Can an Executor Be Sued Personally in Ontario?

Being named executor (the law calls the role estate trustee) can feel like signing up for a risk you did not choose. You handle money that belongs to other people, and you may worry that an honest mistake could land on your own bank account.

In most estates nothing goes wrong. But it helps to know where personal exposure comes from, how beneficiaries can ask questions, and what the court looks at. This article explains the general picture in Ontario. It is not a substitute for advice on your own file.

When personal liability can arise

An estate trustee is not personally responsible simply because the estate has problems. Exposure usually comes from how the trustee acted. In Ontario, when accounts are passed, the judge may make a full inquiry into the deceased's property and may order the executor, administrator or trustee to pay a sum by way of damages or otherwise as is just. This is a route to recover misused estate funds.

Two other situations are worth knowing about. A trustee who invests estate property must use the care, skill, diligence and judgment of a prudent investor. And a trustee who distributes assets without a clearance certificate, when tax turns out to be owing, is personally liable for the unpaid amounts, up to the value of the assets distributed.

The court can excuse an honest, reasonable trustee

Liability is not automatic even where something went wrong. Under the Trustee Act, the court may wholly or partly relieve a trustee of personal liability for a breach of trust if the trustee acted honestly and reasonably and ought fairly to be excused.

That relief is discretionary, so you should not count on it. Good records and sensible decisions are what make it realistic to ask for. Whether it would apply to a particular mistake depends on the facts and is worth confirming with a lawyer.

How beneficiaries can check your work

Beneficiaries are not left in the dark. A beneficiary is an interested person who can compel accounts. A person with a financial interest in the estate may also move for an order requiring the trustee to file a statement of the nature and value of the estate's assets, give further particulars, or pass accounts. These motions can generally be made without notice, except a motion for further particulars, which requires 10 days' notice to the trustee.

Any person interested in the estate may also apply to the Superior Court of Justice to remove a personal representative on any ground on which a trustee can be removed, and to appoint another proper person. Where co-executors are deadlocked or a dispute stalls the estate, a person with a financial interest can apply for directions, and the court may appoint an estate trustee during litigation.

Ways to reduce your risk

• Keep accurate records of the estate's assets and transactions, because accounts must show assets at the date of death, all money received, all liabilities and the compensation you claim.
• Invest only as a prudent investor would, and do not leave large sums to chance.
• File all required returns for the deceased and make sure any balance owing is paid before you distribute.
• Request a clearance certificate before distributing, because distributing without one leaves you exposed.
• Pay estate expenses you believe are properly incurred, such as utilities or insurance on a vacant house, but know the court may later disallow them.
• Do not mix your own money and estate money, and do not deal with estate property for your own benefit without advice.

Your own compensation is also something a beneficiary can challenge. The court allows a fair and reasonable amount for care, pains and trouble and time spent, and the statute sets no percentage or formula. If the will itself fixes the allowance, that section does not apply.

If you want out, or you are worried: next steps

A person named as estate trustee does not have to act. If you have not yet started, you can renounce using Form 74G. Once you have started acting, you cannot simply retire by deed. An executor who wants to step down must apply to court.

• Write down what you have done so far and keep every receipt and statement.
• Pause distributions if a question about debts, tax or a beneficiary's complaint is unresolved.
• Speak with a lawyer before you pay yourself, sell estate property, or respond to a demand for accounts.
• Ask about passing accounts if beneficiaries are unhappy, since the court process can settle questions formally.

Frequently asked questions