Ontario Estate Administration & Estate Litigation

Being appointed as an Estate Trustee in Ontario, commonly referred to as an executor, comes with significant legal responsibilities. An Estate Trustee is responsible for administering the deceased person’s estate, protecting estate assets, paying valid debts and taxes, dealing with beneficiaries, and ultimately distributing the estate in accordance with the Will and Ontario law.

While being named as an Estate Trustee may seem straightforward, estate administration can become complicated quickly. Disputes between beneficiaries, questions about the validity or interpretation of a Will, unpaid debts, tax issues, real estate, business interests, or disagreements over how the Estate Trustee is handling the estate can result in litigation.

Estate Trustees also have fiduciary obligations. A failure to properly administer an estate can, in some circumstances, expose an Estate Trustee to personal liability.

This article provides an overview of the key duties and obligations of an Estate Trustee in Ontario.

What Is an Estate Trustee?

An Estate Trustee is the person legally responsible for administering a deceased person’s estate.

Where there is a Will, the person named as executor will generally apply to the Ontario Superior Court of Justice for a Certificate of Appointment of Estate Trustee with a Will, if a Certificate is required.

Where a person dies without a Will, an eligible person may apply to be appointed as an Estate Trustee without a Will. The estate will generally be distributed according to Ontario’s intestacy laws rather than according to a Will.

Whether appointed under a Will or without one, an Estate Trustee assumes important legal and fiduciary responsibilities.

What Are the Main Duties of an Estate Trustee in Ontario?

Although every estate is different, the responsibilities of an Estate Trustee will generally include:

• identifying and securing the deceased’s assets;
• locating and reviewing the Will and any codicils;
• determining the beneficiaries of the estate;
• obtaining information about the deceased’s assets and liabilities;
• applying for a Certificate of Appointment where required;
• determining and paying valid estate debts;
• dealing with the deceased’s real estate and other property;
• filing required income tax returns and dealing with tax liabilities;
• keeping proper estate accounts and records;
• communicating appropriately with beneficiaries;
• investing or preserving estate assets where necessary;
• defending or commencing legal proceedings on behalf of the estate when appropriate; and
• distributing the estate to the beneficiaries when it is appropriate and legally safe to do so.

An Estate Trustee’s job is not simply to divide the deceased’s assets among the beneficiaries. The Estate Trustee must properly administer the estate before making distributions.

Estate Trustees Have Fiduciary Duties

An Estate Trustee is a fiduciary. This means that the Estate Trustee must act honestly, in good faith and in the interests of the estate and its beneficiaries.

An Estate Trustee should not use his or her position to obtain an improper personal benefit and must appropriately manage conflicts between personal interests and the interests of the estate.

This obligation can become particularly important where the Estate Trustee is also a beneficiary. Being both an Estate Trustee and beneficiary is common and is not, by itself, improper. However, the Estate Trustee must distinguish between decisions made in a personal capacity as a beneficiary and decisions made in the fiduciary role of Estate Trustee.

Duty to Identify and Protect Estate Assets

One of an Estate Trustee’s first responsibilities is to determine what the deceased owned and take reasonable steps to protect those assets.

• bank and investment accounts;
• houses and other real estate;
• vehicles;
• shares in corporations or private businesses;
• valuable personal property;
• insurance proceeds payable to the estate;
• money owed to the deceased; and
• digital or other assets.

Estate Trustees should take appropriate steps to ensure that property is adequately protected and insured while the estate is being administered.

If estate property is unnecessarily lost or diminished because an Estate Trustee failed to take reasonable steps to protect it, questions of liability may arise.

Duty to Determine and Pay the Estate’s Debts

Before distributing an estate, an Estate Trustee must consider the deceased’s outstanding debts and the liabilities of the estate.

This may include mortgages, loans, credit cards, taxes, professional expenses, funeral expenses and other valid claims.

An Estate Trustee should be cautious about distributing estate assets prematurely. If assets are distributed and legitimate debts or tax liabilities subsequently arise, the Estate Trustee may face difficulties recovering the money from beneficiaries and could potentially face personal liability.

Duty to Deal With Estate Taxes

Tax issues are an important part of estate administration.

An Estate Trustee may need to arrange for the preparation and filing of the deceased’s final income tax return and any other returns required for the estate. Depending upon the circumstances, there may also be tax consequences arising from investments, real estate, business interests or deemed dispositions occurring on death.

Before making a final distribution, Estate Trustees will often consider whether a clearance certificate from the Canada Revenue Agency should be obtained.

Distributing an estate without properly addressing outstanding tax obligations can create significant problems for an Estate Trustee.

Duty to Keep Proper Estate Accounts

Estate Trustees should maintain accurate records showing all money and property received, expenses paid, income earned and distributions made.

Good record keeping is particularly important because beneficiaries may be entitled to information concerning the administration of the estate.

An Estate Trustee may eventually be required to formally pass his or her accounts before the Ontario Superior Court of Justice. A passing of accounts allows the Court to review the Estate Trustee’s administration of the estate and may also address issues relating to Estate Trustee compensation.

Poor or incomplete records can make this process considerably more difficult.

Does an Estate Trustee Have to Provide an Accounting to Beneficiaries?

Estate Trustees have accountability obligations to the beneficiaries of the estate.

The precise information that must be provided and when it must be provided depends on the circumstances. However, an Estate Trustee generally should maintain proper records and be prepared to account for the administration of the estate.

Beneficiaries who have serious concerns about missing assets, unexplained transactions, excessive expenses, unreasonable delays or other aspects of estate administration may have legal remedies available to them.

Can an Estate Trustee Delay Distribution of an Estate?

An Estate Trustee does not necessarily have to distribute an estate immediately after death.

