Executor Self-Dealing in Ontario: When a Fiduciary Favours Themselves

Most people appoint an executor they trust completely — a spouse, an adult child, a sibling — and never imagine that person might put their own interests ahead of the estate's. But executor self-dealing happens, and when it does, beneficiaries are often left wondering whether what they're seeing is a genuine problem or simply how estate administration normally looks from the outside.

This article explains what self-dealing means for an Ontario estate trustee beyond the obvious example of buying estate property, the range of behaviour that crosses the line, and the concrete steps beneficiaries can take when they suspect it.

The Fiduciary Duty, in Plain Language

An estate trustee, still commonly called an executor, is a fiduciary. That means they hold a position of trust requiring them to act in the best interests of the estate and its beneficiaries, not their own. Two related principles flow from this:

• The no-conflict rule — an executor generally can't put themselves in a position where their personal interests conflict, or could reasonably appear to conflict, with their duty to the estate.
• The no-profit rule — an executor generally can't use their position to personally profit beyond what they're properly entitled to, such as approved compensation.

These aren't technicalities. They exist because an executor typically has near-total practical control over estate assets — bank accounts, real property, investments — while beneficiaries usually have far less visibility into what's actually happening.

What Self-Dealing Can Look Like

• Paying themselves compensation informally, without the will's authority or a proper court process behind it
• Using estate funds or property for personal purposes, even temporarily or with the intention of "paying it back"
• Delaying distributions to beneficiaries without a legitimate reason, particularly where the delay benefits the executor personally
• Favouring themselves when they're also a beneficiary, in ways that go beyond their proper, disclosed share
• Directing estate business, contracts, or asset sales toward a company or person connected to them, without disclosing the connection
• Purchasing an estate asset for themselves at less than fair market value, instead of selling it openly — a specific and well-recognized form of self-dealing in its own right

Why the Rule Exists

The no-conflict and no-profit rules exist precisely because it's so easy for an executor's personal and estate interests to overlap, especially when they're also a family member and beneficiary. The rule doesn't assume bad faith — it removes the need to prove it. An arrangement that benefits the executor at the estate's expense can be improper even if the executor genuinely believed it was fine.

Ontario's Trustee Act gives an estate trustee a right only to a "fair and reasonable allowance" for their work, as approved by the court or set out in the will — not an automatic entitlement to pay themselves whatever amount they think is fair, on whatever schedule suits them.

What Beneficiaries Can Do About It

1. Request information first. Beneficiaries are generally entitled to a reasonable accounting of estate assets, income, expenses, and distributions. Start with a clear, written request.
2. Document the specific concern. Vague unease is hard to act on; a specific transaction, date, and amount is not.
3. Ask for a formal passing of accounts if informal requests fail. Beneficiaries can apply to the court to require the estate trustee to formally "pass accounts," presenting a detailed record of the estate's finances for court review.
4. Consider an application to remove the estate trustee. Where the conduct is serious enough, a court can remove an estate trustee and appoint a replacement, particularly where trust in their ability to act impartially has genuinely broken down.
5. Get legal advice before confronting the executor directly. Especially within families, an accusatory conversation can escalate a resolvable problem into a far more expensive dispute.

Consequences for the Executor

An estate trustee found to have engaged in self-dealing can face several consequences: being ordered to repay the estate for any loss or improper profit, having their compensation reduced or denied entirely, being removed from the role, and, in serious cases, being held personally liable beyond their protection as executor. None of these outcomes are automatic — they follow from a court weighing the specific facts.

Frequently asked questions