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Duties of the Estate Trustee with Valid Will – Estate Admin 1/5

Previously, it was said that:

  • If there is a will and an executor is named, that executor is called the Estate Trustee.
  • If there is no will, and the court appoints someone to administer the estate, that person is called the Administrator.
  • Both were generally referred to as PR (personal representative).

However, nowadays, these distinctions have faded, and the term Estate Trustee is commonly used for both roles.

Below, we will outline the responsibilities and duties of an Estate Trustee in stages.

  • Funeral Arrangements
    • Instructions in the will regarding funeral arrangements are not legally binding on the estate trustee. If someone else (e.g., one of the children) organizes an extravagant funeral, the estate is liable only for reasonable costs.
  • Handling the Deceased’s Body
    • Under the Trillium Gift of Life Network Act, consent from the donor is required for organ or body donation. If no direction is given, the statute specifies who has the authority to make decisions about the body.
  • Communicating with Beneficiaries
    • Beneficiaries, those named in the will, heirs under intestacy laws, or anyone entitled to a share, must be informed of their entitlements.
    • When applying for a Certificate of Appointment of Estate Trustee, the estate trustee is required to serve notice to all beneficiaries entitled to a share of the estate, as they have the right to object to the application.
  • Securing and Determining Assets – “Security” in this context refers to ensuring the estate’s assets are protected. The estate trustee should prepare an Inventory List assets and assign a value to each, which should include: 
    • Real estate (e.g., residences, vacation properties) including mortgages
    • Money on deposit (bank accounts, trusts, investment accounts, etc.)
    • Investments
    • Household contents and personal effects
    • Insurance policies (notify the insurance company of death in writing)
    • Employee benefits (unpaid salaries, pensions)
    • Business interests
    • Annuities and retirement funds
    • Military pensions or benefits
    • Foreign social security benefits
    • Interests in other estates and trusts
    • Jointly held property (e.g., apply Pecore v. Pecore to assess presumptions of resulting trust)
  • Special Note 1 – Delegation of Investment Management
    • While estate trustees must act personally and cannot generally delegate their duties, an exception exists for investment management. Under Ontario’s Trustee Act, trustees can retain an agent as an investment manager.
  • Special Note 2 – No Blind Deference to Lawyers
    • This means even when an Estate trustee hires a lawyer to help him, he cannot blindly follow the lawyer’s advice. The Estate Trustees are personally responsible for all decisions made, even when relying on professional guidance.
  • A lawyer can serve as an estate trustee but must clearly distinguish their role as trustee from their role as a legal advisor.
  • If a corporate trustee is appointed, the lawyer’s role is limited to legal administration.
  • When a lawyer serves as one of the estate trustees, they share equal authority and responsibilities with other trustees. Lawyers in this role have no special privileges over their co-trustees.
  • Solicitor-Client Privilege in the Context of Wills
    • A lawyer acting as an estate trustee must consider the unique implications of solicitor-client privilege. For example, in Hope v. Martin, a lawyer held the original will of the deceased but refused to release it to someone not named as an estate trustee without a court order. The court ruled that solicitor-client privilege and confidentiality should not obstruct the release of a will to someone applying for a Certificate of Appointment of Estate Trustee, provided their interests align with those of the deceased client.
    • Key Takeaway: A will is considered an exception to solicitor-client privilege and confidentiality when its disclosure is necessary to carry out the deceased’s wishes. A court order is only required if there are competing claims or disputes regarding the will.

The most critical initial task for an Estate Trustee is to apply for a Certificate of Appointment of Estate Trustee, commonly referred to as probate. This process confirms the trustee’s authority to administer the estate.

Purpose of Probate

The primary purpose of probate is for the court to formally approve an Estate Trustee. This can occur in two situations:

  • With a will:
    • When a valid will names someone to act as the trustee
  • Without a will:
    • When there is no will, and the court needs to appoint someone to manage the estate anyway

Types of Certificates

Common Types

  1. Certificate of Appointment of Estate Trustee with a Will:
    • For primary wills (probated wills), the certificate is limited to the assets referred to in the will
    • For secondary wills (non-probated wills), probate may not apply
  2. Certificate of Appointment of Estate Trustee Without a Will: used when the deceased left no valid will

The Estate Trustee can also be called “Executor”, who manages the entire state, including representing the estate in any lawsuits. 

