We’ve blogged in the past about a concept in common law, known as the “Executor’s Year”. In summary, the “Executor’s Year” is a centuries’ old practice which gives personal representatives one year after the death of a deceased to wind up the deceased’s estate.

However, in today’s world, it frequently takes more than a year to administer an estate. What happens if the executor was not in a position to distribute the estate after the executor’s year ends? For example, the delay in administering an estate may have been caused by litigation.

In those instances, there may be interest payable to a beneficiary.

In a recent decision Campbell Estate v Campbell, 2021 ONSC 2424, Justice Gilmore had to decide on this exact issue. The disputes between the parties continued over several years and the beneficiary sought 5% interest on the $660,000 paid to him.

Justice Gilmore sided with the beneficiary. Her Honour stated: “…In summary, I find that the law is clear that barring any specific contrary intention from the testator, interest is payable to Owen and concluding otherwise would be an error in law.”

However, Her Honour did not agree with the rate of interest of 5%. Her Honour ruled that 5% interest worked out to $33,000 per year which essentially would become a windfall for the beneficiary and surely was not intended by the testator. Instead, Her Honor followed the parameters of a Canadian GIC investment and ruled that the beneficiary must be paid an interest rate of 1% per annum from the residue of the Estate commencing from the one-year anniversary of the date of death to date of distribution.

Thank you for reading.