Executor Misusing Estate Funds in Ontario: What to Do

Finding unexplained withdrawals, a missing house sale or an executor who refuses to share information is distressing. Before assuming the worst, remember that some payments that look odd are allowed, and that some real problems start as poor record-keeping.

This article walks through the practical steps open to a beneficiary in Ontario: getting information, testing the accounts, and asking the court for remedies. Whether urgent protective orders are available depends on the facts, so a lawyer should look at the situation quickly.

First, separate misuse from legitimate expenses

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. Examples include a funeral paid personally, or insurance and utilities on a vacant house. The court may later disallow the payment or recovery.

Executors may also claim compensation. The Trustee Act allows a fair and reasonable allowance for care, pains and trouble and time spent, as allowed by a judge, and sets no percentage or formula. If the will itself fixes the allowance, that section does not apply. A fee you disagree with is a different problem from money taken without any right.

Step one: get information

Estate trustees must keep accurate records of the estate's assets and transactions. A person with a financial interest in the estate may move for an order requiring the estate trustee to file a statement of the nature and value of the assets, give further particulars, or pass accounts. These motions may generally be made without notice, but a motion for further particulars requires 10 days' notice to the estate trustee.

An executor cannot be required by a court to account other than by an inventory unless it is at the instance of an interested person or a creditor, and a beneficiary is an interested person who can compel accounts.

• Ask the executor in writing for an inventory, bank statements and receipts.
• Note dates, amounts and who received any suspicious payments.
• Keep copies of the will and any certificate of appointment.
• Do not confront anyone in a way that could prompt assets to move without first getting advice.

Step two: challenge the accounts

On an application to pass accounts, the estate trustee files the accounts verified by affidavit (Form 74.43) and a copy of the certificate of appointment. The accounts must include assets at the date of death, all money received, all liabilities and a statement of the compensation claimed.

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, including to the compensation claimed, must serve a Notice of Objection to Accounts (Form 74.45) at least 35 days before the hearing date. If no objection is made and the required record is filed, the court may grant judgment without a hearing. Missing the objection deadline can therefore cost you your chance to be heard.

Step three: recovery, removal and protection

On a passing of accounts, a judge may make a full inquiry into the deceased's property and may order the executor, administrator or trustee to pay such sum by way of damages or otherwise as is just. This is a route to recover misused estate funds.

The Superior Court of Justice may remove a personal representative on any ground on which it may remove any other trustee, and appoint another proper person. Any person interested in the estate may apply. Anyone with a financial interest may also apply for directions, and the court may direct that an estate trustee during litigation be appointed and file security.

Be aware that 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. Investing estate money carelessly can also be a problem, since a trustee must use the care, skill, diligence and judgment of a prudent investor. If a beneficiary is under 18, the Office of the Children's Lawyer may act on their behalf.

Whether a court will freeze particular accounts or assets quickly, and whether any criminal or police route makes sense, depends on the facts and is something to raise with a lawyer straight away.

What to do next

• Gather the will, certificate of appointment, statements and any messages with the executor.
• Write down a timeline of what you noticed and when.
• Request information in writing, then consider a motion for accounts if you are refused.
• Watch every deadline once an application to pass accounts is served.
• Get legal advice early, particularly if you fear assets are about to be sold or moved.

Frequently asked questions