How to Prepare Estate Accounts in Ontario: What Goes Into Them

Every estate trustee in Ontario has a legal duty to keep clear, organized records of everything that happens to estate property from the day they take on the role until the estate is fully wound up. Whether those records are ever reviewed informally by beneficiaries or formally by a judge, the way to prepare estate accounts the way courts expect is to organize everything into a small number of standard categories from the very beginning.

Getting the categories right early saves enormous time later — reconstructing a year of scattered bank statements after the fact is one of the most common, and most avoidable, headaches in estate administration.

Why the Categories Matter

An estate trustee is a fiduciary, meaning they must act in the best interests of the estate and its beneficiaries, keep estate property separate from their own, and be able to show — with records, not just memory — exactly what came in, what went out, and why. If a beneficiary asks to see the accounts, or the accounts are ever formally passed before the Superior Court of Justice, disorganized receipts in a shoebox are far harder to defend than accounts sorted from the outset.

Capital vs. Income: The Foundational Split

Estate accounts are traditionally organized around a split between capital and income, because the two are treated differently and can matter for different reasons, including how compensation is later assessed.

Capital

Capital covers the underlying assets of the estate — the value of the house, investment accounts, vehicles, and other property as it existed at death — plus anything received from selling those assets, minus amounts paid out that reduce the estate’s underlying value, such as a mortgage payout or a major repair made before a sale.

Income

Income covers what the estate’s assets generate while the estate trustee holds them: interest, dividends, and rental income earned after death, for example. Ongoing costs of managing income-producing assets, such as property taxes or utilities on a rental property, are generally tracked here as well.

Receipts and Disbursements: The Other Axis

Layered on top of the capital/income split is a second distinction: receipts (money or property coming in) versus disbursements (money going out). Put together, these two axes produce four basic ledgers most estate accounts are built from:

• Capital receipts
• Capital disbursements
• Income receipts
• Income disbursements

What to Track From Day One

• [ ] A complete inventory of estate assets and their value at the date of death
• [ ] Every bank and investment statement covering the administration period
• [ ] Receipts for funeral costs, probate-related fees, and professional fees (legal, accounting, appraisal)
• [ ] Records of any property sales, including final statements of adjustments
• [ ] Interest, dividends, or rental income received during the administration
• [ ] Ongoing carrying costs paid on estate property (insurance, utilities, property tax)
• [ ] A running log of time and tasks performed, to support a compensation claim
• [ ] Copies of any distributions already made to beneficiaries, and when

Compensation Is Part of the Accounts

An estate trustee’s compensation is not fixed by statute at a set percentage. Under the Trustee Act, absent a will provision setting compensation, an estate trustee is entitled only to a "fair and reasonable allowance" as approved by the court, and courts commonly look at the value of receipts and disbursements handled, along with the time and complexity involved, in assessing that allowance. Because of this, well-prepared accounts usually include a statement showing how the requested compensation was calculated, tied back to the receipts and disbursements already recorded.

When the Accounts Get Formally Reviewed

Well-organized accounts can often be shared informally with adult beneficiaries who have capacity, along with a request that they review and sign off before final distribution. A formal court process — a passing of accounts under the Rules of Civil Procedure — tends to become necessary where a beneficiary is a minor or otherwise cannot consent, where the will requires it, or where the estate trustee and beneficiaries cannot agree.

Frequently asked questions