Executor Conflicts of Interest: Veitch Estate

British Columbia courts do not lightly remove an executor of a will. When you make a will, you may appoint someone to act as your executor to carry out the terms of your will. The general rule is that the courts will respect your choice of who to act as your executor after your death. But, if an executor acts contrary to the interests of the beneficiaries as a group, or puts himself or herself in a conflict of interest with the beneficiaries, the court may remove the executor.

This point is illustrated in Veitch Estate, 2007 BCSC 952.

Ruth Veitch had three children. Her husband died before her. In her will she appointed her son Scott Veitch as her first alternate executor (in case her husband died before her). She divided her estate equally among her three children.

On her death in November 2003, Ruth Veitch owned the family real estate business: Veitch Realty.

Scott Veitch applied for an received letters probate of Ruth Veitch's will. He managed Veitch Realty after his mother's death. Scott Veitch and his wife were also employed as sales agents in the business.

Ruth Veitch's other son, Kevin Veitch, brought an application to court to remove his brother as executor. He alleged that Scott Veitch was acting in a conflict of interest, and that he was not dealing with the estate in a timely manner. Kevin Veitch asked the Supreme Court of British Columbia to appoint him as trustee of the estate, or alternatively to appoint a trust company or lawyer, in place of Scott Veitch.

Mr. Justice Kelleher found that Scott Veitch was acting in a conflict of interest. As manager of Veitch Realty, Scott Veitch had changed the commissions the business paid to the sales agents. When Ruth Veitch died, the sales agents received 60% of the commissions they generated for the business, with Veitch Realty receiving the other 40%. Scott Veitch changed the commission split so that those sales agents who brought in at least $65,000 in commissions per year would receive 70% of the commissions. This change primarily benefited Scott Veitch and his wife.

According to Mr. Justice Kelleher,

... Scott Veitch’s position as executor of the estate permits him to continue to delay distribution of the estate, including the distribution of the beneficiaries’ respective interests in Veitch Realty. His personal interest is therefore in direct conflict with the interests of the estate: his desire to maintain a comfortable lifestyle through his management of Veitch Realty so as to favour himself is in conflict with his duty to manage the business for the benefit of the estate, and with his duty to distribute the
estate to the beneficiaries, which includes distributing to the other beneficiaries their respective interests in the Company.

But, the Mr. Justice Kelleher did not appoint Kevin Veitch or a professional trustee in Scott Veitch's place. Instead, he appointed their sister, Charmaine Clayton. The appointment of Charmaine Clayton reflected Ruth Veitch's wishes, as set out in her will, that her daughter act as executor and trustee if Scott Veitch were unwilling or unable to act as executor.