession or control. It is prudent to seek an order, at the same time you are applying to have a personal representative removed and replaced, to have the personal representative being replaced pass his or her accounts relating to the administration of the estate within a time certain (say 30 or 60 days) of the order.