Law360 Canada (September 16, 2026, 11:10 AM EDT) --

Bradley Phillips

When a deceased’s assets are concentrated in a private corporation, the estate trustee often feels pressured to become a director of the company. Is there a conflict? Is it a prudent course for a professional estate trustee?

There will be a lot more work required to take over the management and operation of an active company. One might expect, out of fairness, that if a person does both the work of an executor and a company director, that she should be paid for both jobs. Whether that actually happens is a matter of estate planning. A trustee, guardian or personal representative is entitled to such fair and reasonable allowance for the care, pains and trouble, and the time expended in and about the estate, as may be allowed by a judge of the Superior Court of Justice. But the general rule of thumb under the common law is that the executor would only be permitted her executor’s fees unless the will says otherwise.

When a business is a going concern, the executor will want to know if she can claim compensation as both the director and estate trustee. She will also want to know whether she is duty bound to sell the business or continue its operation. Her first steps will be to determine if there are other shareholders, the obligations under any shareholder agreement, and how and when there is a conflict between her fiduciary duties to the beneficiaries of the estate and her fiduciary duties as a director to the shareholders of the private corporation.

In Simone v. Cheifetz, [1998] O.J. No. 3267, the court stated:


It’s not unusual to imagine a scenario where this private company was built and maintained by the deceased’s entrepreneurial efforts. Money is not made without risk. Perhaps the deceased made the business thrive through trading public securities or possibly investing in distressed assets and turning them around. It may be in the shareholders’ interest to follow and continue with what proved to be a successful somewhat risky business strategy. Unfortunately, that may be in contravention of the duty of an estate trustee.

There is a view by some academics that absent a specific provision in a will, the executor ought to sell the assets as soon as possible. To do otherwise, the executor will be personally liable for losses and for any debts or expenses. Executors are duty bound to preserve and protect assets. Arguably, the estate trustee should sell risky assets for something safe. A review of s. 27(5) 7 of the Trustee Act, R.S.O. 1990, c. T.23 outlines what our estate trustee or trustee must consider. One of the factors the estate trustee must consider is: “An asset’s special relationship or special value, if any, to the purposes of the trust or to one or more of the beneficiaries.”

For the deceased whose company purchased distressed assets, invested money and turned them around, it might make sense for the estate trustee to take on the role as director and protect the interests of the beneficiaries; that’s because leaving a property partially completed may result in a massive financial loss and be in contravention of the estate trustee’s duty to preserve and maximize the value of the estate. But a business decision will have to be made as to what is the best course of action — whether to invest more of the estate’s money into the project or sell “as is.” As far as continuing the business and buying new properties that are high risk, taking such action might be considered in breach of an executor’s duty to the beneficiaries.

So, should an executor become a director? Probably. The estate trustee has a duty to protect the interests of the beneficiaries, which by definition requires the monitoring of what the company is doing. The difficulties arise when the executor has to balance her obligations to the beneficiaries and the obligations she now has to the corporation. There will be times when the protection of the beneficiaries’ assets involves not taking the risks needed for the corporation to succeed. At that point the other shareholders may cry foul if the methodology heretofore used is stopped and accuse the new director of a breach of duty to her shareholders.

Some might suggest that this issue can be addressed in the planning stage by providing the executor with absolute unfettered discretion when making investment decisions. Perhaps, but one must always have in mind that s. 27 of the Trustee Act has the “prudent investor” rule, which acts as a restraining force.

This issue is an area of interest and concern for estate planners and litigators. For the planners, they need to be cognizant of the issues so conflict can be mitigated with proper foresight and wise planning. For litigators, they need to know the duties of both the estate trustees and directors and the remedies and avenues open for their removal.

A virtual lunch and learn seminar on the topic of executors acting as an officer and/or director of a deceased’s business will be hosted by Wagner Sidlofsky LLP on Sept. 22, 2026, starting at 12 p.m. The presenters will review different issues that executors face — and the remedies beneficiaries can turn to — and will provide their insights on what to consider in different circumstances. For more information and to register, please access this link.

Bradley Phillips is a partner and a member of Wagner Sidlofsky LLP’s estate and commercial litigation groups.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the author’s firm, its clients, LexisNexis Canada, Law360 Canada or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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