In Sheffield (Estate) v. Sheffield, 2024 ONSC 3627, the Court considered an executor’s authority to sell real property subject to a life interest.

Katherine Markolefas and Bradley Sheffield were brother and sister. Katherine and Bradley were the children Gary and Donna Sheffield.

Gary owned a residential property in Picton, Ontario. In Gary’s Will, he named Katherine as his estate trustee. Under Gary’s Will, Donna, his wife, was granted a right to live at the Property for “as long as she is able” and while living at the property she was “to be responsible for the taxes and utilities and insurance”. Upon Donna’s death, the property was to pass to Katherine and Bradley “in equal shares per capita”.

Gary died on November 25, 2020. After Gary’s death, Donna and Bradley both resided at the property. Donna died on September 29, 2023. After Donna’s death, Bradley continued to live at the property, and refused to vacate it.

In her capacity as estate trustee of Gary’s estate, Katherine commenced a Court application seeking orders authorizing the Estate to sell the property, requiring Bradley to vacate the property, and restraining Bradley from removing estate assets from the property.

Katherine alleged that while Donna lived at the property with Bradley after Gary’s death, Donna and Bradley failed to conduct necessary repairs and maintenance, and denied Katherine access to do so, resulting in the deterioration of the property. The property lacked insurance, and Katherine alleged that her attempts to respond to a Compliance Notice issued by Prince Edward County to remediate the property were obstructed by Donna and Bradley.

In its decision, the Court referred to the “golden rule” in interpreting Wills, which was to give effect to the testator’s intentions as ascertained from the language used in the Will. In this case, the Will gave Katherine discretion to liquidate all estate assets and to distribute them in cash, subject to Donna’s life interest to occupy the property, which ended upon her death.

Gary’s Will expressly stated:

On her [Donna Sheffield’s] death or leaving, I give said residence [the Property] to my children, KATHERINE MARKOLEFAS and BRADLEY FREDERICK SHEFFIELD in equal shares per capita.

The Will did not specify how the gift of the property was to be effected, nor did the Will dictate how title to the property would pass upon Gary’s death. However, it was clear that after Gary’s death, Katherine, in her capacity as estate trustee, became the registered owner of the property and so held the property with same rights and interest as Gary had, as confirmed by section 63 of the Land Titles Act and section 2(1) of the Estates Administration Act.

In contrast, at Gary’s death, Bradley had no enforceable interest against the property. Even if the Will had granted Bradley with a right to possess the property after Donna’s death, it would have been as a tenant in common with Katherine. She would be entitled to apply for partition and sale of the property. The property had to be sold one way or another, and if Bradley wished to continue living there, he would have to buy out Kathrine’s interest. It was therefore up to Katherine as estate trustee to decide how to effect the gift of the property, and she was empowered to sell it, subject to her fiduciary duties to the estate and to Bradley as a beneficiary.

Moreover, Bradley’s continued occupancy of the property impeded Katherine’s ability to discharge her duties as estate trustee to ensure the property was in a good state of repair and marketable. Given the length of Bradley’s residence at the property, he was granted 60 days to vacate the property, although the parties could negotiate different terms.

Bradley was also ordered to return any assets of the estate he had removed from the property, and was enjoined from removing any other estate assets from the property without Katherine’s authorization. An inventory of the assets of the property was also ordered.

Take Away

Absent a contrary intention of the testator expressed in the Will as to how to give effect to a gift of real property, an estate trustee is empowered to sell the property, and a beneficiary with an interest in the property has no automatic right to occupancy.