How Broad Is a Trustee’s Duty to Account?
It is trite law that an estate trustee has an obligation to account for his or her dealings with the assets of the estate. However, questions often arise with respect to the extent of an estate trustee’s duties to account for assets that may or may not be part of the estate.
Such questions arose in the recent decision of Munro v. Thomas, 2021 ONSC 3320 (CanLII). As stated by Gibson J. in the opening paragraph of the decision, “This is ultimately a dispute about trust which, as seems so often to be the case, involves at its heart a dispute amongst siblings about a family cottage.”
In Munro, a beneficiary and child of the deceased brought an application to compel the estate trustee to produce full bank records going back to 2013 (the deceased died in 2019), to produce full and complete medical records of the deceased, to submit an affidavit explaining all gifts made and substantial transactions entered into by the deceased (notably, the deceased gifted her cottage to 2 of her 4 children in 2011 and sold her home in 2013), and to submit to cross-examination.
The estate trustee resisted the relief being sought, arguing that it was overbroad, and not consistent with his obligations to account for assets falling within the estate.
The court heard evidence presented by the trustee on the deceased’s capacity at the time of the cottage transfer and home sale. The court concluded that the allegations of incapacity, undue influence and resulting trust were unsupported by the applicant’s evidence and accordingly, the relief sought was not to be granted.
The court dismissed the application, but allowed the estate trustee to apply, if he wanted to, to pass his accounts. Further, the court noted that a beneficiary could compel a passing of accounts. Arguably, in the context of a passing of accounts, the beneficiary could raise an issue there as to whether an asset was appropriately part of the estate or not. The court cautioned that a beneficiary who challenged a trustee’s accounting without good reason or who tries to force the trustee to pursue assets that fall outside of the estate can be held liable for costs.
It should be noted that the applicant did not seek a passing of accounts. The court held that the estate trustee may apply to pass his accounts, notwithstanding the fact that no Certificate of Appointment was granted. Although not referred to in the Munro decision, the decision of Haley J. in Re Silver Estate, 1999 CarswellOnt 4217 is clear authority that an estate trustee does not need to probate the will in order to pass accounts.
Thank you for reading. Have a great Mother’s Day weekend.