Other Types

  1. Certificate of Appointment of Foreign Estate Trustee’s Nominee Without a Will
  2. Certificate of Appointment of Succeeding Estate Trustee with or without a Will
  3. Certificate of Appointment of Estate Trustee During Litigation (ETDL)
    • This certificate is issued when there is an ongoing dispute regarding the validity of a will or a trustee’s appointment. Its purpose is to preserve estate assets during the litigation, meaning the ETDL trustee holds all the rights of a regular trustee, except the authority to distribute assets.
    • Affidavit Evidence – an affidavit must accompany the application, outlining the necessity for the appointment, details of the legal action, the estate’s assets, and suggesting a suitable trustee.
    • Their duties end once the litigation is resolved or all appeals are finalized. At that point, they must:
      • Pass accounts
      • Distribute the estate according to the court’s decision
  4. Litigation Administrator Certificate
    • Litigation Administrator only manages a specific lawsuit for the estate
    • Under s.38(2) Trustee Act, this certificate is required for tort actions against a deceased person’s estate. It allows a representative to be appointed to manage such litigation on behalf of the estate.
  • Regular Appointment
    • The certificate is issued in the county where the testator (deceased) resided
    • It certifies the Will has been duly proved and registered, providing the trustee legal authority to administer the estate.
    • Once granted, the certificate offers some liability protection to the trustee. For instance, if a newer will later emerges after the estate has been distributed, the trustee is generally not held personally responsible.
    • Key timelines:
      • Dependent Relief Claims:
        • Must be filed within 6 months of the certificate’s issuance.
      • Equalization Claims under the Family Law Act:
        • Must be filed within 6 months of the date of death.
  • If a named trustee does not wish to act, they must formally renounce their appointment.
  • In cases where one of multiple trustees dies, the surviving trustee(s) need court certification to continue administering the estate.
  • When no Will exists, preference is given to:
    1. Married spouse
    2. Child
    3. Grandchild
    4. Great-grandchild
  • General Priority Rule: descendants take priority over ascendants
  • Under Re Estate William Armstrong, non-residents of Ontario are ineligible to act as Estate Trustees.
  • Those with priority must formally renounce their right to act before someone of lower kinship can apply.

Previously referred to as “probate fees,” the Estate Administration Tax (EAT) is calculated and payable when the court issues a Certificate of Appointment of Estate Trustee.

It’s worth to note:

  • The late delivery of EAT return brings risk of ministerial assessment and is an offence under EATA
  • Trustee is entitled to challenge assessment by MOF
  • EAT is payable in “representative capacity only”, meaning only appointed PR can pay to MOF, but there is no personal liability for EAT.

More importantly, there are exceptions and nuances to consider:

  • Deposit Requirements and Exceptions – when applying for a Certificate of Appointment, the estate trustee must typically deposit the estimated EAT with the court. There are two exceptions under Rule 74.13(2) of the Rules of Civil Procedure:
    1. Deferred Payment:
      • File an affidavit estimating the value of the estate and the corresponding tax.
      • Then the EAT must be paid within 6 months of the undertaking.
    2. Immediate Certificate Without Payment:
      • The court may allow the certificate to be issued without immediate payment if:
      • The condition is that there is urgent need for the certificate, such as the estate faces financial hardship, or maybe adequate security has already been provided to the court. 
  • Excluded Assets – Certain assets are excluded from the EAT calculation:
    • Assets passing by right of survivorship (e.g., jointly owned property).
    • Foreign real estate.
    • Insurance policies or registered funds with a named beneficiary. However, if insurance proceeds do not have a designated beneficiary, they are included in the EAT calculation.
  • How the Estate’s Value Is Calculated – the EAT is based on the value of the estate at the time of the deceased’s death, calculated as:
    • Total assets minus encumbrances (e.g., mortgages). Note: encumbrances do not need to be registered on the title to be deducted. Example:
      • A home with a fair market value (FMV) of $800,000 and a mortgage of $300,000 would have a taxable value of $500,000.
  • Special Note on Multiple Wills
    • If the deceased had multiple wills, the EAT is calculated based only on the assets governed by the specific will being submitted for probate. This can help minimize the EAT liability by keeping certain assets outside the probated estate.

