Co-Trustees Who Disagree: What Can You Do in Ontario?

Being one of several trustees can feel like being in a group project where one person will not answer emails, or another keeps making decisions without telling anyone. When trustees cannot agree, one person's stalling or solo moves can make things hard for everyone involved.

This article explains the main tools Ontario law gives you when co-trustees disagree. It is general information. The right path depends on the trust document and the facts, so a lawyer should confirm it for your situation.

Start with the trust document

How trustees must make decisions, whether they must act together, and whether one can act alone are usually questions answered first by the will or trust document. Read it closely before taking any step. Even the Trustee Act's investment powers do not authorize or require a trustee to act inconsistently with the terms of the trust.

The document may also say who can appoint a replacement trustee, and what compensation a trustee receives. If you cannot tell from the wording what the voting or decision-making rule is, that is a good point to get legal advice before the dispute hardens.

Practical steps before going to court

Many disagreements are about communication rather than law. A calm, written approach often helps, and it also creates a record if the matter later reaches a judge.

• Put proposals and responses in writing, with a clear date for a reply.
• Keep copies of statements, invoices and decisions.
• Do not act alone on major decisions the document may require trustees to make together.
• Raise investment concerns early. A trustee must use the care, skill, diligence and judgment of a prudent investor.
• Keep personal money and trust money separate.

If you pay a trust expense out of your own pocket, you may recover the same amount from the trust property, but the court may later disallow the expense. Keep receipts and explain why the expense was needed.

Asking the court for directions

When trustees are genuinely stuck, a trustee may apply to the Superior Court of Justice, without starting an action, for the court's opinion, advice or direction on managing trust property. This can resolve a deadlock without accusing anyone of wrongdoing.

Passing of accounts is another route. A trustee who wants to pass the accounts may file them in the office of the Superior Court of Justice. A person who appears to have a financial interest in an estate may also bring a motion for an order requiring the estate trustee to pass accounts. That puts the trustees' dealings in front of a judge.

When one trustee is the problem

A trustee who dies, stays out of Ontario for more than 12 months, refuses or is unfit to act, or is incapable of acting can be replaced by written appointment. The person named in the trust document appoints. If no one is named, the surviving or continuing trustees do, or the personal representatives of the last surviving trustee. If a sole trustee dies, their personal representatives may exercise the trustee's powers until new trustees are appointed, and a sole or last surviving trustee may also appoint a successor by will.

The Superior Court of Justice can also appoint a new trustee, either replacing or adding to existing ones. For estate trustees (executors), the court can remove them on any ground on which it could remove any other trustee, and appoint someone in their place.

On liability, a court may relieve a trustee from personal liability for a breach of trust if the trustee acted honestly and reasonably and ought fairly to be excused. That relief does not apply to investment losses. For those, the trustee relies on the protection for following an investment plan or strategy that a prudent investor could adopt. A trustee who simply goes along with a co-trustee's risky decision should not assume they are protected.

What to do next

• Get a copy of the full trust document and any court orders.
• Write down what has happened, with dates.
• Ask for a meeting or written exchange to try to resolve it.
• If the stalemate continues, speak to a lawyer about directions, accounts, or replacing a trustee.
• Remember that delay can matter, because legal claims have time limits.

Compensation is a common flashpoint. A trustee is entitled to a fair and reasonable allowance for their care, pains and trouble and the time spent, and a judge of the Superior Court of Justice fixes it. Compensation may be settled even if the estate is not before the court in an action, and a judge may allow it on a passing of accounts. These rules do not apply where the trust document itself fixes the allowance. Agree on how this will be handled early.

Frequently asked questions