Fiduciary Duties Of Executors And Trustees In Ontario

An executor controls property that belongs to other people. The beneficiaries can’t manage it, can’t sell it, and often can’t even see what is happening to it. 

Ontario law answers that imbalance with imposing a fiduciary duty: a set of obligations of loyalty, care, and candour that beneficiaries can enforce in court.

When an estate trustee falls short, the consequences are real: removal, personal liability for losses, and legal costs that come out of their own pocket rather than the estate. Agostino v. Agostino, 2025 ONSC 6009 shows how quickly an estate can unravel when two co-executors cannot work together. The court refused to leave either of them in charge and put a neutral professional in control of the estate.

A fiduciary is someone who holds power over another person’s interests and must use it for that person’s benefit. 

Executors (called estate trustees in Ontario) and trustees are fiduciaries by definition. The beneficiaries are vulnerable to how that power is used, and the law holds the trustee to a correspondingly high standard.

These duties come from the common law of trusts and from Ontario’s Trustee Act, R.S.O. 1990, c. T.23. They apply whether the trustee was named in a will, appointed by the court, or is managing a trust set up during the deceased’s lifetime. 

A trustee must act in the beneficiaries’ interests (even if it conflicts with their own self interest). For example, a trustee generally should not:

•  Buy estate assets for themselves without the consent of the beneficiaries or the approval of the court, even at an apparently fair price;
•  Personally profit from their position at the expense of the beneficiaries; or
•   Accept commissions or other benefits from people doing business with the estate.

Where there are several beneficiaries, the trustee must treat them even-handedly, subject to what the will says. This comes up most often where a will gives one person the income from the estate for life and leaves the capital to others. The trustee cannot favour either side.

It also comes up in family estates where the trustee is closer to some siblings than others. A trustee who openly aligns with one faction hands the other beneficiaries a strong argument for removal.

Trustees must manage estate property with care. The traditional common-law standard, restated by the Supreme Court of Canada in Fales v. Canada Permanent Trust Co., [1977] 2 S.C.R. 302, is that of a person of ordinary prudence managing their own affairs. For investments, section 27 of the Trustee Act sets a statutory standard: the care, skill, diligence, and judgment of a prudent investor, including diversification appropriate to the trust.

The standard is objective. Inexperience is not a defence.

In practical terms, prudence means insuring and securing real property, keeping utilities and mortgage payments current, not leaving cash idle for years, avoiding speculative investments, and acting quickly when an asset is losing value.

The testator chose this person’s judgment. Trustees can and should retain lawyers, accountants, and investment advisors, but the decisions remain theirs. Rubber-stamping advice without thinking it through is not enough.

The Trustee Act does permit a trustee to delegate investment decisions to an agent under section 27.1, but only in accordance with a written investment plan and with ongoing monitoring. Outside that framework, handing control of the estate to someone else can itself be a breach.

Where there are co-executors, the general rule is that they must act together unless the will says otherwise.

A trustee must keep complete records of every receipt, payment, sale, and distribution. Beneficiaries are entitled to information about the administration and, ultimately, to an accounting. The formal mechanism is a passing of accounts, in which the trustee submits the accounts to the court and beneficiaries can object to any item. 

Carmela Agostino died in June 2024. Her will named her son Francesco and her daughter Lucia as co-estate trustees. It was not the first time she had paired them: they had also been her co-attorneys under her powers of attorney. That arrangement collapsed while she was alive. In 2021, Francesco’s daughter applied to replace them as guardian, and the order was made on consent.

The family was divided into two camps, with Lucia and her sister Mirella on one side and the remaining siblings and grandchildren on the other. After the death, the estate went nowhere. Its main asset, the family home, was subject to a reverse mortgage that fell into default, and the lender started enforcement proceedings. The property insurance lapsed.

Each co-executor acted alone. Francesco arranged for a sibling to pay three months of insurance premiums, after which the payments stopped. His daughter appears to have cancelled the gas account, leaving the house without heat and at risk of burst pipes. Lucia negotiated some form of forbearance with the mortgage lender without telling Francesco or his lawyer, and then stopped responding to the lender’s follow-up.

Francesco applied for the appointment of an estate trustee during litigation (ETDL) or a neutral estate trustee. Lucia counter-applied to have Francesco passed over so that she could act alone.

Section 37(1) of the Trustee Act allows the court to remove an estate trustee and appoint a replacement. Justice Akbarali applied the principles summarized in La Calamita v. La Calamita, 2024 ONSC 4219.

Removal requires the clearest of evidence and must be necessary for the proper administration of the estate. Courts are reluctant to override the testator’s choice. Removal is not a punishment; the guiding concern is the welfare of the beneficiaries. Friction between co-executors is not enough on its own; it becomes enough when it prevents the estate from being properly administered.

The court’s power to appoint an ETDL comes from rule 75.06(3)(f) of the Rules of Civil Procedure. Relevant factors include whether a trustee may be a witness in related litigation, conflicts of interest, hostility and poor communication among the parties, and settlement discussions that exclude some of them.

The court found that the friction here had gone past impeding the administration. It had put the estate at risk: an asset in enforcement and a house with no insurance.

The court rejected Lucia’s account that she had tried to cooperate and Francesco had obstructed her. The record showed more than 20 calls by Lucia to the police about her siblings, including when they tried to discuss the estate with her. She had insisted that Francesco communicate only through counsel. Her call logs showed very few attempts to reach him, and she refused to say what she had removed from her mother’s house. 

Francesco did not escape criticism either. His own unilateral steps, and the cancelled gas account, contributed to the problem. Lucia argued that removing only Francesco would solve the problem. The court disagreed for two reasons. 

First, the deceased had deliberately named one child from each camp. The appointment was a package deal designed so that neither side could dominate, and leaving Lucia alone in charge would defeat that intention. 

Second, Lucia had shown partiality toward Mirella. She supported Mirella’s separate claim for caregiving compensation, which the other beneficiaries opposed, and she might be a witness to that litigation. She spent time at the house with Mirella while the other beneficiaries were excluded. She did not communicate with any beneficiary other than Mirella about the estate.

Every beneficiary said they would accept a neutral trustee. The court granted Francesco’s application and appointed an experienced ETDL to administer the estate. 

Lucia’s full-indemnity costs came to roughly $92,900; Francesco’s to roughly $51,800. The court ordered the estate to reimburse $40,000 to Francesco and $50,000 to Lucia. Each absorbs the balance personally.

The legal issues were simple, and the litigation was driven by family conflict rather than the needs of the estate. Lucia’s costs were out of proportion both to the issues and to the size of the estate. Moreover, she had earlier offered to accept a neutral trustee — the very outcome the hearing produced. The court relied on Muscat, which confirms that an estate is not a fund litigants can draw on automatically, and that an estate trustee who acts unreasonably or for their own benefit can be ordered to pay costs personally.

At Pinto Shekib LLP, we act in complex Ontario estate disputes, including will challenges, trustee removal, undue influence, suspicious circumstances and fraud matters. Contact us at 416.901.9984 or info@pintoshekib.ca.