The estate trustee is obliged to administer the estate in a ‘reasonable period of time’.
How long is reasonable?
The answer depends on the estate. Some estates are more complex than others.
There is a traditional concept of “the executor’s year” during which the executor should probate, collect assets, and administer the estate. This provides a useful rough guide. Note however, that a) probate applications in some Courts in Ontario can take many months, and b) clearance certificates from CRA can take many months, so even the most diligent estate trustee may find it impossible to complete administration of the estate within one year.
It is likely unreasonable to wait a full year before applying for probate; in the GTA, it is not unreasonable to still be waiting for a Certificate of Appointment 4-6 months after filing the application, and thus 4-10 months after death.
Slow to probate: apply or renounce orders
If the estate trustee has not applied for probate within a ‘reasonable’ period of time, then a beneficiary can apply to the Court for an Order that compels the estate trustee to “apply or renounce”. These orders are relatively straightforward, as there should not be any factual issues in dispute: the respondent has not yet applied for probate, and they should either apply promptly or renounce their right to apply and let someone else step in.
If the person with first right to apply as estate trustee renounces the role (or is deemed to have renounced), then the person next in line to apply can apply to be appointed estate trustee.
Slow to administer after probate
Sometimes an estate takes a long time to administer even with diligence, and sometimes the estate trustee is not diligent. For instance, if the estate trustee is living in (or permitting someone else to live in) property of the deceased rent free, the estate trustee may find it remarkably difficult to move forward promptly on selling the residence.
When the estate trustee is lacking in diligence, there are a number of options for a beneficiary. The most common are a) an Application for Directions, and b) an Order to Pass Accounts. An Application for Directions is a very flexible, wide-ranging tool that can be used to address a wide array of issues (such as the ‘free rent’ scenario above). However, Applications for Directions are also more fulsome and expensive litigation.
Sometimes, an Order compelling the Estate Trustee to pass accounts may be sufficient to prod the estate trustee forward. These orders are generally cheaper and faster to secure than a full Application for Directions.
In order to avoid beneficiaries starting proceedings for delay, a diligent and effective estate trustee should:
- communicate regularly with the beneficiaries and update them on the status of the estate;
- strongly consider making interim distributions. While a reasonable holdback for potential tax liabilities is appropriate, it is not necessary for the estate trustee to forestall all distributions until a clearance certificate is received from CRA.