What is the Passing of Accounts?

A passing of accounts is the formal process of getting a Court to pass the accounts of the estate trustee.

A passing of accounts is a particular type of litigation and is governed by the Rules of Civil Procedure.  A passing of accounts may be contested or uncontested.

There are several important steps in a passing of accounts.  The most significant incluce

• The estate trustee must prepare their accounts in Court format.
• The estate trustee must commence an ‘Application to Pass Accounts’.
• There is a specific procedure with fixed timelines for beneficiaries to raise objections, for the trustee to respond, for the parties to withdraw any objections that have been resolved, and for the Court to make a determination on any issues not resolved by the parties.

Passing Accounts is the Default Option

It is important to remember that estate trustees have the right and the duty to pass their accounts for every estate.

Only in some cases is this duty waived or satisfied by something less than a full passing of accounts.

The most common situation where a passing of accounts can be avoided is when every beneficiary willingly agrees with the accounts provided by the estate trustee (which may be informal and do not need to be in Court format), and usually, signs a release that confirms their satisfaction and waives any right to a passing of accounts.

Estate trustees must pass their accounts in certain circumstances, including where a beneficiary is ‘under disability’ (not an adult with capacity to contract).

Estate trustee should pass their accounts when they cannot readily secure unanimous approval of their accounts.

An estate beneficiary who does not approve the trustee’s accounts is not personally responsible for the cost of preparing accounts or the initial filing of an application to pass accounts (the estate is, so ultimately these costs are usually borne by all beneficiaries).  Beneficiaries who have serious concerns about the conduct of the estate trustee should not sign a release too readily, and should demand a passing of accounts when they have valid concerns that are of significant value.  It is important, however, to be very attentive to the cost and delay of a passing of accounts – a dispute over $1,000 is not something that would warrant a compelled passing of accounts.  Put another way, unless there are valid concerns over tens of thousands of dollars, it is usually not worthwhile to force a passing of accounts.

Miltons Estate Law – Probate and Estate Law