Don’t Be Too Quick to Distribute an Estate

March 25, 2014 Hull & Hull LLP Executors and Trustees Tags: 0 Comments

Estate Trustees should be wary of distributing an estate too soon.

Under the Ontario Family Law Act, no distribution of a deceased spouse’s estate shall be made within six months of the spouse’s death, unless the surviving spouse gives his or her consent in writing, or the court authorizes distribution: s. 6(14).  If an Estate Trustee contravenes this provision, and an order is made under the Family Law Act, the Estate Trustee is personally liable for the breach: s. 6(19).

Similarly, with respect to possible claims for dependant support under the Succession Law Reform Act, an Estate Trustee may be personally liable if distribution is made prematurely.  In an Ontario decision, Re Dentinger, 1981 CarswellOnt 485, estate trustees were held personally liable to a dependant where they distributed an estate before the six month limitation period expired. There the court cited the Supreme Court of Canada Decision of Gilles v. Althouse, [1976] 1 S.C.R. 353, where it was stated that “Executors or administrators have a duty not to distribute before the expiry of the limitation period if the possibility of an application for relief is hanging over the estate; if they do so they do so at their own peril”.

A recent decision out of British Columbia, Stevens v. Wood Estate (Re), 2013 BCSC 2380 (CanLII) brings this point home.  There, the court considered the Wills Variation Act, which provides that there shall be no distribution of an estate until six months after the issuance of probate.  The deceased died on April 28, 2012.  Probate was issued on April 12, 2013, and most of the estate was distributed on April 25, 2013.  An application under the Wills Variation Act was commenced the next day.  The court held that the purpose of the prohibition on distribution is to keep the estate intact, in order to ensure that a successful claimant is able to recover that to which they may become entitled.  Further, to require that the claimant pursue the estate trustee or beneficiaries  after the completion of the proceeding does not sufficiently protect the claimant. Therefore, the estate trustee was required to repay the sums distributed, or post security for that amount. 

Thank you for reading.

Paul Trudelle

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