There may be legitimate reasons for delaying distribution, including:

• determining the estate’s assets and liabilities;
• obtaining probate;
• selling real property;
• resolving tax matters;
• dealing with claims against the estate;
• resolving litigation;
• interpreting provisions of the Will; or
• ensuring that sufficient funds remain available for debts and expenses.

However, an Estate Trustee also should not cause unreasonable or unexplained delay.

If beneficiaries believe an estate is taking too long to administer, they may seek legal advice regarding the Estate Trustee’s conduct and the remedies that may be available.

Can an Estate Trustee Sell Estate Property?

Depending upon the terms of the Will, the nature of the property and the circumstances of the estate, an Estate Trustee may have authority to sell estate assets.

When dealing with estate property, an Estate Trustee must remember the fiduciary nature of the role. Transactions involving the Estate Trustee personally, family members or other related parties can raise conflict-of-interest concerns and require particular caution.

Disputes frequently arise where beneficiaries believe estate property was sold for less than fair market value or where they disagree about whether property should have been sold at all.

Obtaining appropriate valuations and maintaining proper documentation can be important in avoiding or resolving these disputes.

Can an Estate Trustee Be Personally Liable?

Yes. In certain circumstances, an Estate Trustee can face personal liability for losses resulting from a breach of his or her duties.

Potential issues can arise where an Estate Trustee:

• improperly distributes estate assets;
• fails to pay valid debts or taxes;
• misuses estate funds;
• improperly benefits personally from estate property;
• fails to safeguard estate assets;
• makes unauthorized or imprudent transactions;
• fails to maintain adequate accounts; or
• otherwise breaches fiduciary obligations.

Not every mistake automatically results in personal liability. The particular circumstances, the Estate Trustee’s conduct, the terms of the Will and applicable law must all be considered.

Because of the potential consequences, an Estate Trustee facing a significant dispute should consider obtaining legal advice before taking further steps.

Can an Estate Trustee Be Removed?

Ontario courts have jurisdiction to remove or replace an Estate Trustee in appropriate circumstances.

Removal is a serious remedy and is not ordered merely because beneficiaries and an Estate Trustee disagree or do not get along.

However, court intervention may be considered where there are serious concerns regarding matters such as conflicts of interest, failure to administer the estate, mishandling of estate property, failure to account or conduct that threatens the proper administration of the estate.

The overriding concern is generally the proper administration and protection of the estate.

Is an Estate Trustee Entitled to Compensation?

Estate Trustees may generally claim reasonable compensation for the work involved in administering an estate, subject to the Will, applicable law and, where necessary, court approval.

There is no automatic entitlement to simply take whatever amount the Estate Trustee considers appropriate.

The amount of compensation may depend on factors such as the size and complexity of the estate, the work performed, the responsibility involved, the time spent and the results achieved.

Beneficiaries may challenge Estate Trustee compensation where they believe it is excessive or unjustified.

What Can Beneficiaries Do if an Estate Trustee Is Not Doing Their Job?

Beneficiaries are not required to simply accept serious misconduct or an indefinite failure to administer an estate.

Depending upon the circumstances, a beneficiary may seek legal advice regarding steps such as:

• requesting information and an accounting;
• demanding that the Estate Trustee take particular steps;
• requiring the Estate Trustee to pass accounts;
• challenging Estate Trustee compensation;
• seeking directions from the Court;
• seeking the removal or replacement of an Estate Trustee; or
• pursuing a claim arising from an alleged breach of fiduciary duty.

The appropriate remedy depends upon the particular facts of the estate and the seriousness of the Estate Trustee’s conduct.

When Should an Estate Trustee Speak to an Estate Litigation Lawyer?

Not every estate requires litigation. However, obtaining legal advice early can sometimes prevent a disagreement from developing into expensive court proceedings.

An Estate Trustee should consider speaking with an Ontario estate litigation lawyer where there is:

• a dispute between beneficiaries;
• a challenge to the validity of the Will;
• uncertainty about how the Will should be interpreted;
• a significant disagreement concerning estate property;
• an allegation of undue influence or lack of testamentary capacity;
• a claim against the estate;
• disagreement regarding Estate Trustee compensation;
• a demand for an accounting or passing of accounts;
• an allegation that the Estate Trustee breached a fiduciary duty; or
• an application seeking to remove or replace the Estate Trustee.

Beneficiaries should similarly consider obtaining legal advice if they believe an Estate Trustee is failing to properly administer the estate or protect their interests.

Estate Trustee Disputes in Ontario

Estate disputes can become particularly difficult because they often combine significant financial issues with longstanding family relationships.

Estate Trustees need to understand that they are administering property for the benefit of others and that their decisions may ultimately be scrutinized by beneficiaries or the Court. At the same time, beneficiaries should recognize that an Estate Trustee requires sufficient time to properly investigate, administer and resolve the affairs of an estate.

Where disagreements cannot be resolved, experienced estate litigation counsel can assist in determining the parties’ rights and obligations and, where necessary, seek appropriate relief from the Court.

Speak With an Ontario Estate Litigation Lawyer

If you are an Estate Trustee, executor or beneficiary involved in an estate dispute in Ontario, obtaining legal advice at an early stage can help protect your interests and potentially prevent the dispute from escalating.

Landy Marr Kats LLP represents Estate Trustees, executors, beneficiaries and other parties in estate and trust disputes throughout Ontario.

Our lawyers can assist with disputes involving Estate Trustee duties, passing of accounts, beneficiary rights, Estate Trustee compensation, Will challenges, interpretation of Wills, removal of Estate Trustees, breach of fiduciary duty and other estate litigation matters.

Contact our law firm to discuss your estate matter with an Ontario estate litigation lawyer.

Disclaimer: This article provides general information only and is not legal advice. The rights and remedies available in a commercial tenancy dispute depend on the lease and the particular circumstances.