No Strings Attached: A Case Comment on Foster Estate v. Foster, 2026 NSSC 91

In Foster Estate v. Foster, a Nova Scotia executor claimed a testamentary gift of five percent of the estate, under a clause drafted to characterize what might otherwise be a taxable commission as a tax-free bequest. The beneficiaries said he had not earned it.

Justice Gatchalian held that the statutory commission regime does not apply to gifts. A gift is a gift — not compensation — and the amount of it is not subject to the court's review.

But the court did not stop there. Having found that the same executor failed to make interim distributions for over two years, the court ordered him to compensate the beneficiaries for the delay under section 71(1) of the Probate Act. The result is a holistic one: the court honoured the testator's intention while holding the executor accountable for how the estate was actually administered.

I. The Facts

Ruth Charlene Foster died on August 29, 2020. Her estate was not complicated. Once assets were liquidated, it consisted of approximately $1.2 million in cash, with no real property. The will divided the residue equally among her three children — Michael, Bonny, and Robert — and named Michael as executor.

The will gave Michael broad discretionary authority. It also contained what the court called the "Executor's Gift Clause", stating that the executor was to receive five percent of the total value of the assets and income of the estate "as a gift instead of compensation or commission for acting as my executor, to theirs absolutely." The gift was worth $60,329.64.

The family was not close. Bonny had been estranged from Michael since her teenage years. Neither Bonny nor Robert returned Michael's calls when their mother died. Within four months, they had retained counsel. Michael lived in Ontario, worked full-time, and administered the estate from a distance.

Bonny and Robert objected to the passing of accounts. They argued that Michael should be denied the gift, and that he should pay them for lost investment income caused by delay, failure to invest, and flawed tax decisions.

II. A Gift Is Not a Commission

The core question was whether the statutory commission provisions apply to the Executor's Gift Clause.

The court held they do not. Section 76 of the Probate Act governs commissions. Section 77 distinguishes between a commission and "a provision in a will for specific compensation to an executor." Subsection 62(2) of the Regulations implies that a compensation agreement incorporated in a will is binding on the court and the beneficiaries. Read together, the statutory scheme subjects commissions to judicial oversight but treats testamentary compensation differently.

The language of the clause itself reinforced the point. Mrs. Foster used the mandatory "shall." The gift was "instead of compensation or commission" and "to theirs absolutely," with no conditions and no standard the executor was required to meet. The phrase "for acting as my executor" required only that Michael act in the role.

Bonny and Robert pointed to the drafting lawyer's discovery evidence that he had suggested the clause because a gift is not taxable as income. The court considered this as part of the surrounding circumstances, finding that Mrs. Foster intended a gift and not a commission dressed up in different language.

The court was careful to note what this does not mean. An unconditional gift does not place the executor beyond accountability. The court retains jurisdiction under section 71(1) to order payment to beneficiaries for misconduct, neglect, or default. The gift operates outside the commission regime. It does not operate outside the broader powers of the court under the Probate Act.

Still, the practical effect is significant. Under the commission regime, the court applies the factors in section 62 of the Regulations and exercises discretion over the amount of commission awarded. Under a gift clause, the entitlement is fixed by the will. The court can only intervene on the higher threshold of misconduct, neglect, or default. That is a meaningful difference. So drafters who include this language should understand the shift in accountability it creates, and consider whether it is appropriate in the circumstances.

III. The CRA Delay

By November 2021, the estate's tax filings were complete and no amounts were owing. The estate could have moved toward distribution.

But it did not.

In February 2022, Michael learned of a CPP reimbursement of $734.26 and instructed the accountant to file an amended T1. In July, he discovered $206.25 in unreported interest income and instructed her to file an amended T3. The accountant's advice on the interest discrepancy was practical. She explained the tax would amount to about $40, and said she would be inclined to let it go. Michael reported it anyway. The combined benefit to the estate from both amendments was $464.75.

What followed was two years of CRA processing delays. The first amendment was rejected because the accountant had signed it instead of the executor. The second was lost entirely — at one point, CRA told Michael the trust return had never been filed. He could not reach the Amendment Department directly; its staff were working remotely without phone lines. A "self-imposed deadline" of December 7, 2023 passed without result. The reassessment finally arrived on March 15, 2024, with a refund cheque for $44.66.

The court characterized Michael's tax decisions as conservative but not so unreasonable as to warrant intervention. It accepted that the CRA delays were unforeseeable. The standard of review required deference, and the court allowed it.

IV. The Failure to Distribute

This is where the court intervened.

Michael acknowledged that he did not consider making an interim distribution until April 2023 — over two years after obtaining the Grant of Probate. He did not weigh the options and conclude the timing was wrong. Apparently, he did not consider the question at all.

The standard of review for an executor exercising absolute discretion is high. The court should intervene only where the decision is so unreasonable that no honest or fair-dealing trustee could have reached it, where the executor considered irrelevant factors, or where the executor gave no consideration to exercising the discretion at all. It was the third category that applied here.

By March 2022, the estate account held approximately $1.2 million in cash, earning no interest. The tax filings were complete. The estate was beyond the executor's year. The only outstanding liabilities — Michael's compensation claims and anticipated legal fees — could have been addressed by a holdback of approximately $300,000. The accountant had advised Michael that he could distribute most of the estate. He did not act on her advice. In fact, he did not even register it as advice — he described it at trial as an "off the cuff remark."

The court concluded that a distribution of $250,000 to each beneficiary should have been made no later than April 2022. It found the executor’s failure to do so was so unreasonable that no fair-minded trustee would have made that decision in the circumstances.

The remedy is where the pieces come together. The court did not reduce the executor's gift, as it had already held that the gift was unconditional. Instead, it ordered Michael to pay an amount to Bonny and Robert under section 71(1) of the Probate Act, in an amount to be determined at a subsequent hearing. The testamentary entitlement and the fiduciary obligation arise from different sources — the will on one hand, the executor's conduct on the other — and the court addressed them accordingly.

V. Implications for Practitioners

The takeaway is that drafters should think carefully about "gift in lieu of commission" clauses. Foster confirms that this language works — the court will treat the entitlement as a testamentary gift, not a commission subject to judicial oversight. But while the clause exists to circumvent taxation on what is functionally executor compensation, it has the secondary effect of insulating the executor's entitlement from discretionary review. Whether that secondary effect is a feature or an unintended consequence will depend on the circumstances. Drafters should be alive to both effects when they consider this language.

Executors must actively consider interim distributions. The lesson of Foster is not that Michael made the wrong decision — it is that he failed to act at all. An executor with absolute discretion is entitled to a wide berth, but doing nothing is not an appropriate exercise of discretion.

The CRA narrative is a cautionary tale about proportionality. The decision to pursue $464 in refunds in a straightforward cash estate — against the accountant's advice — triggered a chain of delays that kept the entire estate tied up for two additional years.

And section 71(1) of the Probate Act has teeth. Even where a gift clause removes the commission from scrutiny, the court retains supervisory jurisdiction over the administration more generally. So beneficiaries who cannot challenge the quantum of the gift can still seek a remedy for how the estate was handled.

VI. Conclusion

Foster Estate v. Foster addresses a common drafting device that has received relatively little judicial attention in Nova Scotia. The distinction between a testamentary gift and a commission is not new, but the court's treatment of it here — grounded in the statutory text and the principles of will interpretation — gives practitioners something concrete to work with.

Executors should take note. Broad discretion is not the same as no obligation. When an estate consists of $1.2 million in cash and the tax filings are done, the money should be moving toward the beneficiaries. If it is not, the executor needs a reason — and the reason cannot be that it just never occurred to them.