How to Prepare Estate Accounts in Ontario Step by Step

As an estate trustee, you must be able to show what came into the estate, what went out and what is left. Preparing clear accounts protects you and gives beneficiaries confidence that the estate was handled properly.

This article walks through the records to keep, what formal court accounts must contain and the main steps to pass accounts in Ontario. Procedures can vary by region, so confirm details with a lawyer.

Do you have to pass accounts?

Ontario has no statutory requirement for estate trustees to pass accounts at fixed intervals. They may choose not to pass accounts unless the court compels them to. Apart from an inventory, an executor or administrator need not account to a court unless asked by or on behalf of a person interested in the property or a creditor of the deceased.

A person who appears to have a financial interest in an estate may move for an order requiring the estate trustee to pass accounts. That person may also seek an order requiring a statement of the nature and value of the estate's assets at the date of death, and then further particulars. On a passing, the judge can inquire into any complaint or claim, including misconduct or neglect causing loss, and may order payment to the estate.

Keep records from day one

Estate trustees must keep accurate records of the assets and transactions in the estate. Good records make the accounts far easier later.

• Keep a separate estate account and record every deposit and payment.
• Keep receipts, invoices and statements for every expense.
• Record the date-of-death value of each asset and what later happened to it.
• Note each investment purchase and sale. Estate trustees investing estate property must use the care, skill, diligence and judgment of a prudent investor.
• Write down how you calculated any compensation you plan to claim.

A trustee who believes an expense is properly incurred in carrying out the trust may pay it from trust property, or pay it personally and recover the same amount from trust property. The Superior Court of Justice may later disallow a payment or reimbursement if the expense was not properly incurred. Receipts and a clear reason for each expense help here.

What court accounts must contain

Accounts filed with the court must include the following:

• On a first passing, a statement of assets at the date of death cross-referenced to entries showing their disposal (on later passings, assets at the start of the period).
• An account of all money received.
• An account of all money disbursed, including the trustee's compensation and payments under court order.
• Investment transactions.
• Unrealized assets at the closing date.
• All money and investments at the closing date.
• All liabilities, contingent or otherwise.
• A statement of the compensation claimed and, for a value-based management fee, how the value was set.
• Anything else the court requires.

The receipts, disbursements and investment accounts must each show the balance forward. Where the will or trust treats capital and income differently, receipts and disbursements must be divided into capital and income.

Steps to pass accounts in court

• File the accounts verified by affidavit (Form 74.43), a copy of the certificate of appointment, and any latest judgment on a passing of accounts. The court then issues the notice of application (Form 74.44).
• Serve the notice and a draft judgment on every person with a contingent or vested interest at least 60 days before the hearing if served in Ontario, or at least 75 days if served outside Ontario.
• Where the Public Guardian and Trustee or the Children's Lawyer represents a person with an interest, serve them too.
• Wait for objections. A beneficiary who objects must serve and file a notice of objection (Form 74.45) at least 35 days before the hearing, and no objection may be raised at the hearing unless it was in a notice, unless the court orders otherwise.
• If no objections are filed, or all are withdrawn, the court may grant judgment without a hearing once you file the required record at least five days before the hearing date, including proof of service, an affidavit (Form 74.47) and a draft judgment in duplicate. In the Toronto Region, an unopposed passing may proceed in writing.

Costs are assessed under Tariff C. A party seeking more must serve a request for increased costs with a costs outline at least 15 days before the hearing. The judgment declares the accounts passed and orders fair and reasonable compensation paid to the estate trustee out of the estate.

Compensation and next steps

An estate trustee is entitled to a fair and reasonable allowance for the care, pains, trouble and time spent on the estate, as allowed by a judge of the Superior Court of Justice. This does not apply where the will fixes the allowance. Taking compensation before the accounts are passed is allowed only with the agreement of all interested persons who are sui juris, with court approval, or where the will provides for it. If the court later approves a lower amount, the difference can be ordered repaid to the estate. Executor fees are also taxable.

• Start a transaction log now if you have not already.
• Collect statements for every account from the date of death.
• List all assets, debts and distributions.
• Decide whether you will claim compensation, and document the basis.
• Speak with a lawyer about whether to pass accounts or seek the beneficiaries' approval.

Frequently asked questions