Can an Estate Trustee Also Be a Beneficiary in Ontario?

Many wills name a spouse, child or sibling as estate trustee and also leave that same person a share of the estate. If that is you, it is natural to wonder whether there is a conflict of interest, whether you can be paid, and how to avoid a fight with the other beneficiaries.

This article explains in general terms how the two roles fit together in Ontario, how trustee compensation works, and the habits that help you act fairly. Every estate is different, so use this as a map and not as advice on your own situation.

Can the same person be trustee and beneficiary?

With a will, the person who applies for probate is usually the estate trustee named in it. People close to the deceased are often the ones named, but how the two roles fit together depends on the facts, so it is worth confirming with a lawyer.

Being named does not oblige you to act. A person named in a will can decline to act. If you are worried about the strain, or about being accused of unfairness, declining is a real option worth discussing with a lawyer before you take any steps as trustee.

If there is no will, the spouse or common-law partner usually has first right to apply, followed by a close adult relative such as a child, parent, grandchild, sibling, nephew or niece, and the court may appoint whoever it finds most appropriate. People in that position are often beneficiaries too.

What the trustee role actually requires

An Ontario estate trustee is responsible for winding up the deceased's affairs, paying taxes, bills and debts, collecting assets, and carrying out the will's wishes in line with the law.

That is where the tension comes from. As beneficiary you have your own interest, but as trustee your decisions about what to sell, when to distribute and how to value things affect the others as well. The practical answer is transparency: explain what you are doing, keep records, and avoid decisions that benefit you at others' expense.

• Notify the beneficiaries before you file. When applying for probate, the applicant must send or give the application to the estate beneficiaries before filing with the court, signed before a Commissioner for Taking Affidavits.
• Remember anyone under 18. If any beneficiary is under 18, the Office of the Children's Lawyer must be served when applying for a certificate of appointment of estate trustee.
• Expect people to ask to be kept informed. A person with a financial interest can file Form 74P to be notified of estate proceedings.

Getting paid: what you can and cannot do

A trustee is entitled to a fair and reasonable allowance for the care, pains, trouble and time spent on the estate, as a judge allows, although this does not apply where the will or other instrument fixes the allowance. So compensation is generally allowed, but it is measured and can be reviewed.

The risk lies in paying yourself first. An estate trustee may take compensation in advance only in limited situations, and doing so outside them risks liability for breach of trust, a reduced allowance and repayment on a passing of accounts.

If none of those applies, do not take payment on your own authority. A trustee who is also a beneficiary should be especially careful, because the other beneficiaries will be quick to notice. Agreeing the figure in writing, or asking the court, is far safer than hoping nobody objects.

Acting fairly toward co-beneficiaries

Fairness is mostly about process. How to handle your own interest alongside your duties depends on the situation, so it is worth confirming with a lawyer. If a decision would benefit you personally, such as who gets a particular property or at what value, get the other beneficiaries' informed agreement in writing or get legal advice first.

If you are unsure how to bring a question before the court, a person who appears to have a financial interest in an estate may apply for directions on the procedure under Rule 75.06 of the Rules of Civil Procedure. That route can be useful when relationships are tense.

Also keep in mind that a surviving spouse may have a separate choice to make. A surviving spouse can elect an equalization payment under the Family Law Act instead of what the will or intestacy gives, and the Election of Surviving Spouse form must be filed no later than six months from the date of death. If you are that spouse and the trustee, get advice early, since that choice affects both of your roles.

What to do next

• Decide whether you want to act at all; you can decline if you are named.
• Tell the other beneficiaries, in writing, that you are the named trustee and that you are also a beneficiary.
• Keep a simple record of every payment, sale and decision, with dates and reasons.
• Do not pay yourself any compensation until you have everyone's agreement, court approval, or a clear provision in the will.
• Give beneficiaries notice of the probate application before you file.
• If a beneficiary is a minor, plan for service on the Office of the Children's Lawyer.
• Speak to a lawyer if anyone disputes your role, your pay or your decisions.

Frequently asked questions