DUTIES AND RESPONSIBILITIES OF AN ESTATE TRUSTEE

The Estate Trustee is appointed in a Will, if the deceased died with a Will, or by the Ontario Superior Court, if the deceased died without a Will. The Estate Trustee is charged with carrying out the directions, requests and trusts contained in the Will (if one exists) and with otherwise administering the estate. The duties of an Estate Trustee include the following:

1. 1. Make funeral and burial arrangements (normally done in consultation with the family).

   2. Determine that the will is the last will, or that there is no will. Review the will to determine the distribution of the estate, and the Estate Trustee’s duties and powers as provided by the will.

   3. Compile an inventory of assets and liabilities of the deceased at death. Gather such additional information as may be needed to prepare income tax returns, including information about the assets passing on death outside the estate administration (such as insurance to named beneficiaries, joint bank accounts and joint properties passing to surviving joint owners), income during the period for which tax returns are to be filed, and the “cost base” of assets that are subject to capital gains or loss treatment as at the date of death.

   4. Notify the beneficiaries of their interests in the estate and of the anticipated progress of the estate administration so that they can anticipate what their interests are and when they are likely to be received.

   5. Obtain a Certificate of Appointment of Estate Trustee with a Will (or if no will, Certificate of Appointment of Estate Trustee without a Will) if the nature of the assets requires this. Usually this is needed, but in some cases it is not.

   6. Develop an estate administration plan (including realizations, investment policy and proposed distributions) so that the interests of the beneficiaries can be dealt with and protected. It is desirable that this plan be considered and settled as soon as possible when the inventory information is complete. When there is a continuing trust for a beneficiary (such as a trust for a surviving spouse or dependent children), the plan is usually structured to serve the needs of those beneficiaries while at the same time conforming to the instructions in the will.

   7. Determine and settle debts of the deceased and give special consideration to those that may be doubtful.

   8. File income tax returns. Settle any tax liability. Obtain an income tax clearance under subsection 159(2) of the Income Tax Act.

   9. Collect in the assets of the deceased and, after the payment of all debts, distribute the estate to the beneficiaries. The estate may be distributed in stages, with the final amount to be paid only when all income tax matters are settled. Assets may be distributed in cash or in specie, depending on the terms of the will and the decisions of the Estate Trustee. If there is a trust set up under the will, the final distribution may not take place for many years.

   10. Assume responsibility for the custody, maintenance, protection and insurance of the estate assets. Make suitable arrangements for business property interests and properties that may be located at some distance.

   11. Maintain a set of estate accounts to record all receipts and disbursements so that a proper accounting can be given to beneficiaries and income tax returns can be prepared.

Estate Trustees have a high degree of responsibility to the beneficiaries of the estate. Estate Trustees are bound to strictly follow the directions in the will. Estate Trustees are usually entitled to, and should seek, legal, business, investment and tax advice from competent advisors. They are usually entitled to retain assistance in carrying out their responsibilities. The extent of their powers (for example, as to investment) is generally contained in the will, or if there is no will, in the Trustee Act.

To allow the Estate Trustees to deal with assets in the name of the deceased, such as bank accounts, securities and real estate, certain procedures must be followed. Various documents are required by the transfer agents before securities can be transferred or sold. For real estate, generally the Certificate of Appointment of Estate Trustee must be registered on title.

COMPENSATION OF AN ESTATE TRUSTEE

Estate Trustees are entitled to receive compensation for administering the estate. The amount varies, but is generally calculated as 21⁄2 per cent on capital receipts, 21⁄2 per cent on capital disbursements, 21⁄2 per cent on revenue receipts and 21⁄2 per cent on revenue disbursements, and, where there is a continuing trust, an annual management fee of 2⁄5 of 1 per cent on the value of the fund under administration. If the Estate Trustee retains others to assist in carrying out the Estate Trustee’s duties, the fees of those others are paid by the Estate Trustee. Compensation is taxable income to the recipient.

Estate Trustees must account to the beneficiaries (other than those who receive specific items or cash legacies) as to their administration of the estate, and to obtain approval of their compensation. This can be settled by a “passing of accounts” in court, or if all the beneficiaries entitled to an accounting are adults, by their consent.

Estate Trustees should obtain receipts and releases from the beneficiaries at the time of distribution.

LEGAL COUNSEL AND THE ESTATE

Legal counsel also have a role to play in the administration of an estate. The duties for which they are paid by the estate include:

1. 1. preparing the application to Court for the Certificate of Appointment; preparing and publishing advertisements for creditors; preparing the documents to transmit assets (such as securities, bank accounts and real estate) from the name of the deceased to the Estate Trustees or to the beneficiaries; preparing releases for signing by beneficiaries for use at the time of distribution;

   2. services in connection with the preparation of income tax returns;

   3. services on the passing of accounts before the appropriate court; and

   4. services in connection with sales of assets (for example, the sale of real estate).

Legal counsel also often do most of the executor’s work in an estate by maintaining accounts, filing income tax returns and dealing with The Canada Revenue Agency, dealing with securities and other assets, carrying out distributions, and other matters that are the responsibility of the Estate Trustees. If legal counsel does this type of work, then fees are paid by the Estate Trustees personally, out of the compensation to which the Estate Trustees are entitled.