Estate Accounts in Ontario: What Records an Executor Must Keep

Being an executor (the law calls you an estate trustee) means handling money that belongs to other people. Beneficiaries and others with an interest in the estate have a stake in how that money is handled. If you start keeping clear records on day one, the job is much easier later.

This article explains what Ontario's rules expect you to keep, how expenses and your own compensation fit into the accounts, and what happens if the accounts are reviewed by a court. It is general information, not advice on your particular estate.

The duty to keep accurate records

Under rule 74.17 of the Rules of Civil Procedure, estate trustees must keep accurate records of the estate's assets and transactions. Keeping those records from the start makes any later accounting easier. Even a modest estate benefits from a paper trail, because you may be asked to explain it at any point.

A simple, consistent system is easier to keep up than a complicated one, so choose a layout you will actually follow. A lawyer or accountant can help you choose a layout that suits the estate.

What the accounts must show

If accounts are filed with the court, a first passing must include a statement of assets at the date of death, together with accounts of all money received and disbursed. That means two things need to be traceable: what the estate owned on the day of death, and every dollar that has moved since.

Your own records will feed straight into those accounts. Useful things to keep include:

• A list of every asset at the date of death, with supporting statements or valuations
• A running record of every amount received, such as refunds, final pay, and investment income
• A record of every payment made, with the date, the payee and the reason
• Bank and investment statements for any estate account
• Receipts and invoices for funeral costs, legal fees, repairs, insurance and similar costs
• Copies of letters and emails with beneficiaries, creditors and government offices
• Notes on any decision you made about investing or selling an asset

If you invest estate money, the Trustee Act expects you to use the care, skill, diligence and judgment of a prudent investor. 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. Notes on why you made a choice and on any advice you received are a sensible practical habit. Keep in mind that investment directions or limits in the will take priority.

Recording expenses and your own compensation

If you believe an expense is properly incurred in carrying out the trust, the Trustee Act allows you to pay it directly from the estate, or pay it yourself and then recover it from the estate. Either way, the accounts should show it clearly. If you pay personally, keep the receipt and record the date you were repaid, so the estate's books and your own do not get tangled.

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, and a judge passing the accounts may allow a fair and reasonable amount. A time log, even a rough one, gives you something concrete to point to.

If the accounts are passed in court

On a passing of accounts, notice goes to the 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.

So beneficiaries have a real chance to question both the accounts and your compensation. Records that line up with the accounts make those questions easy to answer.

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

Why good records protect you

The court may relieve a trustee who is personally liable for a breach of trust, wholly or partly, if the trustee acted honestly and reasonably and ought fairly to be excused. Similar relief is available to a personal representative who overpays a creditor or claimant while acting honestly and reasonably to protect or conserve estate assets. Nothing is automatic, and the outcome depends on the facts.

Clear records are how you show what you did and why. Before you hand out money, also remember that you generally need a CRA clearance certificate, and distributing without one can make you personally liable for unpaid tax, up to the value of what you distributed. Keep a copy of that certificate with the estate records.

What to do next

• Open a separate estate account and run all estate money through it
• Gather date-of-death statements for every asset and debt
• Start a simple ledger of money in and money out, and file a receipt for each entry
• Keep a dated log of your time and tasks if you plan to claim compensation
• Save all correspondence with beneficiaries and keep them informed
• Speak with a lawyer or accountant before you distribute, and before you decide how much to hold back, since that depends on the facts

Frequently asked questions