Mixing Personal and Estate Money: Executor Commingling in Ontario

Many executors mix money without meaning to. You paid the funeral home or a utility bill from your own account, planning to be repaid. Or an estate cheque arrived and you deposited it where it was convenient. Now you worry that you did something wrong.

Mixing personal and estate funds is called commingling. It is a common problem, and it is usually fixable if you act openly. This article explains why it matters under Ontario law and the steps that generally help.

Why commingling is a problem

Property of a deceased person vests in the personal representative as trustee for the persons beneficially entitled, subject to payment of debts. You hold it for others. Once estate money sits in your personal account, it becomes hard to show which dollars belong to whom.

The risk is practical as much as legal. Personal accounts may be affected by your own debts, your spouse, or your own death. If something goes wrong, beneficiaries may say estate money was lost or used. How the law treats a particular mix of funds depends on the facts, so get advice.

Two common scenarios

Paying a legitimate estate expense yourself is generally less worrying than depositing estate money into your own account. Even so, how and when you are reimbursed should be documented. If you are unsure, ask a lawyer before taking money out.

How commingling can come to light

An executor need not account other than by inventory unless requested by or for a person interested in the property or by a creditor. When a beneficiary asks, your bank records become the story of what happened.

If accounts are passed in court, 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 misconduct, neglect or default causing loss to the estate and order damages or other relief. A trustee who wants to pass accounts can also file them in the Superior Court of Justice.

A court may excuse a trustee who acted honestly and reasonably and ought fairly to be excused, but that relief does not apply to a loss arising from investment of trust property. Open records and prompt correction help show honesty, though no outcome can be promised.

How to fix it

• Stop mixing further. Do not make more estate payments from personal funds or deposit more estate money personally.
• Open a separate account for the estate. What your bank will need to open it can vary, so ask the bank and confirm with a lawyer.
• List every transaction: date, amount, payer, payee and purpose, with receipts.
• Move estate money out of your personal account to the estate account, and note the transfer.
• Do not simply repay yourself for expenses without recording them and, if unsure, getting advice first.
• Keep your compensation separate. A trustee's allowance is allowed by a judge unless the will fixes it. Where compensation was not fixed, a judge on a passing of accounts can fix it and the trustee may then retain that amount.
• Consider telling beneficiaries openly what happened and how you corrected it.

If you used a power of attorney before the death

A continuing power of attorney ends when the grantor dies, so the attorney's authority over the grantor's accounts ends at death. An attorney is a fiduciary who must act diligently and keep accounts of all transactions. Records must be kept until, among other events, the person has died and the accounts and records have been delivered to the personal representative. If you were attorney and are now executor, keep the two roles' records separate.

What to do next

Gather the statements and receipts, build a simple ledger and separate the funds. Then speak with an Ontario estates lawyer, especially if amounts are large, beneficiaries are already asking questions, or you are unsure whether to reimburse yourself. Acting openly and early generally puts you in a stronger position than hoping nobody notices.

Frequently asked questions