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Sunday, February 3, 2019

The court decided not to remove these executors - for practical reasons

Many beneficiaries who are critical of an executor's administration of an estate (either rightly or wrongly) will sooner or later consider the idea of having the executors removed from their role. I certainly hear this suggestion frequently, and I assume that other estate litigators do as well.

Removing an executor who doesn't want to be removed isn't easy. It has to be ordered by a judge after a full hearing of the issues and allegations. Judges always start that process by acknowledging that the decision to remove an executor cannot and should not be taken lightly. This is partly because the testator who made his will named the executor(s) he wanted and the court will try to uphold the testator's wishes.

But beyond that, what does the court look at? The consideration that is first and foremost is the question of what is best for the estate and the beneficiaries. This is where a hearing gets into the details of exactly what the beneficiaries believe the executor is doing wrong, and why it's wrong. I've recently come across a newer case from my own jurisdiction called Henley Estate, in which the court looked at this very issue and gave a wonderfully practical decision.

In this case, there were four executors of an extremely complex, valuable estate. All four were the children of the deceased, and as anyone could have predicted, they could not all agree on how to administer the estate. They managed to deal with several assets, and they were four years into the estate before they gave up. There was an application made to remove all of them as executors and to put the Public Trustee in as a neutral administrator.

Nobody alleged any theft or fraud on the part of the executors. The real issue was an allegation that two of the executors were holding things up because they wanted to interpret one clause of the will in a way that favoured themselves. In other words, instead of being neutral and fair to all, as executors were supposed to do, it was alleged that they were looking out only for themselves. This ended up in a deadlock that couldn't be broken. While this can be a ground for removing an executor, in this case the court did not remove them.

Instead, the court looked at the practicalities of the situation. Changing administrators at that late stage of the estate would cause delays and extra costs. And, said the judge, with everyone still fighting, the Public Trustee would end up coming back to court for assistance and direction on issues anyway. In other words, removing the executors wouldn't help and would only hurt the estate as a whole.

The reason I like this decision is that clients often go to see their lawyers because they want someone removed as executor based on a legal principle. The executor has screwed up and now must be removed. But when I ask a client what happens after the executor is removed, there is generally silence. Nobody has thought about the practical matters, only the idea of giving someone the boot. Legal principles are essential, but they don't exist in a vacuum.


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