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Estates & Wills & Trusts

Trustees, lawyers must distinguish their roles in estate administration

Confusion about the overlapping roles of lawyers and trustees could lead to problems in estate administration, Toronto estates and trusts lawyer Suzana Popovic-Montag told a recent gathering of lawyers at the Law Society of Upper Canada (LSUC).

Popovic-Montag, the managing partner at Hull & Hull LLP, was a speaker at the LSUC’s recent Six-Minute Estates Lawyer program at Osgoode Hall in Toronto.

“The roles of a lawyer and estate trustee are distinct. A lawyer advising an estate trustee or acting in a dual role should be careful to delineate between solicitor's work and trustee's work,” Popovic-Montag wrote in a paper prepared for the event, noting that a failure to do so “may lead to remedies against the estate trustee and the lawyer.”

Popovic-Montag explained that estate trustees are generally appointed by a will or the court, and are required to act in accordance with the wishes of the deceased and in the best interests of the beneficiaries.

Depending on the circumstances, they may also owe duties to third parties, such as creditors of the estate as they carry out responsibilities including disposing of the deceased’s body, ascertaining their assets, completing tax returns and distributing the estate, amongst others.

“An estate trustee is not required to obtain legal advice — but it is advisable,” Popovic-Montag said, adding that the lawyer’s role will be to assist them in their duties.

In these cases, lawyers are appointed only by the trustee, and not the estate itself or its beneficiaries. Retained lawyers should explain to trustees what's expected of them, but should be careful about taking on certain tasks, since trustees are limited in their ability to delegate work, Popovic-Montag said.

Case law in Ontario dictates that trustees shouild only delegate work to lawyers that is “necessary and proper” for them to perform, a category that has grown with the increasing complexity of estate administration.

“Even though the range of services that may be delegated has expanded, the law does not permit an estate trustee to delegate all of their duties,” Popovic-Montag said, noting that trustees may occasionally request non-legal services.

“While lawyers may be keen to follow the instructions of their clients, requests by clients may raise liability issues, if the service requested is not something estate trustees are able to delegate,” she warns.

In a series of Ontario cases, judges have ruled that trustees should pay out of their own compensation any work done by a lawyer that they could have done themselves, to stop the estate paying twice for the same services.

“As such, lawyers have a duty to inform their client, the estate trustee, whenever their client asks them to perform work that is arguably trustee's work and to advise the estate trustee that he or she may have to pay for this service personally,” Popovic-Montag said.

Lawyers will likely have to exercise their judgment in determining whether they believe that the service requested by their client is properly delegated to them — that is, whether an ordinary prudent person in the ordinary course of business would delegate this particular task to a lawyer. This determination may need to be made with regard to each task that an estate trustee requests their lawyer to perform on their behalf.”

When it comes to justifying expenses incurred by the estate to the court, the trustee bears the primary onus, Popovic-Montag said.

"To justify an expense, the estate trustee must have a thorough record of estate accounts” that can be produced to beneficiaries on demand, she added.

For lawyers doubling up as trustee and counsel to the estate, they must take particular care to avoid conflicts, act impartially among beneficiaries, and distinguish between work done in each capacity for the purposes of compensation.

“The onus rests with the lawyer to show that he or she is not charging a lawyer's rates for estate trustee's work,” Popovic-Montag said.

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