The estate trustee has a duty to account to the beneficiaries, and thus the estate trustee must keep complete and accurate records (accounts) of each step of the administration of the estate. Detailed and accurate ledgers of all assets, income,and disbursements from the estate are an absolute must.
The executor’s accounts should include, but are not limited to, detailed information about all legal and other professional fees incurred by the executor and paid from the estate, and all executor compensation.
When to pass accounts
“Passing accounts” refers to the process of obtaining the Court’s approval of the executor’s accounts. There is no universal duty to pass accounts. In other words, not all executors are required to have their accounts approved by the Court – it is only required in certain instances.
A beneficiary can require the executor to provide accounts in almost all cases. If the executor refuses to provide any accounts or provides inadequate or inaccurate accounts, a beneficiary can ask the Court to compel the estate trustee to pass their accounts. To accomplish this, the beneficiary must secure a Court order that requires the executor to pass their accounts. Once this order is made, then the estate trustee must prepare and provide accounts (and supporting documentation as required) and the beneficiaries have an opportunity to challenge the accounting, before the matter comes back before a judge for ‘passing of the accounts’.
An estate trustee can voluntarily apply to court for a passing of accounts. For instance, if one or more beneficiaries will never voluntarily agree that the executor has performed properly and provide a release to the estate trustee, the estate trustee can pass their accounts and have them approved by the Court.
We have considerable experience with cost-effective applications to Court to force executors to pass accounts in instances where the executor has been unduly slow or is not fulfilling their duties.
It is necessary to have the estate accounts approved by the Court under the following circumstances:
- there are minor or mentally incapable beneficiaries
- there are unascertained or contingent beneficiaries
- a beneficiary challenges the actions of the estate trustee or refuses to consent to the amount of the estate trustee’s compensation
- a beneficiary challenges the handling of the estate accounts by the estate trustee
How to pass accounts
Passing of accounts is accomplished by preparing documents in proper Court format, and filing them with the Superior Court of Justice.
The following is required:
- estate accounts in proper Court format
- an Affidavit sworn by the estate trustee verifying the estate accounts
- copy of the Certificate of Appointment of Estate Trustee
- a Notice of Application to Pass Accounts
- the filing fee of $322.00 payable to the Minister of Finance
Most executors seek the assistance of legal counsel when passing accounts, as do most beneficiaries who want to contest the executor’s accounts. As with any other piece of litigation, passing of accounts can be complex, requires knowledge of the law, attention to detail, and the core skills of an advocate – clarity, focus, emphasis, and brevity.
Generally, for an executor, the cost of passing accounts is borne by the estate. However, the courts increasingly impose costs on executors personally (or deducted from the executor’s compensation) for inappropriate behaviour, including delayed or badly handled accounts.
Beneficiaries should not start or maintain unnecessary or unreasonable challenges or objections in a passing of accounts – increasingly the Courts are awarding costs on a ‘loser pays’ basis, and by no means will all costs be borne by the estate. In particular, beneficiaries must focus their attention on the issues that matter, and not get distracted with trivial or minor expenses and issues.
The cost to pass accounts can vary widely. The factors that affect this cost include:
- The size and complexity of the estate
- The quality of the executor’s records
- How long the estate has been on-going
- Any disputes about the size or legitimacy of any expenses
Many accounts for simple well-organized estates can be prepared and passed quickly and cost-effectively. Please contact us for a free initial consultation.