When Estate Trustees Get It Wrong: Personal Liability and the Cost of Poor Decision-Making

Acting as an estate trustee is a serious responsibility – and Ontario courts are increasingly willing to hold trustees personally accountable when they fail to uphold their fiduciary duties. In some cases, trustees have been removed from their role or ordered to personally repay estate losses or cover legal costs for unnecessary litigation.

For trustees, this serves as a stark reminder: the role is not ceremonial. It comes with legal obligations, financial risk, and scrutiny from both beneficiaries and the court.

What Is Personal Liability for Estate Trustees?

 

An estate trustee can be held personally liable when they:

• Mismanage estate assets

• Make reckless or uninformed decisions

• Prioritize personal interests over those of the estate

• Pursue legal action that is not in the best interest of the estate

• Cause financial loss through avoidable tax consequences or poor planning

 

When the court determines that a trustee has breached their fiduciary duty, it may order them to:

• Personally repay mismanaged funds

• Cover legal costs from their own pocket

• Step down or be removed as trustee

 

Real-World Examples of Liability

 

We’ve seen Ontario courts remove trustees and award costs personally against them where:

• A trustee insisted on pursuing litigation that clearly lacked merit, needlessly draining the estate

• A trustee made a significant tax-triggering sale despite being advised of the consequences

• A beneficiary’s trust in the trustee had completely eroded due to delays, obstruction, or lack of transparency

 

While trustees may believe they are acting in good faith, good intentions are not a defence if the result is financial harm to the estate.

Red Flags That Could Lead to Personal Consequences

 

• Ignoring professional advice from accountants or lawyers

• Failing to communicate transparently with beneficiaries

• Taking actions that delay or devalue estate assets

• Refusing to consider settlements or mediation in litigation

• Using estate funds to cover personal legal expenses without court approval

 

Protecting Yourself as a Trustee

 

If you’re serving as an estate trustee in Ontario, here are key ways to avoid liability:

• Get legal and tax advice early — especially before any major decisions

• Keep detailed records of all actions, communications, and expenses

• Act impartially and avoid taking sides in family disputes

• Communicate consistently with beneficiaries, even when tensions are high

• Know when to seek the court’s direction, rather than acting unilaterally

 

For Beneficiaries: What If a Trustee Is Mismanaging the Estate?

 

If you suspect a trustee is putting the estate at risk, you have legal options:

• Request a passing of accounts to review how estate funds are being managed

• Bring a court application to remove the trustee

• Seek a personal costs order if the trustee is depleting the estate through unnecessary litigation

 

Courts in Ontario take these concerns seriously. A trustee who acts carelessly—or for personal motives—can and will be held to account.

At Kimel Law Group, we regularly assist both trustees seeking guidance and beneficiaries pursuing legal remedies. Whether you’re navigating a difficult decision or concerned about another party’s conduct, we provide clear, strategic advice grounded in Ontario estate law.

If you’re an estate trustee facing uncertainty—or a beneficiary dealing with poor estate management—contact us today to discuss your rights and next steps.