The process of settling an estate is emotionally fraught and often contentious, especially where there is a lack of trust or communication between an Estate Trustee and the Beneficiaries of an Estate.
A recent decision in Pinard et al. v. Gilchrist et al. by the Ontario Superior Court of Justice outlines the obligations that an Estate Trustee has towards the beneficiaries in terms of the type and depth of information that an Estate Trustee is obligated to provide to the estate’s beneficiaries.
Passing of accounts
In the context of Estate Law, Passing of Accounts refers to the review by a court of the administration of the estate assets by an Estate Trustee during a specified period. There is no requirement for an Estate Trustee to voluntarily pass accounts in Ontario. However, some experienced Estate Trustees may voluntarily participate in the process and receive formal court approval for administering an estate to stave off any costly legal challenges from benefices in the future.
Section 23(1) of the Ontario Trustee Act outlines the voluntary process. Sections 49 and 50 of the Ontario Estate Act and Rule 74 of the Ontario Rules of Civil Procedure outline an Estate Trustee’s process under which a court can be compelled to submit to the Passing of Accounts process.
The rules of civil procedure and the requirement to pass accounts
Under rule 74.15 of the Rules, anyone with a financial interest in an estate can file a motion with the court seeking an order requiring an Estate Trustee to:
- provide a statement of the nature and value, at the date of death, of each of the assets of the estate to be administered by an estate trustee;
- after receiving same, for an order for further particulars by supplementary affidavit or otherwise as the court directs,
- and an order requiring the estate trustee to pass accounts;
- and an order providing for any other matter as the court directs
Choosing an estate trustee who is also a residual beneficiary is often a recipe for litigation
In the Pinard Case, the court was asked by an estate beneficiary, Yvonne to compel the Estate Trustee, Mr. Ronald Pinard (who was also named as a residual beneficiary of the estate), to particularize the deceased’s assets that the Estate Trustee was treating as part of the estate and those that the Estate Trustee was not treating as part of the Estate assets. The beneficiary also sought an order compelling the Estate Trustee to pass his accounts as Executor and Estate Trustee.
Ms. Jean Pinard passed away in December of 2017. At the time of her passing, she had four surviving children, Ronald and Yvonne, as well as Lind and Jo-Anne. She was pre-deceased by her husband.
Ms. Jean Pinard originally executed her will in 2013. In November of 2017, she changed her will and removed Yvonne as her executor. Instead, she named Ronald as her executor. In November of 2017, she also tried to remove Yvonne as a joint account owner on an investment account she held at Edward Jones. That account held $125,000, and the money belonged to Ms. Jean Pinard. However, Yvonne never filed paperwork consenting to have her name removed from the joint account, so her name remained on the account at the time of her mother’s passing in December. At the time of her motion to force Ronald to pass the accounts, Yvonne had not relinquished the Edward Jones account to the Estate.
As there was a will, it was quickly probated, and Ronald was named as the Estate Trustee.
In her will, Jean outlined monetary gifts to her children and grandchildren totalling $130,000. Those gifts included gifts to Yvonne and her children. Ronald paid out the gifts to other members of the family but did not make the payments to Yvonne and her children out of the estate. Ronald stated to the court that he had made the payments to the other members out of his personal inheritance and there was not sufficient money to make the payments to the other members (Yvonne and her children) without access to the Edward Jones account.
Rather than relinquish the Edward Jones account, Yvonne filed this motion asking the court to force Ronald to disclose the estate’s assets and what he was treating as forming part of the estate and what he was treating as not part of his mother’s estate.
An estate trustee is held to the most exacting standards of all fiduciaries
In granting Yvonne’s request, Justice Rusiah writes that a Trustee “must keep a complete record of his/her activities and be in a position at all times to prove that he/she administered the trust prudently and honestly […and must have the] accounts ready and give full information whenever required”. Justice Rusiah also references the Ontario Court of Appeal’s decision in Cahill v. Cahill where the court confirmed that due to the “dependency relationship and the fact that the trustee controls the beneficiary’s property, the trustee is held to the most exacting standards of all fiduciaries”.
It should be noted that Justice Rusiah dismissed the argument by Roland that because there is a dispute regarding the Edward Jones account that Roland should not be compelled to provide a detailed accounting of his activities as an Estate Trustee.
Estate trustees can be compelled to pass accounts at any point
As the Pinard Decision demonstrates, Estate Trustees can be compelled to produce accounts at any moment and should be prepared with detailed records at any time. In fact, prudence suggests that an Estate Trustee should always fulfill his or her duties so that the passing of accounts is considered part of the proper process and always prepared for so that if it does happen, it is not an unexpected unpleasant surprise.
Contact Toronto Estate Lawyers at Derfel Estate Law for Estate Administration
At Derfel Estate Law, our experienced team of estate lawyers are always up to date on estate administration requirements and can assist in acting as an Estate Trustee. Contact us by phone at 416-847-3580 or reach us online to discuss your estate needs.