Executor's Duties: Records and Accounts
Executor’s have an obligation to keep proper accounts and records. Unfortunately, many executors fail to fulfil these obligations. Sometimes this failure is due to willful neglect of educating themselves on their responsibilities, duties and obligations; other times, the failure is due to greed and actual theft.
The duty to keep records and accounts are requirements for all executors. However, in Ontario, it is not always necessary to have the records and accounts approved by a court. Accounts are approved by the court by way of a Passing of Accounts. The form of the records and accounts that the court requires in Ontario is set out in the Rules of Civil Procedure:
Estate trustees shall keep accurate records of the assets and transactions in the estate and accounts filed with the court shall include,
(a) on a first passing of accounts, a statement of the assets at the date of death, cross- referenced to entries in the accounts that show the disposition or partial disposition of the assets;
(b) on any subsequent passing of accounts, a statement of the assets on the date the accounts for the period were opened, cross-referenced to entries in the accounts that show the disposition or partial disposition of the assets, and a statement of the investments, if any, on the date the accounts for the period were opened;
(c) an account of all money received, but excluding investment transactions recorded under clause (e);
(d) an account of all money disbursed, including payments for trustee’s compensation and payments made under a court order, but excluding investment transactions recorded under clause (e);
(e) where the estate trustee has made investments, an account setting out,
(i) all money paid out to purchase investments,
(ii) all money received by way of repayments or realization on the investments in whole or in part, and
(iii) the balance of all the investments in the estate at the closing date of the accounts;
(f) a statement of all the assets in the estate that are unrealized at the closing date of the accounts;
(g) a statement of all money and investments in the estate at the closing date of the accounts;
(h) a statement of all the liabilities of the estate, contingent or otherwise, at the closing date of the accounts;
(i) a statement of the compensation claimed by the estate trustee and, where the statement of compensation includes a management fee based on the value of the assets of the estate, a statement setting out the method of determining the value of the assets; and
(j) such other statements and information as the court requires.
(2) The accounts required by clauses (1) (c), (d) and (e) shall show the balance forward for each account.
(3) Where a will or trust deals separately with capital and income, the accounts shall be divided to show separately receipts and disbursements in respect of capital and income.
In Ontario, “Estate Trustees” is now used to describe an executor an administrator whether male or female. This eliminates the old-fashioned and cumbersome terms “executor,” “executrix,” “administrator,” and “administratrix.”
In many cases, this step is never required. Unfortunately, this leads to many executors to being lulled into a false sense of security that their matter will not find its way in front of a judge. This false sense of security encourages executors to not keep the required records and accounts.
Judges and lawyers know all too well how difficult it can be to recreate records and accounts years after the fact.
For the people trying to decide who to appoint as an executor, please be sure to choose someone that has the skills and desire necessary to keep the requisite records and accounts. Being an executor is not an honour; it is a huge responsibility that brings with it many duties and obligations. Choosing an executor that cannot or will not do what is required of them will only cause problems down the road.
For the people that are deciding on whether or not to accept the position of executor, please be sure that you have the skills and desire necessary to keep the requisite records and accounts. Alternatively, if you do not have the requisite skills, please make sure that you hire someone that can help you in this regard.
If you have any questions about executor’s duties and obligations, please do not hesitate to contact my office. I offer free initial consultations in estate matters.