Trustees Need Only Act Reasonably, Not Perfectly
NH died in December 2017, making her son, RH, her estate’s Personal Representative and its primary beneficiary. The deceased’s nieces, SK and DS, had been her Trustees for the previous three or four years. The Personal Representative had fought with the Trustees when they were appointed as trustees instead of him. He tried unsuccessfully to withhold the deceased’s documents and belongings to frustrate their duties. Now freshly made a Personal Representative, he was determined to continue. After demanding a full, 200+ page accounting from their time as Trustees, the Personal Representative applied to challenge much of what they had done in Court in NH (Re), 2019 ABQB 306.
The law concerning the duty of care and standard of care for trustees of represented adults has been largely codified within Alberta’s Adult Guardianship and Trusteeship Act, SA 2008, c A-4.2, sections 56 and 57. Trustees must act in the best interests of the represented adult. They can use the adult’s funds for expenses they reasonably need to educate, support and care for the adult. In doing so, trustees must “exercise the care, skill and diligence that a reasonably prudent person would exercise in managing the person’s own financial matters.” Trustees failing to meet this standard have breached their duty. However, a Court may excuse breaches if trustees acted honestly and reasonably despite not getting prior direction from a Court to prevent those breaches.
In the present case, everything was examined. The Trustees claimed no compensation except for legal fees. These amounted to almost $20,000, however. The Personal Representative alleged the Trustees wrongly valued the deceased’s house when they sold it and incorrectly valued the furnishings within. The Trustees incurred several late fees on the deceased’s credit card. The Court examined monthly withdrawals of $400-$500 in cash given to the deceased as well as miscellaneous expenses and gifts the Trustees made to family members on behalf of the deceased. A significant portion of the deceased’s funds went toward home care and companion care in those few years. Lastly, the Personal Representative alleged the Trustees continued to resist producing certain documents at the time of the hearing.
In its analysis, the Court found the Trustees’ records were “not perfect”, but they had acted in good faith, to the best of their ability, and in the deceased’s best interests. The Court was concerned about the legal fees. The majority of these were due to the Personal Representative challenging or withholding property from the Trustees, which was unfortunate. The remainder were from the preparation and sale of the house, which was legitimate. The Court found nothing untoward about the house conveyance, but rather commended the Trustees in the amount of work they did to rehabilitate it for sale. The house sold for the amount the market would bear. The Court was concerned about late fees on the credit card too, though it recognized the Trustees had busy family lives. While the deceased’s home and companion care were expensive, the Trustees demonstrated their necessity and the positive impact they had on the deceased. The Court also decided the various miscellaneous expenses and withdrawals were not extravagant or objectionable. Regardless, had there been any breaches, the Court found the Trustees acted honestly and reasonably and therefore should be excused.
As for the remainder, this fell to the Personal Representative. He had control of the furnishings now, so he could value them as he pleased. If he felt he was owed anything from the estate, he could reimburse himself. He had control over all the deceased’s records and accounts now, while the Trustees of the living estate specifically did not, so any lack of access was his own fault. Lastly, 50% of the Trustees’ costs from the court application would come from the estate.