Managing a last Will and testament for the first time? Be prepared to “pass the accounts” before your work is done. Ontario estate trustees, executors or personal representatives are required to keep accurate records of their actions to show beneficiaries and, if necessary, Ontario probate court. You can also be responsible for passing of accounts as power of attorney.
Every transaction you make, from collecting pensions or bank interest to making investments that generate income, can be questioned. Keeping accurate statements of expenses for professional advice, taxes, investments or money paid to beneficiaries protects you if you are held legally or financially liable by heirs or a probate court that disagrees with how you handled the deceased’s estate.
Passing Informal Accounts for Ontario Estates
When you keep accounts for an estate, you are expected to record every transaction in detail. Think of accounts as financial statements that include dates, assets, transaction types and institutions or people you did business with to ensure beneficiaries or probate court can retrace your steps. Errors or omissions and deliberate fraud can result in legal action. You could be required to pay back expenses or disbursements if you are found liable by an Ontario court.
Keep notes of money received or paid, including investments made to preserve the estate’s principal, interest or rental income received, bank or pension statements and taxes paid. Record professional fees for legal or financial advice and your own fees. You won’t have to share these receipts with beneficiaries, but will need to keep originals or certified true copies for backup to prove your claims.
Providing regular, informal records keeps beneficiaries informed as estate assets are located and valued and make it easier to pass the accounts if court approval becomes necessary. Informal passing of accounts do not need to be in court approved form, but should be signed off by adult beneficiaries, provided they are mentally capable. Request a signature each time you provide informal accounts.
Passing formal accounts is time consuming and can be complicated. Sending beneficiaries complete and accurate informal accounts can sidestep passing the accounts in court if beneficiaries are satisfied you were fair and responsible in administering the estate. Axess Law estate lawyers can advise you on drawing up estate trustee accounts.
How to Prepare a Formal Passing of Accounts
Formal passing of accounts occurs in Ontario Superior Court of Justice. You may be required to pass the accounts in court when:
- Beneficiaries include minor children, mentally incapable senior or adults with developmental disabilities who are unable to approve informal accounts.
- The deceased has unascertained beneficiaries, such as children or grandchildren who are not yet born or are unknown, or contingent beneficiaries who inherit if another beneficiary dies, can’t be located or predeceases you.
- Beneficiaries refuse to sign or delay the passing of informal accounts.
- Beneficiaries disagree with how you are administering the estate or your fees and obtain a court order compelling you to pass the accounts.
Rule 74.17 of the Ontario Rules of Civil Procedure explains how to apply for and prepare a formal passing of accounts. You will be required to make a notice of application to pass accounts and, if beneficiaries include minors or adults with disabilities, may have to inform the Ontario Public Guardian and Trustee and Office of the Children’s Lawyer. Going to court allows beneficiaries or their legal representatives to challenge your records. The court will review the accounts and approve, question or disallow them.
What to do if Estate Accounts are Contested
Beneficiaries who object to how you administered the estate or kept the accounts can file a motion to compel passing of accounts. Unless your explanation satisfies the judge, a passing of accounts hearing may go to trial. Axess Law estate probate lawyers can advise you what to do if you receive a contested passing of accounts motion and if you need trustee liability insurance to protect yourself from claims by beneficiaries or creditors. Your legal costs will be paid by the estate unless you are found liable.
Billing Estate Trustee Expenses
Expect to be paid fairly and reasonably for your time, skill, ability and the care and responsibility you took in administering the estate. Your fees depend on the estate’s size and complexity and are taxable income. The tariff, as it’s called, may be set out in the Will or a court may decide it. But generally, you receive 5% of the estate’s value: 2.5% of capital and 2.5% of revenues. Courts can reduce the amount or pay you nothing at all if you mishandle the estate, take too long or act in a fraudulent way. Axess Law probate lawyers can advise you on whether a proposed tariff is fair and when to request releases for estate trustee fees from the beneficiaries.
When to Question the Accounts
Unusual withdrawals or payments, especially if not called for by the Will, can be red flags an estate is being mismanaged. Watch for missing or undervalued assets, under performing or unreasonable investments. If records of bank deposits or transactions are incomplete, rental or interest income appears left out or personal expenses are charged to the estate, ask the trustee for a passing of accounts. An accountant or Ontario probate court can help you verify if a trustee’s actions, fees or expenses are inappropriate. Protect yourself by requiring a signed release or probate order before paying trustee fees.
Legal Advice for Uncontested Passing of Accounts – Ontario
Axess Law’s Ontario estate administration attorneys explain rules for uncontested passing of accounts and your estate trustee obligations. We answer questions about what to include in estate accounts for beneficiaries and probate court. Our experienced virtual Wills and estate lawyers teleconference remotely anywhere in Ontario or we can meet you in person at our Greater Toronto Area law offices.