From Duty to Liability: The Evolution of Trustee Responsibility in Ontario Courts

This article was originally published in Law360 Canada.

The recent case of MacBeth Estate from the Ontario Court of Appeal (2025 ONCA 360) is a reminder of the personal liability that estate trustees may be exposed to if their actions warrant it — and an example of how the court will address estate disputes where there has been a breakdown in trust between the estate trustee and a beneficiary.

The dispute related to the Estate of Ruth MacBeth, whose estate trustees were her friends, Robert and Catherine Hurst. The deceased’s son, John MacBeth, was the sole beneficiary of the estate.

As the sole beneficiary of the estate, John brought a motion to, among other things, seek the Hursts’ removal as trustees. The basis for seeking their removal centered around the estate trustees’ actions with respect to a family cottage which formed part of the estate. In particular, the motion judge found that the estate trustees had not advised the beneficiary they were selling the cottage; that the estate trustees made it difficult for the beneficiary to collect personal belongings from the cottage; and that the actions taken by the estate trustees led to a capital gains tax that could have otherwise been avoided or reduced, all of which led the motion judge to find that, going forward, the Hursts would likely mishandle the estate if they remained as estate trustees.

The motion judge removed the Hursts as trustees and replaced them with John, the sole beneficiary. The Hursts appealed the order. The Court of Appeal upheld the Hursts’ removal and the balance of the motion judge’s order, finding that the motion judge had enough evidence to justify the removal.

When it came to the costs of the appeal, the Hursts argued the estate should pay their legal costs. Both case law and the Trustee Act RSO 1990 (section 23.1) provide authority for an estate trustee to pay their properly incurred costs out of the estate, and courts have long held “trustees are entitled to be indemnified for all costs, including legal costs, which they have reasonably incurred” (Goodman Estate v Geffen, 1991 CanLII 69 (SCC) — however, the costs must be reasonably incurred.

Here, the court found that the appeal was unnecessary and that it was not brought in the interests of the estate, and as such, the court applied personal cost consequences to the estate trustees. Rather than the estate paying for John’s costs of responding to the appeal, the estate trustees were personally ordered to pay John’s costs.  

This case serves as a reminder of the duties of estate trustees, including that a trustee must act in the best interests of the beneficiaries, that trustees have a duty to communicate with beneficiaries and to keep beneficiaries informed, and a duty to act reasonably in exercising their discretion. Further, in acting in the best interests of the beneficiaries, estate trustees have a duty to maximize the assets and value of the estate.

On the other hand, if trustees act unreasonably, fail to communicate, or cause financial harm to the estate, they can be removed from the office of estate trustee and held personally responsible for legal costs which arise out of actions which were not in the best interest of the beneficiaries.