CANADA Law and Practice Contributed by: Ian Hull, Suzana Popovic-Montag and Nick Esterbauer, Hull & Hull LLP
would otherwise have received a greater share of the estate may commence legal proceedings to: • challenge the validity of the deceased’s will or inter vivos gifts; or • require the family member who assisted the deceased to account for transactions carried out on the deceased’s behalf. 5.2 Mechanism for Compensation Various remedies may be available in wealth disputes, depending on the nature of the dispute and the assets available to fund any compensation or damages awarded. Parties successful in establishing unjust enrichment, quantum meruit and/or joint family venture claims may be entitled to a constructive trust over certain estate assets. Where joint assets pass by right of survivorship to a surviving joint tenant, a beneficiary of the estate may assert that the presumption of resulting trust applies and that the survivor holds the assets in trust for the estate. On hearing dependants’ relief applications, Canadian courts can make a variety of orders, including award - ing an interest in assets that would otherwise pass outside an estate – for example, the proceeds of a life insurance policy or other assets subject to a benefi - ciary designation. In passings of accounts, courts may make various orders against a fiduciary who has failed to exercise their duties diligently and in good faith. 6. Roles and Responsibilities of Fiduciaries 6.1 Prevalence of Corporate Fiduciaries Canadian trust companies may act as estate trus - tees, estate trustees during litigation, and attorneys for or guardians of property. The rate at which trust companies are compensated may differ from the rate that fiduciaries are typically able to claim on a pass - ing of accounts, and is often set out in a fee sched -
ule attached to the testamentary document or order appointing the trust company. 6.2 Fiduciary Liabilities Trustees may be personally liable for any loss to the trust property resulting from a breach of fiduciary duty. Trustees acting in good faith may also be held liable for acting honestly upon mistaken facts or misunder - standing, but personal liability is typically limited to the In some situations, it may be unreasonable to limit liability for a corporation to the corporation itself. Canadian courts may “pierce the corporate veil” to hold corporate shareholders and/or directors liable for the corporation’s actions. Courts may be more likely to hold the corporation’s directing mind(s) account - able in situations where fraud, breach of trust and/or an intentional tort has/have been committed by the corporation’s principals, or where the corporation is deliberately undercapitalised in relation to legitimate claims. value of the trust property. Piercing the Corporate Veil Mechanisms to Protect Fiduciaries From Liability Errors and omissions insurance may be available to trustees, including estate trustees. Such insur - ance policies typically cover trustees for the costs of defence and indemnity for damages awarded against them, personally, arising from errors and omissions committed during the administration of the trust. Exculpatory and indemnity clauses purport to protect fiduciaries from personal liability for losses resulting from their administration of a trust or estate. They fre - quently appear in trust documents and protect trus - tees who exercise their authority in good faith. Canadian courts have considered the validity of excul - patory clauses on numerous occasions. Clauses that protect trustees from liability are typically valid, but are not interpreted to protect fiduciaries from fraud and/or dishonesty. 6.3 Fiduciary Regulation Canadian fiduciaries are bound by the prudent inves - tor rule and the best interests standard, and must
149 CHAMBERS.COM
Powered by FlippingBook