Trust Company as Executor of an Estate in Ontario: Control and Pay

Many wills name a bank or trust company as estate trustee, often alongside a family member or as a back-up. If you are a beneficiary or a relative, you may wonder who actually makes the decisions, how long it will take and what the company will be paid.

This article explains in plain language how a corporate executor fits into an Ontario estate. The details turn on what the will says, so it is worth having a lawyer read the document before you decide anything.

A named trust company does not have to act

Being named in a will is an offer, not an obligation. A person named as estate trustee does not have to act. The same is true of a company. If it declines, it uses Form 74G (Part A) to renounce, and a probate application must include a renunciation from every living named estate trustee who has not joined the application.

Once an executor renounces probate, its rights as executor wholly cease and administration passes as if it had never been appointed. If a named executor does not respond, a person with a financial interest in the estate can bring a motion asking the court to require the executor to accept or refuse the appointment. The court can also summon a named executor to prove or refuse to prove the will, and if the executor does not appear, the right to the executorship wholly ceases.

Who is in control of the estate

The deceased's property, other than property passing by survivorship, vests in the personal representative as trustee, subject to payment of the debts. That means a corporate executor, not the family, holds legal control of the estate assets. A jointly owned home held with a right of survivorship is the usual exception, because it passes to the survivor and is not part of the estate the executor deals with.

• The executor must keep accurate records of the estate's assets and transactions.
• When investing estate property, it must use the care, skill, diligence and judgment of a prudent investor.
• If it wants to sell real property only to distribute the estate, the approval of the majority of the persons beneficially entitled is needed, unless a judge dispenses with it.
• Where a minor is a beneficiary, the Children's Lawyer gives approval, and for a mentally incapable person the Public Guardian and Trustee does.

If the will names a trust company together with a family member, the powers of several personal representatives vest in the survivor or survivors unless the will provides otherwise. How the two share decisions day to day depends on the will, so read it closely.

How a trust company is paid

An estate trustee is entitled to a fair and reasonable allowance for care, pains, trouble and time spent, as allowed by a judge of the Superior Court of Justice. The statute sets no percentage or formula. Compensation can be settled even when the estate is not before the court in an action. If the will itself fixes the allowance, the Trustee Act provision on compensation does not apply. Corporate executors often have a fee set out in the will or in an agreement, so check what yours says.

When a beneficiary objects, a judge passing the accounts decides what is fair and reasonable. The accounts must include a statement of the compensation the estate trustee claims. On the tax side, a professional or business executor reports fees as business income and receives a T4A slip, while a non-professional executor's fees are employment-type income reported on a T4. If the estate pays executor fees, it must file a T4 Summary and the related T4 slips.

What beneficiaries can do if they are unhappy

A beneficiary is an interested person who can compel accounts. A person with a financial interest can move for an order that the executor file a statement of the estate's assets, give further particulars, or pass accounts. These motions can generally be made without notice, except a motion for further particulars, which needs 10 days' notice to the estate trustee.

• On an application to pass accounts, the notice and draft judgment must be served on everyone with a vested or contingent interest at least 60 days before the hearing, 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.
• If no one objects and the required record is filed, the court may grant judgment without a hearing.
• A judge passing accounts may order an executor to pay a sum by way of damages or otherwise where estate funds were misused.

In more serious cases, the Superior Court of Justice may remove a personal representative on any ground on which it may remove any other trustee, and any interested person can apply. A court may relieve a trustee of personal liability for a breach of trust if the trustee acted honestly and reasonably and ought fairly to be excused. An executor that wants to step down after acting cannot retire by deed. It must apply to court.

What to do next

• Get a copy of the will and find the clause naming the executor, any alternate and any fee provision.
• Ask whether the trust company has accepted the appointment or renounced.
• Ask for a written explanation of how its compensation will be calculated.
• Ask about the timeline, including the Estate Information Return, which is due within 180 calendar days of receiving the certificate of appointment.
• Keep your questions and its answers in writing.
• Speak with a lawyer before filing an objection, because the deadlines are short.

Frequently asked questions