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Setting remuneration of trustees and guardians
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- Application for remuneration
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Setting remuneration of trustees and guardians88 (1) A trustee under a deed, settlement or will, an executor or administrator, a guardian appointed by any court, a testamentary guardian, or any other trustee, however the trust is created, is entitled to, and it is lawful for the Supreme Court, or a registrar of that court if so directed by the court, to allow him or her a fair and reasonable allowance, not exceeding 5% on the gross aggregate value, including capital and income, of all the assets of the estate by way of remuneration for his or her care, pains and trouble and his or her time spent in and about the trusteeship, executorship, guardianship or administration of the estate and effects vested in him or her under any will or grant of administration, and in administering, disposing of and arranging and settling the same, and generally in arranging and settling the affairs of the estate as the court, or a registrar of the court if so directed by the court thinks proper. (2) The court or a registrar of the court if so directed by the court, may make an order under subsection (1) from time to time, and the amount of remuneration must be allowed to an executor, trustee, guardian or administrator, in passing his or her accounts, in addition to any other allowances for expenses actually incurred to which the trustee, executor, guardian or administrator may by law be entitled. (3) A person entitled to an allowance under subsection (1) may apply annually to the Supreme Court for a care and management fee and the court may allow a fee not exceeding 0.4% of the average market value of the assets.
Application90 Nothing in section 88 or 89 applies in any case in which the allowance is set by the instrument creating the trust. Review of order or certificate of registrar91 (1) An order or certificate made by a registrar under section 88 or 89 is subject to review by the court on application by summons to be made before the expiration of 14 clear days after the entering of the order or the filing of the certificate. (2) Unless varied or discharged by the court, the order or certificate is binding on the trustee, executor, administrator or guardian, and all parties interested in the trust estate. Re Atkinson Estate Facts: The executor of the estate asked for 375k based upon 3% of the total value of the estate at death plus 5% on revenue receipts which was the standard in Ontario at the time. The total value of the estate was 12M. The beneficiaries disputed this. Issue: What overarching principles should the court take in mind in authorizing payments for trustees? Ratio: The guiding principle under the trustee act is that compensation must be fair and reasonable based on the actual care, pains, trouble and time shown in the administration of the account. Any customary percentages can be useful but are not determinative Analysis: The judge set out a 5 part test in what is normal in considering compensation: To allow a fair percentage of income receipts To allow a fair percentage on capital receipts and disbursements To look at the estate invested and to allow a fair management fee To look at capital assets; and To consider whether further compensation should be allowed On the facts, the disbursement for 375k (which was actually more but adjusted downwards based on the math, was too much, even though much work was done on the file. Holding: Down to 150k Laing Estate v Hines Facts: The executor was attempting to get paid, but the judge declined to apply the “Tariff guidelines” in calculating his compensation. The executor appealed, holding they should be filed (and no doubt getting more money), beneficiaries appeal. Issue: What test do we use to determine how compensation is meted out Ratio: Customary tariff guidelines are appropriate to use in determining compensation but must be cross checked against the “5 factors” as discussed in Toronto General Trusts Corp v Central Ontario Railway. No one factor is more important than another, nor should penalties necessarily be meted out for failure to meet a factor Analysis: The judges admit here that there is no exact science as to how much someone should be compensated. This is no doubt why big trusts get paid out per professional rates to avoid this stuff. Based on the facts, the estate was large and complex, and even though he didn’t do a good job of keeping his time records, he clearly did spend a lot of time and his skill and ability met and exceeded any reasonable standard of competence. Based on this they found the compensation fair and reasonable Note: Judges very clear that one factor is not dominant Holding: Dismissed, gets increased funds Re Assaf Estate Facts: The trustee’s widow claimed ~87k worth of compensation for estate administration. The beneficiaries objected due to the fact that he forged documents, committed perjury and breached his duties to the beneficiaries. The truth of the matter was that the Assaf estate was possibly the most litigious in Ontario history with over 30 law suits and over 130 orders or endorsements. Of course now that the estate has been wiped out, they want to settle and this settlement proportion is an even larger amount of the estate than it would have been but for the litigation. Assaf’s bad actions were partially due to the acrimony between the parties and the trustee (Bosada) even spent 2 ½ years in jail thanks to them. William did this because the mother was going to be screwed out of the estate Issue: In the event of wrong doing by the trustee, how does the court determine how they should be compensated? Ratio: Equity concerns govern in the face of judicial discretion regarding compensation. Analysis: Clearly the court needed to punish him for his frankly illegal behaviour (remembering that trustees are allowed to be dishonourable, but not participate in anything illegal). As a lawyer he knew better and he paid the price accordingly. That being said, the court found it would be extremely unfair due to Bosada amazing amount of work he did to completely deny him compensation. Other than the illegal acts, everything else was spit spot and his actions caused no harm to the estate. In fact, but for his actions, the estate would have probably crumbled into further disrepair and he endured considerable emotional distress, all predicated on a favour to his sister and nephew. Holding: Half compensation Zimmerman v McMichael Estate Facts: A trust existed with approx. ~5M in value. Zimmerman failed to pass accounts appropriately. After multiple attempts, he was finally removed from being a trustee and was ordered to deliver the trust property to the Fenwicks. He did such a god-awful job that it was effectively impossible to figure out what was going on. To be fair he had substance abuse issues, anxiety and depression but he still did a garbage job nonetheless. He comingled property, paid himself 450k without authorization, failed to provide proper accounts, made low interest loans to himself and used trust property (including a BMW and an art collection) as if it was his own Issue: Can a court reject compensation for a trustee? Ratio: Where a trustee demonstrates no skill or diligence in administering the trust and/or breaches his fiduciary duties in doing so, a court may deny compensation. Holding: He had to pay back all precompensation, plus pay for the accounts, plus pay an additional 2k for a missing sketch Indemnification Trustee Act – S.95 Directory: wp-content -> uploads -> gravity forms -> 1-7d6c8355b7f07846e8789d85deabdb60 -> 2016 gravity forms -> Earl E. Klein Jr gravity forms -> Narrative of how the entry meets the award criteria – July 28, 2016 gravity forms -> Revonda M. Baldwin gravity forms -> Air Atlanta Icelandic November 2006 – Current 2016 -> Ip master Guide 1-7d6c8355b7f07846e8789d85deabdb60 -> Insurance Law can Download 0.79 Mb. Share with your friends:
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