What Are Passing of Accounts? Role of an Estate Trustee

What Are Passing of Accounts? Role of an Estate Trustee

An Estate Trustee has a legal obligation to keep a complete and accurate set of accounts of the assets under his or her administration. Informal accounts do not have a legal status, but are more common than formal agreements.

The letter contains information on the progress of distributing and disposing assets. Informal accounts are legal and unproblematic to the trustee as long as no one objects to the accounts.

Passing of Accounts is the formal process that the estate trustee must undergo to obtain the court’s approval of the accounts. A beneficiary can obtain a court order to force the passing of accounts. For example, if he is suspicious of how the estate trustee has distributed the assets. In other circumstances, an estate trustee can apply to the court voluntarily for a passing of accounts, for example, if he or she feels that someone will object to the accounts.

An Estate Trustee is required to pass accounts in circumstances where:

  • A beneficiary challenges the actions of the estate trustee
  • A beneficiary challenges the estate trustee’s handling of the estate accounts
  • At least one of the beneficiaries is a minor
  • At least one of the beneficiaries is mentally incapable
  • There are contingent beneficiaries (individuals who will receive assets in the event that the primary beneficiary is unable to receive them)
  • Some of the beneficiaries are unknown

FILING THE DOCUMENTS

The estate trustee must file the following documents with the Superior Court of Justice:

  1. Accounts in proper form
  2. An Affidavit of the Estate Trustee Verifying Estate Accounts
  3. Present a copy of the certificate of appointment of estate trustee
  4. If there has been a prior passing of accounts, a copy of the last order made on the passing of accounts
  5. A Notice of Application to Pass Accounts
  6. A filing fee of $322.00 payable to the Minister of Finance and imposed by the Superior Court of Justice and Court of Appeal

“PROPER FORM”

The accounts must be in proper form and there are several requirements that an estate trustee must meet. If this is the first passing of accounts, the estate trustee must provide a statement of the assets at the date of death. If a company is opening accounts, they must provide information about their assets to the people who are doing the work. The estate trustee must also present an account of all the money received and all money disbursed, including the trustee’s own compensation and any court order payments.

Investments come with their own proper form requirements. If the estate trustee has made any investments, they must provide an account of:

  1. All of the estate’s investments at the closing date of the accounts
  2. All unrealized assets in the estate at the closing date of the accounts
  3. The estate’s debts and liabilities at the closing date of the accounts
  4. The estate trustee is paid for their work as well as a management fee based on the value of the estate’s assets.
  5. Money used to purchase investments
  6. Money received from repayments or realization on the investments
  7. A statement indicating all the money and investments in the estate at the closing date of the accounts

SERVING THE DOCUMENTS TO BENEFICIARIES

The Estate Trustee must serve the documents to all the beneficiaries who have an interest in the estate. It is appropriate for the estate trustee to mail the following documents to the recipients:

  • A notice of the application to pass accounts
  • Draft notice of objection to accounts
  • A draft judgment must be served on each person who has a contingent or vested interest at least 60 days prior to appointment for persons in Ontario; 75 days for parties outside of the province

A minor must have copies of any will sent to the Office of Children’s Lawyer and Public Guardian. A mentally incapable person cannot manage their own affairs so someone else has to act on their behalf.

There is value in accounting to beneficiaries. The estate trustee is obligated to pass on the accounts in an honest way. Passing of accounts is when the assets in an estate are divided up according to who gets what. The estate trustee is not entitled to any compensation until the beneficiaries have consented.

A person appointed as an estate trustee has judicial release for actions taken during the time of accounting. An Estate Trust gives the trustee peace of mind, and protects them from objections.

Nothing in this article should be considered or relied on as legal advice or opinion. This article only provides general information and should you require assistance, please contact us to book a free initial consultation 905-366-0202 or through our website here.

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