DUTIES OF AN ESTATE TRUSTEE WITH A WILL (ONTARIO)

Duties of an Estate Trustee With A Will

The following is a basic outline of the responsibilities of an executor/executrix or as an “Estate Trustee” as it is now called in Ontario.

You, as an estate trustee, are the person primarily responsible for the administration of the estate. Without giving an exhaustive list, your work includes the following:

  1. Making proper funeral and burial arrangements;
  2. Determining that the Will appointing you is the last Will of the deceased; –
  3. Determining the names and addresses of those beneficially entitled in the estate and notifying them of their interest;
  4. Determining the full nature and value of the assets of the deceased and compiling a list of them;
  5. Determining what debts were owed by the deceased at the time of death and arrange for payment of them from the estate assets;
  6. Contesting and/or settling any debts, the validity of which you are in doubt;
  7. Determining the tax liability of the deceased and of the estate, paying any tax owing and obtaining an income tax clearance certificate;
  8. Distributing the assets of the estate as the will directs. If you have the discretion provided through the deceased’s Will, you may convert the assets of the estate into money and distribute it among those beneficially entitled if you wish to do it that way;
  9. Accounting to the beneficiaries, and the Court, if you are lawfully required to do so, for all of your actions in the administration of the estate.
DECISION MAKING

You are, in your capacity as estate trustee, a court-appointed officer, and you have a high degree of responsibility to the beneficiaries. Above all of this is your responsibility to make decisions. A lawyer can guide you and advise you, but the decisions must be yours, and you cannot delegate that responsibility to anyone else.

EXECUTOR’S YEAR

The Court has traditionally allowed an Estate Trustee twelve months from the time of the death of the deceased person to complete the administration of the estate including its distribution among the beneficiaries. However, some estates provide for on-going trusts to be satisfied that take several years. Each estate has its own circumstances that must be addressed.

THE LAWYER

It is your decision as to whether or not to employ a lawyer to advise you in your administration of the estate. Most Estate Trustees will retain a lawyer because, as Estate Trustee, their role is to perform a legal function. If the nature of the assets requires you to do so, the estate will have to be “probated.” You will have to supply the lawyer with the information necessary to make the application including a list of the assets and their value, the names and addresses of those beneficially entitled and many other things that will be discussed.

You have no doubt heard it said that a lawyer is acting as “solicitor for the estate.” This is not entirely true. The lawyer is the solicitor for the; Estate Trustee and as such can be discharged if the Estate Trustee is not pleased with his/her services.

The role of a lawyer may include the following:

  1. Advising you on all matters in connection with the administration of the estate and hopefully to guide you in making proper decisions;
  2. Preparing the application to the Ontario Court to confirm your nomination as Estate Trustee of the estate (i.e. probate);
  3. Preparing the advertisement for creditors if you wish to advertise for debts;
  4. Assisting you in converting any assets that you decide to sell or transfer by preparing any documents that might be required for this purpose, including agreements for purchase and sale of land, deeds. Statements of adjustment, declarations of transmission, notarial copies of Letters Probate and the like;
  5. Assisting you in preparing your accounts for audit by an Ontario Court Judge if you are required to have them so audited (“passing accounts”);
  6. Preparing releases for signature by the beneficiaries of the estate when they receive their share of the estate releasing you from any future liability;
  7. Representing you in Court in contesting any invalid claims against the estate if this should occur;
  8. Preparing any applications to the Court for advice in your administration of the estate if this becomes necessary.

The responsibility, however, for making decisions, remains with you.

ESTATE TRUSTEE’S COMPENSATION

An Estate Trustee is entitled by law to receive compensation for the care, trouble, out of pocket expenses and responsibility which he or she incurs in acting in that office. The amount varies, usually between 3% and 5% of the gross value of the estate, depending on the difficulty of the problems encountered. If the Estate Trustee is also a beneficiary, the percentage is not computed on that portion of the estate that is being transferred to him or her. The compensation received is “income” in the hands of the Estate Trustee for taxation purposes.

Any duties of an Estate Trustee that are performed by your lawyer (i.e. preparing estate accounts and income tax returns, accumulating and distributing assets) will reduce any executors’ compensation payable to you.

APPLICATION FOR CERTIFICATE OF APPOINTMENT OF ESTATE TRUSTEE’ commonly referred to as “Probate.”

Under the estate rules, an Estate Trustee applies for what is called a “Certificate of Appointment of Estate Trustee.”

Where there is a will and the executor(s) is(are) the applicant(s), the court will issue a “Certificate of Appointment of Estate Trustee With a Will”. This is what was formerly called “letters probate.” Where it is an application where there is no will, the application is for a “Certificate of Appointment of Estate Trustee Without a Will”.

In essence, on the issue of such a certificate, the court confirms the following to be facts:

  1. The death of the deceased;
  2. The place and date of death;
  3. The appointment of the executor/rix/estate trustee;
  4. The document submitted to the court as the last Will of the deceased is in fact, the last will;
  5. Confirmation of the terms of the will but not an interpretation of them.

The authority of the Estate Trustee comes from the will, but the issuing of the “certificate” confirms that authority.

One critical thing to note is that under the rules, notice of your application for the certificate now must be sent to all persons entitled to share in the distribution of the estate including charities and contingent beneficiaries. ‘

Where a charity or mentally incompetent person is involved, the Public Guardian and Trustee must receive notice.

Where. Minors or unborn or unascertained beneficiaries are involved, notice must be mailed to the Office of the Children’s Lawyer.

INCOME TAX

Under the Income Tax Act you are required to file the following income tax returns:

1. A return for any year before the death of the deceased for which the deceased should have filed a return and failed to do so;

2. A return for the year of death covering the period from January 1st to the date of death;

3. A T3 estate return covering income received on the assets you are handling from the date of death to either the end of the calendar year or the estate year whichever period you elect; and

4. in the year of final distribution, a return for the period beginning with that estate year to the date of distribution.

The third and fourth returns are combined if the estate administration is completed within the first year.

If you fail to file the returns, pay any taxes found to he owed, and obtain a clearance from Canada Revenue Agency, you are personally responsible for payment of any tax that might be owed should there be no assets left in the estate with which to satisfy the taxes payable. Therefore, you should make sure that no distribution is made unless there are sufficient assets retained to pay all taxes.

ESTATE BANK ACCOUNT

I suggest that you continue to use the deceased’s accounts at the deceased’s bank as estate accounts. You should provide a notarial copy of the will to the bank and as soon as the Certificate of Appointment of Estate Trustee is obtained, provide the bank with a copy of that. You wilt have to sign a signature card so you can deal with the accounts. In the meantime, if there are sufficient funds in the bank, the funeral account can be paid.

CANADA PENSION PLAN

You are entitled to apply for the death benefit under the Canada Pension Plan.

SUMMARY

I hope that this brochure has outlined to you some of the work that is required to be done over‘ the next few months and has given you some insight into the work and responsibility of both the estate trustee and the lawyer.

William G. MacDonald
Bridget M. Jokitalo

Disclaimer: THIS IS NOT INTENDED TO PROVIDE LEGAL ADVICE TO ANY READER.