Examples of Executor Misconduct in Ontario Estates

As a beneficiary, you may feel something is wrong with how an estate is being handled. The executor is slow, vague or defensive. But feeling uneasy is not the same as proving misconduct, and a disagreement over timing or judgment is different from a breach of duty.

This article gives practical examples of conduct that can raise real concerns, explains what separates them from ordinary frustration, and describes what evidence and tools an Ontario beneficiary generally has.

Misconduct versus a disagreement

An estate trustee winds up the deceased's affairs, pays taxes, bills and debts, collects the assets and distributes the residue to those entitled. Property of the deceased vests in the personal representative as trustee for the people beneficially entitled. That is a position of trust.

Misconduct generally means failing in that trust in a way that harms the estate or beneficiaries. The Estates Act speaks of misconduct, neglect or default by an executor that causes loss to the estate. A beneficiary simply wishing the house were sold sooner, or disliking how a reasonable choice was made, usually sits in the disagreement category. Whether a given situation crosses the line depends on its facts.

The law also allows a court to excuse a trustee who committed a breach of trust if the trustee acted honestly and reasonably and ought fairly to be excused. That relief does not apply to a loss arising from investment of trust property. An honest mistake is therefore treated differently from deliberate or careless conduct.

Examples that can raise real concerns

• Distributing estate property before getting a CRA clearance certificate. A legal representative who distributes without one is personally liable for unpaid amounts, up to the value distributed.
• Missing tax filings. The deceased's final return is generally due April 30 of the following year for a death from January 1 to October 31, with a late-filing penalty of 5% plus 1% per full month late, to 12 months, where a balance is owing. An Estate Information Return is due within 180 calendar days of the certificate.
• Giving false or incomplete information. Failing to file the Estate Information Return or making false or misleading statements can bring a fine of at least $1,000 and up to twice the tax payable, up to two years' imprisonment, or both.
• Hiding or ignoring later-discovered assets. An executor must file a sworn statement of the value of property discovered later, within six months of discovering it.
• Careless investing. A trustee investing trust property must exercise the care, skill, diligence and judgment of a prudent investor.
• Paying yourself without authority. Compensation is a fair and reasonable allowance allowed by a judge, unless the will fixes it.

Each example turns on the details. A late filing caused by a delay in getting documents is different from one that was ignored for years.

Common frustrations that are often not misconduct

Evidence that matters and the tools available

An executor need not account other than by inventory unless requested by or for a person interested in the property or by a creditor. A beneficiary is an interested person, so a written request for accounts is a reasonable first step.

If accounts are passed, the judge may make full inquiry into and accounting of the whole property of the deceased and its administration. The judge may also inquire into and decide complaints of misconduct, neglect or default causing loss, and may order damages or other relief. That order can be appealed.

• Copies of the will and any certificate of appointment.
• Your written requests for information and the executor's replies, with dates.
• Bank and investment statements, if you can lawfully obtain them.
• Evidence of what the property was worth and what happened to it.
• Notes of conversations, written promptly and kept factual.
• Any tax notices or filings showing missed deadlines.

What to do next

Start with a calm, written request for an update and accounts, and keep your own file. Avoid accusing the executor of theft or fraud before you have documents. If the answers are evasive or the numbers do not add up, speak to an Ontario estates lawyer about whether to ask for a formal passing of accounts. Costs, timing and risks differ in each case, and a lawyer can assess whether the conduct you describe is likely to amount to misconduct.

Frequently asked questions