- An estate trustee is a fiduciary and can be personally liable for getting it wrong.
- Distributing before obtaining a CRA clearance certificate is the most common serious error.
- Proper accounts are compulsory, and beneficiaries can compel them.
- A named executor is entitled to decline, but should do so before starting to act.
The role
An estate trustee gathers the deceased’s assets, pays the debts and taxes, and distributes what remains according to the will. Along the way they owe fiduciary duties to the beneficiaries: to act honestly, in good faith, impartially between beneficiaries, and in the estate’s interests rather than their own.
It is a legal office, not an honorary one, and the obligations are enforceable.
The sequence
The order matters, and doing things out of order is where problems arise:
- Locate the original will and arrange the funeral in accordance with any wishes.
- Secure the assets, property, vehicles, valuables, and ensure insurance remains in force. Insurers should be told the property is vacant, or coverage can lapse.
- Identify and value all assets and liabilities as at the date of death.
- Apply for probate where required.
- Notify institutions, government bodies and any pension administrators.
- Advertise for creditors where appropriate.
- Pay the debts.
- File the deceased’s final tax return and any estate returns.
- Obtain a clearance certificate from the Canada Revenue Agency.
- Prepare accounts and distribute, obtaining releases.
Where personal liability arises
Distributing before clearance. If the estate is distributed and tax is later assessed, the trustee can be personally liable for it. Beneficiaries who have received and spent their shares are often not a practical source of recovery.
Failing to advertise for creditors. Where proper notice is given and no claim is made within the period, a trustee has protection against later claims. Skipping it removes that protection.
Losses from poor investment or delay. A trustee who leaves estate assets exposed, or who delays a sale unreasonably and the asset falls in value, may be answerable for the loss.
Self-dealing. Buying an estate asset, or preferring one’s own interest, is a straightforward breach.
Partiality. A trustee who is also a beneficiary must still act even-handedly, which can be genuinely uncomfortable and is not optional.
Accounts
A trustee must keep complete records of every receipt and disbursement. Beneficiaries are entitled to an accounting, and can apply to compel a formal passing of accounts before the court.
On a passing of accounts the court reviews the administration and the compensation claimed. A trustee with poor records is in difficulty, because the burden of justifying the administration is theirs.
The practical advice is unglamorous and effective: open a dedicated estate bank account, run everything through it, and keep every receipt.
Compensation
Estate trustees are entitled to fair and reasonable compensation. Courts commonly use a percentage-based guideline as a starting point, then review it against the actual work, the size and complexity of the estate, the time spent, the skill required, and the results.
It is a guideline, not an entitlement to a fixed percentage. Compensation is taxable income to the trustee, which surprises family members who accepted the role expecting a gift.
Where the will specifies compensation, that generally governs.
Declining
A named executor does not have to act. They can renounce, and the alternate or another eligible person applies instead.
The critical qualification: renunciation must happen before intermeddling in the estate. Once someone has started acting as trustee, they cannot simply walk away, and removal requires a court application.
Anyone unsure should take advice before doing anything with estate assets, not after.
Common questions
Can I be removed as estate trustee?
Yes, on application, where there is misconduct, incapacity, or a conflict making it impossible to act properly. The threshold is meaningful, beneficiaries disliking decisions is not enough.
How long should an estate take?
A straightforward estate commonly takes around a year, largely driven by the tax filing and clearance certificate timeline. Complex or contested estates take considerably longer.
Can I use estate money for legal advice?
Reasonable professional fees properly incurred in administering the estate are generally a proper estate expense.
What if beneficiaries want money before I am ready?
An interim distribution is possible where it is prudent and a sufficient reserve is retained. The trustee bears the risk of getting that judgment wrong.
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