Estate litigation often arises from disagreements about how an estate should be administered. While some disputes involve complex legal or financial issues, others escalate over relatively small amounts of money or procedural disagreements. A recent Ontario Superior Court decision demonstrates how estate conflicts can spiral into costly litigation even when the underlying dispute is minor.

In Hernandez v. Hernandez, the court was confronted with an estate administration dispute that ultimately generated tens of thousands of dollars in legal fees over issues worth only a few hundred dollars. The case highlights several important principles in Ontario estate litigation, including the proper procedure for resolving disputes with estate trustees, the limits of requiring beneficiary releases, and the consequences of unreasonable litigation conduct.

For beneficiaries and estate trustees alike, the decision serves as a cautionary example of how estate disputes can escalate unnecessarily and how courts may respond when parties pursue litigation disproportionate to the issues involved.

Estate Disputes Involved Long-Standing Family Conflict

The case arose following the testator’s death in March 2020. She was survived by six children, and three of them were initially appointed as co-estate trustees. However, the siblings had been involved in litigation with one another even before their mother’s death, and conflict continued after the estate administration began.

Because of the ongoing disputes among the siblings, the court removed the original estate trustees in 2022 and appointed a lawyer as the independent estate trustee. The order appointing him specified that he would be compensated for his services at an hourly rate, plus disbursements and HST, with a maximum fee of $4,000.

The appointment of an independent trustee is not uncommon in contentious estates. Courts may take this step when family members cannot cooperate in administering the estate. Independent trustees are intended to bring neutrality and efficiency to the process.

However, the appointment did not resolve the family tensions in this case.

Disagreements Over Estate Administration

One beneficiary (the respondent) raised numerous concerns about the estate’s administration. She criticized the pace of administration and questioned certain expenses charged to the estate.

Among the specific complaints were relatively small disbursements, including:

• A $198 software charge;
• A $16 paralegal fee; and
• A commission of approximately $561 relating to the sale of shares.

When divided among the six beneficiaries, these amounts were relatively minor. For example, the two disputed disbursements totalled $214, which meant each beneficiary’s share was only about $35.67. Nonetheless, the dispute intensified as the estate approached final distribution.

By July 2025, the remaining residue of the estate to be divided was approximately $27,211, leaving each beneficiary entitled to about $4,535. Despite the modest amounts involved, the conflict between the respondent and the estate trustee escalated significantly.

The Release Dispute and Breakdown of Communication

At a meeting in July 2025, the estate trustee sought to complete the administration and distribute the remaining funds. As is common in estate administration, beneficiaries were asked to sign a release confirming that they approved the trustee’s administration and would not pursue claims against the trustee.

Most beneficiaries signed the release. However, the respondent refused to sign the document unless its language was modified. She objected to the clause releasing the trustee from “any claim, actions, accounts and demands whatsoever.”

The meeting reportedly deteriorated quickly. According to the evidence, tensions escalated between the respondent and the estate trustee, eventually resulting in police involvement and criminal allegations that were later withdrawn.

Following this confrontation, the estate trustee commenced court proceedings seeking permission to distribute the estate to the other beneficiaries and to pay the respondent’s share into court if she continued refusing to sign the release.

At that point, what had begun as a disagreement over minor expenses evolved into full-scale estate litigation.

The Legal Issues Before the Court

The court ultimately had to address several legal questions, including:

1. Whether the estate trustee could compel a beneficiary to sign a release before receiving a distribution;
2. Whether the trustee had commenced the proper type of court proceeding; and
3. How costs should be allocated in light of the parties’ conduct.

These issues required the court to examine procedural rules governing estate disputes and the legal obligations of estate trustees.

Can an Estate Trustee Require a Release?

The court confirmed that while estate trustees may request that beneficiaries sign releases, they generally cannot refuse to distribute estate assets solely because a beneficiary declines to sign one.

Ontario case law recognizes that releases are a useful tool for trustees seeking informal approval of their administration. However, trustees cannot hold distributions “hostage” to force beneficiaries to sign releases approving their conduct.

If a beneficiary refuses to approve the administration, the appropriate solution is typically for the trustee to commence a formal passing of accounts, which allows the court to review and approve the trustee’s actions. This process ensures transparency and judicial oversight while protecting both trustees and beneficiaries.

Procedural Error: The Wrong Type of Court Application

Although the estate trustee attempted to resolve the dispute through court proceedings, the court determined that the application had been brought under the wrong procedural rule.

The trustee relied on Rule 75.06 of the Ontario Rules of Civil Procedure, which allows interested parties to seek directions from the court regarding estate proceedings. However, the court concluded that this rule was primarily procedural and was not intended to address substantive issues such as payment of estate funds or trustee compensation.

Instead, the appropriate procedure would have been a formal passing of accounts. Because the wrong procedure was used, the court dismissed the trustee’s application. However, the analysis did not end there.

The Court’s Strong Criticism of the Litigation

Despite ruling that the application had been brought under the wrong rule, the court was highly critical of the conduct that led to the litigation.

Justice Nicholson described the dispute as an example of litigation that had “spiralled out of control,” noting that the legal costs vastly exceeded the value of the underlying dispute.

Both sides had incurred legal fees exceeding $27,000—far more than the amounts in dispute.

The court concluded that the respondent’s conduct was largely responsible for this escalation. The judge found that she had repeatedly challenged minor expenses and attempted to control the estate administration even after being removed as trustee. In the court’s view, the dispute had become disproportionate to the issues involved.

Costs Consequences in Estate Litigation

In Ontario estate litigation, courts typically apply the standard civil litigation rule that the losing party pays costs. However, courts retain discretion to depart from this rule in appropriate circumstances.

Historically, some estate disputes were treated more leniently because they were viewed as necessary to clarify the deceased’s intentions. However, modern case law increasingly emphasizes that parties who engage in unreasonable litigation conduct may be required to pay costs personally.

In this case, the court concluded that the beneficiary’s conduct justified a significant costs award. Although the estate trustee had technically used the wrong procedure, the court found that the beneficiary’s behaviour had caused the litigation to occur in the first place.

As a result, the court ordered the beneficiary to pay $27,000 in costs to the estate trustee on a full indemnity basis. This outcome illustrates that even a party who is technically correct on a legal issue may still face adverse cost consequences if their conduct is unreasonable.

Eisen Law: Experienced Estate Litigation Lawyers in Toronto

Estate disputes can quickly become complex, emotionally charged, and costly. Whether you are an estate trustee facing challenges from beneficiaries or a beneficiary concerned about the administration of an estate, obtaining experienced legal guidance early can help prevent conflicts from escalating.

At Eisen Law, our Toronto estate litigation lawyers advise clients on a wide range of estate disputes, including trustee disputes, passing of accounts proceedings, beneficiary claims, and contested estate administrations. We work to resolve estate conflicts efficiently while protecting our clients’ legal and financial interests.

If you are involved in an estate dispute, contact us online or call 416-591-9997 to discuss your situation and explore your legal options.