Can a BC Court Excuse an Executor Who Made an Honest Mistake?

Being an executor means handling someone else's property under rules that are easy to get wrong. A payment goes out too early, a debt is missed, or a share goes to the wrong person. If beneficiaries then say the estate lost money, the executor may worry about being personally responsible.

British Columbia's Trustee Act has a safety valve for some of these situations. This article explains in plain terms what it does, where it fits in an estate dispute, and what beneficiaries can do instead. It is general information, not advice on your situation.

This article covers the law of British Columbia.

What section 96 of the Trustee Act says

If a trustee is or may be personally liable for a breach of trust, but acted honestly and reasonably, the court may relieve the trustee wholly or partly from that liability.

Two things stand out. First, the court has discretion: it may relieve, and it may do so in whole or only in part. Second, honesty alone is not the test. The words are honestly and reasonably, so a sincere but careless approach may not be enough. How the court applies those words depends on the facts, and a lawyer can tell you how they might apply to yours.

What an executor can be liable for

A personal representative is liable, to the extent of the estate's assets, for the deceased person's wrongful acts or breaches, subject to contrary enactments. That is liability inherited from the deceased. Separately, an executor can face a claim for their own breach of trust in how they run the estate. Section 96 is aimed at that second kind of exposure.

Common places where mistakes happen are listed below.

• Distributing too early. A personal representative must not distribute within the 210 days after a grant is issued, except by court order.
• Distributing while a claim is pending. After the 210 days, distribution needs court consent, or the consent the section requires, if a proceeding about who the beneficiaries are, a wills variation claim, or other proceedings that may affect distribution is pending.
• Paying a minor's share to the wrong person. Where a minor's interest has no trustee or trust, it must go to the Public Guardian and Trustee in trust for the minor, not to the minor or a parent. The exception is where the court, on notice, appoints a trustee before distribution.
• Missing assets or debts. An applicant for a grant must make a diligent search and inquiry to find the deceased person's property and liabilities.

Accounts: where mistakes usually come to light

Executors, administrators and trustees under a will must obtain an order for passing their first accounts within two years of the grant or appointment, unless the exceptions in section 99 apply. Preparing accounts that show assets, receipts, disbursements and distribution, and getting the court's approval of them, is listed among an executor's duties in the provincial government guide. Because the exceptions can be detailed, check the full text of section 99 or ask a lawyer whether one applies.

A beneficiary can also push the process. If a beneficiary serves notice requiring it, the representative must pass accounts annually, within one month of the anniversary. A trustee who fails to pass accounts as required may be called before the court to explain why.

Clear, complete records matter for a request for relief. An executor who can show what was done, why, and on what information is better placed to show they acted reasonably.

What beneficiaries can do instead

Seeking to hold an executor responsible is not the only option. Depending on the problem, a beneficiary may consider the following.

If an executor is removed, the court must generally appoint a substitute who consents to act, and the former representative's grant is revoked. Removal as personal representative does not by itself remove the person as trustee of a trust under the will; that needs separate relief.

Time limits and what to do next

Court time limits under the Limitation Act generally depend on when a claim is discovered, and fraud and trust claims have special rules. Discovery is the first day the person knew or reasonably ought to have known of the loss, its cause, the defendant's act, and that a court proceeding is appropriate. There is also an ultimate period of 15 years from the act or omission, but where the act or omission was wilfully concealed, it is deemed to have taken place on the discovery date, and fraud and trust claims are covered by separate rules in section 12. Fraud and trust claims have special rules, including that the trustee bears the burden of proving the claim was discovered. Because those rules can change the deadline, get advice early rather than relying on a general figure.

• Executors: keep every receipt, bank statement and note explaining major decisions.
• Executors: do not distribute within the 210 days after the grant unless a court orders it, and check for pending claims that may delay distribution after that.
• Executors: get advice before paying out any share to or for a minor.
• Beneficiaries: ask for an accounting in writing and keep copies of what you receive.
• Beneficiaries: note dates when you learned of a problem.
• Both sides: speak with a lawyer before applying for, or opposing, relief under section 96.

Frequently asked questions