Who Pays for the Funeral: Executor Reimbursement in Ontario

A funeral usually has to be arranged in the first days after a death, while the estate's affairs are still being sorted out. Many executors end up putting the bill on their own credit card and wondering whether they will ever see the money again.

Ontario law gives executors a way to be repaid, but it comes with conditions. This article explains how reimbursement works, how funeral costs fit with the estate's other debts, and what to do if the estate is short of money.

How repayment from the estate works

Under the Trustee Act, an estate trustee who believes an expense is properly incurred in carrying out the trust may pay it from estate property, or pay it personally and recover it from the estate. A funeral paid personally is one of the examples given.

The rule is permissive, not a guarantee. The court may later disallow the payment or recovery. Because of that, it is sensible to keep your records as though your payments may be reviewed.

The same section covers other costs of looking after the estate. Examples given include insurance or utilities on a vacant house. Whether a particular cost is properly incurred depends on the facts, so keep the paperwork for those costs too.

Where funeral costs sit in the order of payment

Ontario's official guidance says the estate is distributed once assets have been liquidated and the funeral and burial expenses and any debts have been paid. In other words, beneficiaries are paid after these costs, not before.

The deceased's property, other than property passing by survivorship, vests in the personal representative as trustee, subject to payment of the deceased's debts. Property held with a right of survivorship, such as a home owned as joint tenants, passes to the survivor and does not form part of the estate. If the estate has enough money, the order of payment rarely causes trouble. It matters when the estate is short.

If assets are insufficient, debts are generally paid proportionately without preference or priority, subject to existing liens. Do not assume you will be repaid first. A court may relieve a personal representative who acted honestly and reasonably in an insolvent estate. If you suspect the estate cannot pay everyone, get advice before paying anyone.

Notice to creditors also matters before you distribute. A personal representative who gives the notices the court would have directed may distribute the assets and is not liable for amounts paid out to anyone whose claim they had no notice of at the time. That protection does not apply to heirs, next of kin, devisees or legatees claiming as such. If you dispute a creditor's claim, an estate trustee may serve a written notice contesting it. The claimant must then apply to court within 30 days of receiving it, or within a further three months if a judge allows, or the claim is deemed abandoned and forever barred.

Records that protect you

Estate trustees must keep accurate records of the estate's assets and transactions. If accounts are later filed with the court, they must include all money received, all liabilities, and a statement of the compensation the trustee claims. A beneficiary who is an interested person can require accounts to be given.

• The itemized funeral home invoice and proof of payment.
• Receipts for cemetery, flowers, notices and any other related costs.
• A note of how you paid, and the date.
• Any bank statement showing the repayment you took from the estate.
• Written agreement from beneficiaries if the funeral was unusually costly.

If the accounts are reviewed formally, the process is set by the Rules of Civil Procedure. On an application to pass accounts, the estate trustee files the accounts verified by affidavit, a copy of the certificate of appointment, and any earlier judgment on passing of accounts. The notice of application must be served on every person with a contingent or vested interest at least 60 days before the hearing date, or 75 days if served outside Ontario. A beneficiary who objects to the accounts must serve a Notice of Objection to Accounts at least 35 days before the hearing date.

Funeral costs and reimbursement compared

What to do next

Keep your own money and the estate's money separate where you can, and pay yourself back only after you have confirmed that the estate can cover its other debts. Before you pay yourself, make sure you are acting as the estate's legal representative and that the funds are available to you.

• Ask the funeral home for an itemized invoice.
• Find out how the deceased's accounts are held, since some assets pass outside the estate.
• Talk to a lawyer before repaying yourself if the estate looks short, or if family members dispute the cost.

If something goes wrong, a court may wholly or partly relieve a trustee of personal liability for a breach of trust if they acted honestly and reasonably and ought fairly to be excused. That is not something to count on, so ask for advice early if you are unsure.

Frequently asked questions