Bonding Basics

Surety bonds, a form of insurance are a means to protect the creditors and beneficiaries of the estate – if the trustee does not perform, the bond provides a backstop.

Often estate trustees first hear about the requirement to bond when their initial Application for a Certificate of Estate Trustee is rejected by the Court. We can help.

A bond may be required when:

there is no Will; or,
there is a Will but either –
- the person applying for appointment as the estate trustee is not named as an executor in the Will; or
- the trustee named in the Will is not resident in Ontario (Sorry, I forgot to mention this circumstance in the video above – will fix).

An exception to these rules for small estates (under $150,000)

Even if a bond would be required under the rules above, a bond is not required if the value of the estate is under $150,000 and if

the applicant lives in Ontario (no Will) or the Commonwealth (with a Will) and
no beneficiary is a minor child, and
no beneficiary is an incapable adult (incapable of managing their own finances).

Bonding

We can, where necessary, assist you to apply for a bond. This is best done through a specialized broker with experience and expertise.

Warning: unless you apply to an insurer with deep experience in bonding estate trustees in Ontario this is likely to be a stressful and money-consuming nightmare.

Dispensing with the bond

The presumption is that the applicant for appointment as trustee must secure a bond in the circumstances set out above (not named executor, or out of province, or no will).

However, arranging for an estate bond can be difficult, time-consuming and expensive. Successful applications for a bond from an insurance company are very rare. Accordingly, whenever possible, executors try to have the Court order that the requirement to bond is waived. This is commonly called ‘an Order to dispense with a bond’.

The Court may, on motion from the estate trustee, order that a bond is not required if the Court is satisfied that a bond is not required to protect the estate and the beneficiaries.

The estate trustee must bring a motion to dispense with the administration bond. This motion must be dealt with by a judge (usually in writing, without a personal appearance). The relief sought cannot be granted by the Estates Registrar (‘over the counter’).

The motion for the Order to dispense with the bond must contain the following information, properly before the Court as evidence by way of sworn affidavit:

the identity of the beneficiaries of the estate
the identity of beneficiaries who are minors or incapable persons, and the value of their interest
executed consents from all beneficiaries to the appointment and to the dispensation of the bond or an explanation as to how the interests of those beneficiaries will be protected
the last occupation of the deceased
evidence as to whether all debts of the deceased have been paid
evidence as to whether the deceased operated a business at the time of death, and if so, information about the debts of the business
if all debts of the estate have not been paid, information about the value of the assets of the estate, and information about the debts including arrangements made with creditors to pay the debts

Securing an order to dispense with a bond takes time, effort and skill

Preparing and filing the motion to dispense with the executor’s bond is one of the most difficult parts of an initial probate application in Ontario, as it requires preparation of a Notice of Motion, draft Order, and proper submission by way of Affidavit of all evidence necessary to satisfy the Court of the issues that must be addressed before it can order that an estate administration bond is not required in a specific case.

Our experience with this issue saves our clients time, grief, and hassle, and it is included as part of our normal probate application services for estate trustees.

The key variables that affect whether or not a bond is required are: whether Ontario is the first location to probate the estate, whether or not there is a will, if there is a will, whether the executor is named in the will, and where the estate trustee resides (ie. whether in Ontario or in the Commonwealth, or not in the Commonwealth).

Click this button to see our handy chart that explains when bonding is and is not required:

Bonding of Trustees: A PDF Chart

The same information is summarized below.

Ontario first location of probate

No bond is required if

there is a will;
and the estate trustee is the executor named in the will; and
the estate trustee resides in Ontario, any other Province of Canada, or the Commonwealth.

If the executor is NOT resident in Canada or the Commonwealth, then when they apply for appointment as estate trustee they must post a bond or secure an Order to dispense.

With a will, executor NOT named in will

Regardless of residence of executor = bond or Order to dispense

No Will

Proposed estate trustee resident in Ontario = bond or Order to dispense

Proposed estate trustee not resident in Ontario = not possible (except in very rare circumstances, which require a Court Order that is difficult to secure).

Estate already probated outside Ontario

First grant of probate is outside Ontario but in Canada or the Commonwealth (called a re-sealing)

With a will, in another Province or the Commonwealth = no bond

Without a will = bond or dispense

First grant of probate is outside the Commonwealth (including the USA) (called an ancillary grant of probate)

With a will, regardless of residence of executor = bond or dispense

Without a will = nominee of estate trustee must be resident in Ontario, and bond or dispense