Passing of Accounts and Objections to Estate Accounts in Ontario

If you are a beneficiary, you may have received notice that the estate trustee is asking the court to review the accounts. If you are the trustee, you may be preparing to file them. Either way, the process can feel unfamiliar.

This article explains in general terms what a passing of accounts is, what is in the accounts, and how objections to the accounts or to the trustee's compensation fit in.

What a passing of accounts is

A passing of accounts is the process where an estate trustee puts the estate's finances before the court for review. A judge passing the accounts may allow a fair and reasonable allowance for the trustee.

On a first passing, the accounts filed with the court must include a statement of assets at the date of death, together with accounts of all money received and disbursed. This is why estate trustees must keep accurate records of assets and transactions.

How notice and objections work

Notice goes to beneficiaries and other interested persons, and the estate trustee swears an affidavit verifying the accounts.

Judgment can be given unopposed once the objection period has expired and no notice of objection to the accounts or to the compensation claimed has been received. In other words, if you have concerns, the objection period is your opportunity to raise them, so read the notice carefully and act within it.

Where an estate has minor, unborn or unascertained beneficiaries, the Office of the Children's Lawyer must be served with an application to pass the accounts under rule 74.18(3), and should be served where there is an unborn or unascertained interest.

What a compensation dispute is about

An estate trustee is entitled to a fair and reasonable allowance for their care, pains, trouble and time spent on the estate, as allowed by a judge of the Superior Court of Justice. Compensation can be settled even when the estate is not before the court in an action.

If the trustee is a lawyer who provided necessary professional services to the estate, the allowance is increased by an amount considered fair and reasonable for those services.

The notes, receipts and time records kept during the administration are usually central to that discussion.

Common grounds for concern

• Investments that do not seem to meet the prudent investor standard of care, skill, diligence and judgment.
• Spending that does not look properly incurred in carrying out the trust.
• Gaps or unexplained entries in the money received and disbursed.
• Compensation that seems high for the work done.

Some of these may have good answers. A trustee who relies on investment advice is not in breach of trust if a prudent investor would rely on that advice in comparable circumstances. Investment directions in the will also take priority. A trustee may also delegate investment functions to an agent to the same extent a prudent investor might.

Even where a breach is found, the court may relieve a trustee wholly or partly if the trustee acted honestly and reasonably and ought fairly to be excused.

What to do next

• Read the notice and note the objection period.
• Review the accounts line by line against the will.
• List your questions and any records you want to see.
• If you are the trustee, gather receipts, statements and a record of your time.
• Get legal advice before deciding whether to object or to defend the accounts.

Frequently asked questions