When a loved one dies, it is common for a family member to step in and start handling practical matters. They may pay bills, collect mail, manage bank accounts, deal with corporate assets, or take control of business operations while the estate is being sorted out.
What many people do not realize is that taking control of estate assets can also create legal responsibilities.
The decision in Class v. Smith, 2018 ONSC 623 (CanLII) is an important reminder that individuals who assume control of estate property may be required to account for their actions, even if they have not yet been formally appointed as estate trustee.
Estate Disputes Become More Complicated When Businesses Are Involved
Many estate disputes involve a family home, investment accounts, or personal belongings.
Matters become significantly more complicated when the estate includes private corporations.
Family businesses often continue operating after a death. Employees need to be paid, contracts may need to be completed, and financial obligations continue.
This can create pressure for someone to step in quickly and begin making decisions.
The problem is that acting quickly does not necessarily mean acting with authority.
Taking Control Can Create Fiduciary Obligations
One of the most important lessons from the case is that responsibility can arise from conduct, not just appointment.
A person may begin managing:
- Corporate bank accounts;
- Business records;
- Real estate transactions;
- Estate assets; or
- Financial affairs
without first obtaining the legal authority they need.
Courts may nevertheless treat that person as having assumed fiduciary responsibilities.
Once someone starts exercising control over estate assets, they may be expected to justify how those assets were managed.
What Is an Executor de Son Tort?
Estate lawyers occasionally use the term "executor de son tort."
Although the phrase sounds technical, the underlying concept is relatively straightforward.
An executor de son tort is a person who acts as though they are the executor without having received proper authority.
Examples may include:
- Collecting estate funds;
- Distributing property;
- Managing investments;
- Paying estate debts; or
- Operating businesses owned by the deceased.
A person who intermeddles with estate assets may later be required to account to beneficiaries and the court for everything they have done.
In some situations, assuming control of property can create the very obligations a person hoped to avoid.
Proper Accounting Is One of an Executor's Most Important Duties
A recurring theme in estate litigation is the obligation to account.
Beneficiaries are generally entitled to know:
- What assets existed;
- What liabilities existed;
- What money came into the estate;
- What money was spent;
- Who received payments; and
- Why decisions were made.
Courts expect executors and trustees to maintain accurate and complete records.
This obligation becomes even more important when:
- Family members disagree;
- Significant assets are involved;
- Businesses are involved; or
- The executor is also a beneficiary.
Transparency is often the best protection against allegations of misconduct.
Corporate Assets Are Not Personal Assets
When a deceased person owned a business, confusion can arise regarding ownership and control.
Family members sometimes assume that because the deceased owned the company, they automatically have authority to manage corporate affairs after death.
That assumption can be dangerous.
Corporate assets remain corporate assets.
The individual taking control must still be able to explain:
- Corporate transactions;
- Bank transfers;
- Legal expenses;
- Revenues received;
- Business decisions; and
- The use of corporate funds.
Failing to maintain documentation can create significant problems later.
Conflicts of Interest Matter
The case also highlights the importance of conflicts of interest in estate administration.
An executor often wears multiple hats.
They may be:
- A beneficiary;
- A shareholder;
- A family member;
- A creditor; or
- A litigant in related proceedings.
While these overlapping roles are common, they can create concerns when personal interests begin competing with fiduciary obligations.
The court's primary concern is protecting the estate and ensuring all beneficiaries are treated fairly.
Where a significant conflict exists, the court may decide that a neutral third party is required.
Courts Can Appoint an Estate Trustee During Litigation
One tool available to courts is the appointment of an Estate Trustee During Litigation.
This remedy is designed to:
- Protect estate assets;
- Preserve neutrality;
- Prevent conflicts;
- Maintain proper records; and
- Ensure transparency during litigation.
A neutral estate trustee can take control of estate property while disputes are resolved.
This is particularly valuable when family members no longer trust one another or where the administration of the estate has become contentious.
Records Must Be Complete
Another practical lesson from the case is that partial disclosure is often not enough.
Providing selected records while withholding other information can create further concerns.
Executors and trustees should generally maintain:
- Bank statements;
- Financial statements;
- Tax records;
- Corporate documents;
- Accounting records;
- Receipts; and
- Supporting documentation for significant transactions.
The ability to explain what happened is often just as important as the transactions themselves.
Estate Litigation Is Often About Information
Many estate disputes begin because one side believes information is being withheld.
Questions often arise such as:
- What happened to the money?
- Who controlled the business?
- Why were certain payments made?
- Where did the estate assets go?
- Why has a distribution not occurred?
Clear records and open communication can often prevent these concerns from escalating into expensive litigation.
Practical Lessons for Executors and Families
Do Not Assume Control Without Authority
Managing estate property can create significant legal obligations.
Keep Detailed Records
Every major transaction should be supported by documentation.
Separate Personal Interests from Estate Duties
Executors must place the interests of the estate ahead of their own.
Be Transparent
Open communication frequently helps avoid disputes.
Seek Advice Early
Questions about authority and estate administration are usually easier to address before litigation begins.
The Bottom Line
Class v. Smith demonstrates that people who take control of estate assets may find themselves subject to the same obligations as formally appointed executors. Courts expect anyone managing estate property to act transparently, preserve records, avoid conflicts of interest, and remain accountable for their decisions.
The decision is a reminder that estate administration is not merely about controlling assets. It is a fiduciary role that carries significant legal responsibilities, whether those responsibilities arise through formal appointment or through a person's conduct.
How MerGen Law Can Help
At MerGen Law, we assist clients throughout Alberta with estate administration, executor disputes, accounting applications, estate trustee removals, trust disputes, corporate succession issues, and estate litigation. Whether you are administering an estate or concerned about how someone else has managed estate assets, we are here to help.
This article is intended for informational purposes only and does not constitute legal advice. Individuals facing concerns about elder abuse should seek professional advice tailored to their specific circumstances.