Oh, the trouble estate trustees get themselves into. Proceed with caution if you’re asked to be a personal representative or administrator when a family member or acquaintance dies. You could be hauled into court for sloppy bookkeeping.
Passing of Accounts Trustee’s Duty
Ontario law requires estate trustees to keep complete and accurate records of a deceased’s assets. As the estate’s fiduciary, trustees owe a duty of care to the estate trust and beneficiaries to act in their best interest. Most times, trustees can just share the accounts with heirs to approve. But if heirs object or the accounts are late arriving, Ontario courts may get involved.
Estate Trustees Keep Financial Records
Carrying out a relative’s wishes in their personal will is quite a responsibility. Besides distributing personal property and possessions to heirs, estate trustees wrap up their financial affairs. That includes creating a bank account for the deceased’s money and keeping records of receipts, payments, expenses, investments and interest.
Communicate often unless you want heirs to force the issue. A disgruntled or suspicious heir can apply to Ontario probate court to force the passing of accounts. Court orders are typically granted if:
- you fail to keep heirs informed
- your fees or compensation are disputed
- you take too long
- heirs allege money is missing
- your handling of the estate is questioned.
Caring for Money for Minor or Incapable Heirs
When minor children or heirs incapable of managing their own financial or health care decisions are involved, a litigation guardian, power of attorney for personal care, Ontario Public Guardian and Trustee or Ontario Children’s Lawyer assumes responsibility for their inheritance. Estate trustees are legally required to pass the accounts to guardians, creditors or dependents. Accounts must also be passed to beneficiaries who are:
- unborn or unascertained, such as grandchildren who may be born in future
- or contingent, such as a corporation or charity if the main beneficiary is unable or unwilling to accept an estate’s assets.
Be Careful What You Do
Be careful what you do with the deceased’s money. Ontario judges can order funds returned to an estate if you can’t prove it was used for the heirs’ or estate’s benefit. Your performance could also affect your ability to get paid for distributing the estate. Provided you exercise due care, you might get special fees for extra or specialized efforts needed to administer the estate, deal with tax issues or lawsuits or if there are many heirs.
What’s the Big Deal?
While distributing an estate seems simple enough, don’t run afoul of Ontario wills and estate law. These estate trustees did.
Ignoring Heirs’ Requests Leads to Court Complaint
The failure of an estate trustee to file a passing of accounts resulted in contempt of court charges. Not showing for the court hearing didn’t help his fate. The sorry affair started when the deceased appointed her grandson executor of her estate. The appointment got off to a rocky start shortly after her 2003 death. Heirs complained that the trustee had ignored their requests for estate information. A court order to produce the accounts within 60 days went unanswered in 2007.
Two-year Delay Causes Distress
By 2009, the heirs were demanding court action. The trustee arrived apologetically at court, had the 2007 order set aside and promised to produce the accounts within 10 weeks. Another missed deadline and the trustee was back in court. Since some progress had been made, the court allowed that he had made “sincere efforts” to comply.
Warrant for Failure to Show
Two months later, the grandson was again cited for failure to satisfy the court’s demands. This time, the court issued a warrant to appear for a contempt of court hearing. It’s fair warning to trustees that passing the accounts is not optional.
Undisclosed Assets Disturb Heir
The heirs’ ordeal is not the first probate courts have heard. A daughter took her brother to court over inconsistencies in accounts of their late father’s assets. They amounted to a $100,000 difference in the value of the father’s home and $18,000 in two undisclosed bank accounts. Neither assets were listed in the certificate of appointment of estate trustee her brother sought three months after the death.
Failure to Respond Costs Estate
Dissatisfied with her brother’s answers to her queries, she hired a wills and estates lawyer. But even the lawyer was unable to get the truth. Concerned the estate wasn’t being properly managed, he filed a request for a passing of accounts by March 2005. Subsequent motions for contempt of court and to replace the estate trustee were adjourned with yet more promises to provide the missing records. Finally, two years after her father’s death, she had the accounts. The delay cost her father’s estate $8,000 for legal fees.
Legal Advice on Your Estate Trustee Responsibilities
Axess Law Ontario wills and estate lawyers advise you on avoiding similar pitfalls when you probate an estate. Online video conferences with a licensed lawyer are available 7 days a week, day or evening, at your convenience. Call toll-free to 1-877-522-9377 or in Greater Toronto at 647-479-0118 or use our online booking form to make an appointment. In person meetings are available at our Ottawa, Toronto, Scarborough, Vaughan, Etobicoke, Mississauga Winston Churchill or Mississauga Heartland law offices.
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