Estate Accounts in Ontario: What Executors Must Keep and Show

If you are an executor, you are handling money that belongs to other people. Good records protect them, and they protect you if anyone later asks what you did with the estate.

This article explains what records Ontario executors are expected to keep, what formal estate accounts contain, and what beneficiaries are generally entitled to ask for.

The basic duty to keep records

Estate trustees must keep accurate records of the assets and transactions in the estate. That sits alongside the main job of finding the will, winding up the deceased's affairs, paying taxes, bills and debts, and distributing what remains.

If you spend money on the estate, the Trustee Act lets a trustee who believes an expense is properly incurred pay it from trust property, or pay it personally and recover the same amount from the estate. The Superior Court of Justice can later disallow a payment or reimbursement if the expense was not properly incurred in carrying out the trust. Receipts matter for exactly this reason.

Your records also support any claim for compensation. An estate trustee is entitled to a fair and reasonable allowance for the care, pains, trouble and time spent on the estate, as allowed by a judge of the Superior Court of Justice. That rule does not apply where the will fixes the allowance. Executor's fees are taxable.

Taking compensation before accounts are passed is a point to be careful about. An estate trustee may do so only with the agreement of all interested persons who are of full legal capacity, with court approval, or where the will provides for it. If the court later approves a lower amount, it can order the difference repaid to the estate.

What formal accounts contain

When accounts are filed with the court, the Rules of Civil Procedure set out what they must include:

• on a first passing, a statement of assets at the date of death, cross-referenced to entries showing how each was disposed of (on later passings, the assets at the start of the period)
• an account of all money received
• an account of all money paid out, including the trustee's compensation and payments under court order
• investment transactions
• unrealized assets at the closing date
• all money and investments at the closing date
• all liabilities, contingent or otherwise
• a statement of the compensation claimed and, for a value-based management fee, how the value was set

The receipts, disbursements and investment accounts must each show the balance forward. If the will or trust treats capital and income differently, receipts and disbursements must be split into capital and income.

What beneficiaries can ask to see

Apart from an inventory, an executor or administrator need not account to a court unless asked by or on behalf of a person interested in the property or a creditor of the deceased. Ontario has no statutory requirement to pass accounts at fixed intervals, and an executor may choose not to unless the court compels it.

A person who appears to have a financial interest can move for an order requiring the estate trustee to pass accounts. They can also ask for a statement of the nature and value of the estate's assets at the date of death, and then for further particulars. In short, beneficiaries cannot be kept in the dark indefinitely.

When accounts go through the court

To pass accounts, the estate trustee files the accounts verified by affidavit (Form 74.43), a copy of the certificate of appointment, and any latest judgment on a passing of accounts. The court then issues a notice of application (Form 74.44). Those with an interest must be served at least 60 days before the hearing if in Ontario, or 75 days if outside Ontario. Where the Public Guardian and Trustee or the Children's Lawyer represents someone with an interest, they must also be served.

A beneficiary who objects must serve and file a notice of objection to accounts (Form 74.45) at least 35 days before the hearing date, and no objection may be raised at the hearing unless it was raised in a notice of objection, unless the court orders otherwise. If no notices of objection are filed, or all are withdrawn, the court may grant judgment without a hearing. In the Toronto Region, an unopposed passing may proceed in writing once the required material is filed.

Costs on a passing of accounts are assessed under Tariff C, and a party seeking more must serve a request for increased costs with a costs outline at least 15 days before the hearing.

The resulting judgment declares the accounts passed and orders fair and reasonable compensation paid to the estate trustee from the estate. Judges can also look into complaints, including misconduct or neglect causing loss.

What to do next

• Open a separate estate account and keep every statement.
• Record each receipt and payment with a date, amount, reason and supporting document.
• Note the value of each asset at the date of death.
• Keep investment decisions on file, since investing requires the care, skill, diligence and judgment of a prudent investor.
• Track your own time and any compensation before you take it.
• Ask a lawyer or accountant to review your records before you distribute.

Frequently asked questions