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;
- an alternate executor not named in the Will is applying to the Court for appointment as executor; or
- The trustee named in the Will is not resident in Ontario. (but not always: see below)
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 a bond is not required. This is commonly called ‘an Order to dispense with a bond’.
Dispensing with the 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 in writing by a judge. The relief sought cannot be granted by the Estates Registrar (‘over the counter’). The motion must contain the following information, properly before the Court as evidence:
- 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:
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 and 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