Estate Planning

Foreign Trustees - Herring Estate (Re)

By Hull and Hull LLP

In yesterday's blog, I mentioned that my blogs for the balance of this week would focus on a selection of recent trust law cases. A case that merits mentioning in the category of foreign trustees is Herring Estate (Re), 2009 CanLII 44707 (ON. S.C). This is a decision by the Honourable Justice D.M. Brown that provides clear and helpful guidance as to the circumstances under which a foreign trustee can act as ancillary estate trustee.

In this case, the Deceased was a US resident who created an inter vivos trust in North Carolina naming a licensed trust company (the 'trust company') there as the sole trustee. The trust company was also named executor of his Will. The Deceased's wife was the sole beneficiary of the trust and the trust was the sole beneficiary of his residuary estate. Probate of the Deceased's Will was issued in North Carolina for the estate, which was substantial in value.

The Deceased owned a new condo unit in Toronto worth $360,000 but with respect to which the estate would owe $126,831 on occupancy date, which had not yet occurred. There were no debts owing in Ontario at the time of the application.

The trust company's application for a certificate of ancillary appointment of estate trustee with a will was rejected by the Local Estates Registrar because the trust company was not an approved registered trust corporation under section 175(2) of the Loan and Trust Corporations Act, R.S.O. 1990, c. L.25 (that is no certificate could be issued to it).

The Court found that while section 175 permitted it to grant probate to a trust corporation registered under the Act without having to post security for acting as an executor or trustee, it did not prohibit the appointment as estate trustee, under an ancillary application, of a foreign trust company that is not registered under the Act.

Section 213(1) of the Act, which provides that "no person, other than a registered corporation, shall conduct, undertake or transact in Ontario the business of a loan corporation or of a trust corporation' also did not disqualify the trust company from acting as ancillary estate trustee. By fulfilling its duties under the will and the inter vivos trust, the Court found that the trust company would not be offering its services to the Ontario public.

The trust company was awarded the certificate of ancillary appointment of estate trustee with a will but was ordered to post a bond in the amount of $125,000, which was the approximate amount owing on the closing of the condominium as some security was required because the affidavit from the trust company did not contain a clear, unambiguous statement that the company, as estate trustee, intended to make the payment due on the interim occupancy date.

Thanks for reading.

Craig

Full post as published by Toronto Estate Law Blog on October 27, 2010 (boomark / email).