It is now possible to submit, via email, applications for court certificates of all types.

However, unfortuantely the E-filing has not eliminated the requirement for certain original documents to be delivered (by mail, by courier, or in person) to the appropriate court office, along with payment on account of estate administration tax, if any. For example:

  • in the case of an application for a certificate of appointment of estate trustee with a will, the original will must be delivered to the court; and
  • in the case of an application for
    • confirmation by resealing (with or without a will);
    • a certificate of ancillary appointment of estate trustee with a will; or
    • a certificate of appointment of a foreign estate trustee’s nominee as estate trustee without a will,

Also, the court certified copy of the foreign grant must be delivered to the court.

Except for the original documents referred to above, all other documents can be scanned and submitted to the appropriate court office, along with an information form that lists all of the documents being e-filed and confirms how and when any required original documents and payment of estate administration tax have been delivered to the court office. Further details about e-filing are available by consulting the Ontario’s instruciton page: Notice to the Profession, Parties, Public and the Media.

Where a person e-files the application, the court will issue an electronic court certificate and email it to that person. In principle, this should obviate the need to provide notarial copies of the court certificate to third parties. Instead, the electronic court certificate can be forwarded to the third party by email. A person who receives the electronic court certificate via email can verify:

  1. the authenticity of the estate registrar’s digital signature, and
  2. the integrity of the document (via a confirmatory message that the document has not been altered subsequent to the affixing of the estate registrar’s digital signature).

In the short term, the novelty of electronic court certificates may lead some third parties to decline to recognize them. In such cases, a court-certified copy of the court certificate can be ordered for an added fee. 

Stocks and Bonds

Held under trustee’s control and care, in Ontario, a transfer or sale requires:

  • Original certificate of appointment
  • Declaration of transmission
  • A transfer form, power of attorney, or certificate endorsed by estate trustee

Real Estate

  • If Will directs the real estate to be sold, then the property must be solde.
  • When the main asset in the will is real estate, a certificate of appointment of estate trustee is usually needed to make the property sale.
  • If it is in the “land titles” system, when the property is over $500k, the followings are needed:
    • a transmission application
    • a certificate of appointment of estate trustee

Debts

The estate trustee should inquire into debts and obligations, and to:

  • Determine outstanding debts and claims
    • The PR should do an advertisement for creditors.
    • Ontario Gazette for 3 weeks (old way) or NoticeConnect as the modern means, as the NoticeConnect website can also do an online “affidavit evidence of online posting”
  • Give notice to creditors
    • The PR can distribute if properly notified and once the expiration of notice for sending in claims has passed
  • A prudent estate trustee should give notice to creditors as soon as possible after the deceased’s death, and when notice of any claim has been received, the estate trustee ought not to proceed to pay the legatees without making due provision for all legitimate claims of which notice has been received

s.12 of SLRA provides when the testator gifts a beneficiary and this beneficiary has witnessed the execution of the Will, the gift is void unless the court is satisfied that there is no undue influence (UI). This means if a will gives something (a bequest) to a person who witnessed the will signing, or to that witness’s spouse, the gift is not valid unless the court is convinced that the witness or their spouse did not improperly influence the person making the Will.

s.17(2) of SLRA provides that, unless contrary intention is shown in the Will, a divorce after will is made will revoke bequests/gifts to former spouse. This means when a person makes a will, then gets divorced (or legally separated), any gifts left to the former spouse in the Will, and their role as estate executor, are automatically cancelled, unless the Will specifically states otherwise.

Also, if the former spouse is involved in legal proceedings related to the Will, the court may require their participation to confirm the changes. 

  • The court will require security to be posted when the PR applicant is not an Ontario or commonwealth resident 
  • Under s.37 of Estates Act, usually the total penalty in the bond is twice the value of the assets in the estate being administered
  • Court can dispense or reduce bond, or not require it if: 
    • The administration is a result of an intestacy 
    • Is granted to surviving spouse 
    • Net value of estate is less than $350k 
    • An affidavit of debts is filed with the application for administration

Final Important Note

While this blog series provides a detailed overview of the responsibilities and duties of Estate Trustees, please note that the information offered is a general guide to the process. If you are an Estate Trustee or are about to take on this role and are uncertain about how to proceed, it is essential to seek professional advice.