The Executor and Trustee – your most important appointment

We’ve raised this issue time and time again in this blog. Sadly, news articles continue to surface that describe Executors stealing the money that they should be distributing. In a previous post we referenced four cases of Trustees either helping themselves to funds, taking exorbitant fees or simply money just going missing and not being accounted for.

Over the weekend, the Globe and Mail published a feature article of one of the most egregious cases in Canada and it gave some interesting insight into the process of distributing an estate. Paul Penna had a very successful career in the mining industry, and was a generous philanthropist throughout his life. Hardly a day went by that he didn’t make some kind of charitable gesture, but even though he gave much of his money away throughout his lifetime, he died with an estate worth about $24 million. He hired a top city law firm to create his Will, but unfortunately he appointed a long-term friend and colleague, Barry Landen, to be his Executor. Mr Landon was appointed to gather up Mr Penna’s estate and distribute it according to the wishes outlined in the Will. Sadly, over the course of seven years Mr Landen helped himself to the money which should have been passed on to the charities.

The Globe and Mail article explains some of the nuances around probating a Will – the estate lawyer “said in a court affidavit that she recommended the complex will be probated, a legal process that registers a will with court officials to ensure its legality and to oversee distributions to beneficiaries. Ms. Roberts’ affidavit said Mr. Penna’s trustees declined to probate the will …By not probating the will, the estate avoided Ontario probate fees that can be exorbitant – but it also meant there was no court supervision and no assurance that the beneficiaries would be notified.”

This successful businessman and philanthropist accumulated $24 million which he bequested to charity, and where did it end up? “Most of the money ($3 Million) was used to buy and renovate a newly purchased home in Forest Hill for Mr Landen. He also charged the estate $122,000 for Raptors and Leafs tickets and special entertainment suites at the games. Another $130,000 was spent to lease five cars, including a Porsche and Mercedes.”  and “about $12-million was unaccounted for.”

At the same time another Canadian family saw their charitable bequest hijacked by a family friend they had appointed as a trustee. In 2009, the relatives of Robert and Signe McMichael discovered that the estate’s trustee, former Crown attorney Geoffrey Zimmerman, had helped himself to more than $1-million of a $5-million bequest designated for the McMichael Canadian Art Collection.

The painful lesson from these cases is that you must choose your Executor wisely. They will potentially have unfettered access to sums of money that they are not accustomed to dealing with, and although they are permitted to take a fee, it can be very tempting for some people to dip into the estate a little more than they are entitled to. If you are not sure whether you have a suitable candidate to act as Executor there are a couple of options open to you; name more than one Executor to act jointly so that all decisions have to be agreed upon, or if you feel that this arrangement could introduce its own issues, you can hire a professional. Most banks offer Estate Trustee services.

7 thoughts on “The Executor and Trustee – your most important appointment

  1. Sandra says:

    My son girl friend is now in a position. Her school and car were to be paid for by the exector but there was always and excuse why he could not do this. Now the bank wants there money but they found out the executor spent it. What can she do

  2. Hi Sandra, thanks for your comment.

    This type of thing is more common than people think, but unfortunately we cannot give legal advice on this blog. The best thing for you to do is to speak to a lawyer with experience in estate planning law. You need professional help with this one.

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