Can an Executor Be Sued by Beneficiaries in British Columbia?

Being an executor is a position of trust. You manage property that belongs to other people, and beneficiaries may feel that you are not doing it well, or not doing it quickly enough. Executors, in turn, worry that an honest mistake could cost them personally.

This article explains in general terms how beneficiaries can challenge an executor in British Columbia, what the court looks at and how executors can reduce their risk. Every dispute turns on its own facts, so use this as a map, not as advice on your case.

This article covers the law of British Columbia.

What a beneficiary can ask the court to do

A beneficiary does not have to simply accept what an executor tells them. The law gives several routes, depending on the problem.

• Ask the court to remove or pass over the personal representative. Any person with an interest in the estate may apply.
• Ask for an order passing the accounts or fixing the executor's remuneration. A personal representative or anyone interested in the estate may apply.
• With leave of the court, sue or defend in their own name on behalf of the estate.

Other remedies depend on the facts and the kind of wrong alleged, and a lawyer can explain which apply to a particular situation.

Grounds for removal

Subject to the will, the court may remove a personal representative on listed grounds. These include refusing to act without renouncing, incapacity, purporting to resign, a conviction for an offence involving dishonesty, undischarged bankruptcy, a Patients Property Act order, or being unable or unwilling to carry out duties to the point of hampering administration.

A creditor may apply on the dishonesty or bankruptcy grounds only if their claim exceeds a prescribed amount. Removal as personal representative does not remove the person as a trustee. If the court removes a representative, it must generally appoint a consenting substitute, and the former representative's grant is revoked. The former representative must then hand over the estate property and records within 30 days of the substitution order.

Acting on behalf of the estate

Sometimes the problem is that the executor will not pursue a claim the estate has. A beneficiary, intestate successor or wills-variation claimant may sue in their own name on behalf of the estate, but only with leave of the court. Leave requires reasonable efforts to get the personal representative to act, notice, good faith, and that the step is necessary or expedient to protect the estate. This is not a step to take casually, and a lawyer should review it first.

How the court views honest mistakes and liability

The court may excuse a trustee, wholly or partly, from personal liability for a breach of trust if they acted honestly and reasonably and ought fairly to be excused. This rule applies to personal representatives. In practice, that means careful records, sensible advice and good communication carry real weight.

Some risks are more concrete. A personal representative who distributes property without a clearance certificate from the Canada Revenue Agency is personally liable for the unpaid tax, up to the value of the property distributed. Government guidance also warns that an executor who distributes the estate while debts remain unpaid may be held personally liable for them.

On the other hand, a personal representative is liable for the deceased's wrongful acts or breaches only up to the value of the estate assets they control.

How executors can protect themselves

• Do not distribute within 210 days after the grant is issued unless the court orders otherwise or the required consents are in place.
• Obtain a clearance certificate from the Minister of National Revenue before distributing.
• Prepare accounts showing assets, receipts, disbursements and distribution, and have them approved by the court or the people receiving the assets.
• Ask the court for advice or direction on a difficult question, without starting any other proceeding.
• Know the remuneration rules: the allowance is not more than 5% of the gross aggregate value of the estate assets, as fixed by the court or a registrar, unless the will sets the fee.

Beneficiaries can also require accounts. An executor under a will must obtain an order passing their first accounts within 2 years from the grant of probate, unless all beneficiaries approve the accounts in writing. The exact reach of this rule is worth confirming with a lawyer for your estate.

What to do next

• Beneficiaries: ask the executor in writing for an inventory and accounts, and keep copies.
• Executors: keep every receipt, bank statement and note of decisions.
• Do not distribute until debts, tax and the waiting period are dealt with.
• Be aware that an order fixing compensation by a registrar can be reviewed if an application is made within 14 clear days after it is entered or filed.
• Speak to a lawyer early, before positions harden or a deadline passes.

Frequently asked questions