Why Get One?
Estate administration bonds protect beneficiaries and creditors against financial loss resulting from the actions of an estate trustee.
When are they Necessary?
An estate administration bond may be necessary in the following situations:
- on an intestacy;
- where the applicant is not the named executor in the Will;
- where the executor is a non-resident of Canada or a non-resident of a Commonwealth country;
- where there is an Estate Trustee during Litigation;
- on an Application for Succeeding Estate Trustee;
- where a foreign estate trustee nominates an Ontario resident as estate trustee;
- on a resealing of appointment of estate trustee without a Will;
- on an ancillary appointment of estate trustee with a Will;
- on motion pursuant to Rule 74.11 of the Rules of Civil Procedure.
Estate administration bonds are not always necessary in some of the above scenarios, as there are certain exceptions, further explained in this slideshow made by my colleagues Jordan, Suzana and Ian.
How does one Obtain an Estate Administration Bond?
A bond can be obtained in one of two ways:
- from an insurer licensed to write surety and fidelity insurance; or
- by two personal sureties, or one personal surety where the estate is worth $100,000 or less. The surety must be an Ontario resident who is not a minor, registrar or solicitor.
Practical Considerations
- Obtaining a bond can be expensive – s 37(1) of the Estates Act directs that a bond shall be in a penalty of double the amount under which the property of the deceased has been sworn, and gives judges the power to require more than one bond.
- The process for obtaining a bond is time-consuming and complex, so assistance from a lawyer is often necessary.
The Bond can be Reduced or Dispensed
The applicant may request a waiver of the bond requirement – see Henderson (Re), 2008 CanLII 69136 (ON SC) for a summary of this process. A request to dispense has 3 components:
- Applicant’s Affidavit;
- Consents of Beneficiaries; and
- a draft Order to dispense with the bond.
If the Court won’t waive the bond requirement, s 37(2) of the Estates Act gives them the discretion to reduce the amount of the bond.
Resources
This post is a summary of the key points of estate administration bonds, and does not cover all their complexities. For further information on estate administration bonds, you can consult the following resources:
- Sections 35-43 of the Estates Act
- Section 74.11 of the Rules of Civil Procedure
- Section 6.2 of the Estates Procedures Manual
- Henderson (Re), 2008 CanLII 69136 (ON SC)
- the above-noted slideshow by my colleagues
- past blogs we have done on the topic:
Thank you for reading and have a great day!