Passing of Accounts

An attorney or estate trustee can be required to account to the court for every transaction. It is often the step that turns a suspicion into evidence.

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Passing of AccountsAttorney AccountingEstate TrusteeFiduciary Duty

The obligation to keep records belongs to the fiduciary. So does the burden of justifying them.

The Short Answer

What is a passing of accounts?

A court proceeding in which an attorney under a power of attorney, or an estate trustee, presents a formal account of every receipt and disbursement for review. Interested parties can object to specific items. It is frequently the most effective step available, because the duty to keep records rests on the fiduciary and so does the burden of justifying what was spent.

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WHY IT WORKS

The Burden Sits With Them

Most people approaching these situations assume they must prove wrongdoing. On a passing of accounts, the position is closer to the reverse.

An attorney or trustee is obliged to keep complete records of every receipt and disbursement. When accounts are passed, they must present those records and justify what was done. A fiduciary who cannot account for what happened to the money is in difficulty, because the obligation to be able to was theirs.

That is why this step often achieves more than an investigation. It shifts the work onto the person who has the information.

HOW IT STARTS

Demanding, Then Applying

The usual first step is a written demand for an accounting. It sometimes produces the records, and where it produces a refusal instead, that refusal is itself useful.

Where informal demand fails, an application can be brought to compel a formal passing of accounts. Who may apply depends on the circumstances and includes, in defined situations, the grantor, other attorneys, certain family members, and beneficiaries of an estate.

The accounts must be presented in a prescribed court format, which is itself demanding for a fiduciary who has kept poor records.

WHAT THE COURT REVIEWS

Transaction by Transaction

The court examines whether disbursements were proper, whether they were for the benefit of the grantor or the estate, and whether the fiduciary complied with their duties. Interested parties may file objections to specific items.

Items that commonly attract scrutiny include payments to the fiduciary or their family, gifts, loans, cash withdrawals without explanation, transactions with connected parties, and expenses that appear personal.

The court also reviews the compensation claimed. A fiduciary who has taken compensation without authority, or in excess of what is reasonable, can be required to repay it.

OUTCOMES

What the Court Can Order

Approval of the accounts, in whole or in part.
Disallowance of specific disbursements, with repayment to the grantor or the estate.
Reduction or denial of compensation.
Costs, which can be ordered personally against a fiduciary whose conduct made the proceeding necessary.
In serious cases, removal, which is usually sought in a related application.

A note on cost. These proceedings are not cheap, and where the amount in dispute is modest the cost can approach it. Part of an honest first assessment is whether the amount at stake justifies the process, and sometimes the answer is that it does not.

General information

This page is general information about Ontario and Canadian law published by Lexaltico LLP. It is not legal advice, it does not account for the facts of any particular situation, and reading it does not create a solicitor-client relationship. Rules change, and whether any option is available to you depends on your own circumstances.

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Common Questions

Frequently Asked Questions

Can I demand an accounting without going to court?

Yes, and a written demand is the normal first step. It sometimes works, and a refusal is useful evidence if it does not.

Can accounts be passed while the grantor is alive?

Yes. An attorney can be required to account during the grantor's lifetime, which is generally better than waiting.

What if the fiduciary kept no records at all?

That is itself a breach. The absence of records tends to count against them rather than protect them.

How far back can accounts go?

Generally over the period the fiduciary acted, subject to limitation and delay considerations.

Who pays for this?

Costs are in the court's discretion. Where a fiduciary's conduct made the proceeding necessary, costs can be ordered against them personally.

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Related Estate Litigation Pages & Guides

Estate Litigation Overview Capacity Assessments Passing of Accounts Estate Trustee Removal

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