The recent decision in Flowers v. Flowers, 2026 ONSC 3524 provides an important reminder that estate trustees have an ongoing fiduciary obligation to maintain proper records and account for the assets under their administration. The decision also illustrates the potential consequences of self-dealing, commingling estate and personal funds, and failing to properly account for an estate—including the loss of estate trustee compensation.
Case Summary
Olga Flowers died in May 2007, leaving four children as equal residuary beneficiaries. Her daughter, Donna Flowers, was appointed estate trustee.
Almost 20 years later, the estate remained unadministered. One of the beneficiaries brought an application requiring Donna to pass her accounts. Rather than providing formal accounts in accordance with Rule 74.17 of the Rules of Civil Procedure, Donna provided a narrative affidavit. She acknowledged that her records were incomplete and that she could not verify the completeness of the accounts.
There were also significant questions concerning the estate’s assets and transactions. Donna admitted that she had borrowed $185,000 from the estate to fund legal expenses arising from a family law dispute. She maintained that the money had subsequently been repaid. There were also questions concerning approximately $272,539 transferred to her lawyers in trust, proceeds from the sale of estate property, and other estate assets and expenses.
The Court’s Decision
Justice Akbarali found that Donna had failed to meet her fundamental obligation to keep proper books and accounts. The Court emphasized that an estate trustee must be able to account for the property entrusted to them. The deficiencies in Donna’s records were not merely technical: there were significant unanswered questions concerning estate assets, transactions and her dealings with estate funds.
The Court was prepared to draw adverse inferences where supported by the evidence. However, it also cautioned that an adverse inference cannot be used to speculate about losses that have not been established. The Court declined, for example, to find that a property had been sold below market value simply because the transaction raised questions.
Ultimately, after reconstructing the estate’s financial position from the available evidence, the Court determined that approximately $6,811.22 remained unaccounted for and ordered Donna to repay that amount to the estate.
Importantly, the Court did not treat the relatively modest repayment as vindicating Donna’s administration. The limited recovery reflected the evidence available to establish an actual loss, rather than the absence of concerns regarding her conduct.
No Compensation for the Estate Trustee
Perhaps the most significant aspect of the decision for estate trustees is the Court’s treatment of compensation. An estate trustee may generally be entitled to compensation under s. 61 of the Trustee Act. However, compensation is not automatic. The Court relied on Zimmerman v. McMichael Estate, 2010 ONSC 2947, for the principle that proper accounting is a condition precedent to receiving compensation.
In Flowers, the Court found that Donna’s conduct went beyond ordinary administrative shortcomings. She had failed to maintain proper accounts, engaged in self-dealing, commingled personal and estate funds, and failed to provide adequate disclosure concerning the administration. As a result, the Court denied her any compensation for acting as estate trustee.
Implications for Estate Trustees
The decision provides several practical lessons.
First, estate records should be maintained from the outset. An estate trustee should maintain bank and investment statements, receipts and disbursements, invoices, tax records, property records, valuations, distributions to beneficiaries, and documentation supporting any transactions involving the trustee or beneficiaries. Attempting to reconstruct an estate years later is inherently problematic.
Second, estate and personal funds must be kept separate. Any loan, advance or reimbursement involving an estate trustee should be carefully documented. A trustee should not assume that a later assertion that funds were repaid will be sufficient to address concerns about the transaction.
Third, transactions involving the trustee require particular caution. An estate trustee who personally benefits from an estate transaction is subject to heightened scrutiny. Independent advice, appropriate disclosure and beneficiary consent or court authorization may be advisable depending on the circumstances.
Fourth, informal administration does not eliminate fiduciary obligations. Family members may agree that a formal accounting is unnecessary, but the trustee remains responsible for maintaining records sufficient to account for the estate if questions subsequently arise.
Finally, estate trustee compensation can be affected by the quality of the administration. A trustee’s entitlement is connected to the proper discharge of their fiduciary responsibilities. Serious failures in record-keeping, self-dealing and transparency may result in compensation being reduced or eliminated entirely.
In Summary
Flowers v. Flowers is a useful reminder that an estate trustee must be able to tell the financial story of an estate: what assets existed at death, what was collected, what was spent, what was distributed, and what remains. The safest approach for an estate trustee is therefore simple: keep accurate records, keep estate funds separate, document transactions, and address beneficiary requests for information promptly.
This blog is intended for general informational purposes does not constitute legal advice.