Show me the Money! A Beneficiary’s Guide to a Passing of Accounts
Are you concerned about how an estate trustee is managing the estate or trust of a loved one? You may be able to compel an accounting detailing the administration of that estate or trust by making an application to the Court.
Application to Pass Accounts
An Application to Pass Accounts is a an important exercise in the administration of estates and trusts. It serves to provide beneficiaries with the ability to audit the administration of an estate under a will, under a power of attorney, or a trust, and raise any concerns that they may have with the Court.
The procedure for seeking a passing of accounts is governed by Rule 74.18 of the Rules of Civil Procedure, which set out many procedural steps on how a beneficiary can seek an accounting and how an estate trustee, power of attorney or trustee can respond to a demand for an accounting.
In an Application to Pass Accounts, a trustee/estate trustee/attorney for property (referred to as “trustee” for simplicity) will be required to compile an accounting, which includes a list of all of the original assets of the estate or trust, and details all the transactions done and the money being paid in and out of the estate. These are called receipts and disbursements. Where an estate or trust is more complicated, the accounting would include things such as investments, mutual funds, corporate holdings, and the sale of real property.
From the beneficiary’s perspective, there are many advantages to seeking an accounting, including giving the beneficiary the opportunity to ask the trustee questions and raise objections to the trustee’s actions. This is done through a Notice of Objection. A beneficiary may want an accounting if they suspect that the trustee has been negligent, committed a breach of the trust, stolen or misappropriated assets, improperly taken compensation or depleted the estate or trust assets in any way.
Who can make the request for an accounting?
A trustee may not want to pass their accounts and list all the actions that they have taken in administering the estate/ trust. Sometimes, they will voluntarily file an Application to Pass Accounts, but sometimes they need to be forced, or compelled, to do so.
Beneficiaries of an estate or trust are in a unique position because they can compel an accounting from a trustee without notice to the trustee. This is done by a motion using Rule 74.15(2) of the Rules of Civil Procedure. On the beneficiary’s motion, the Court can make an order compelling the trustee to file with the Court an Application to Pass Accounts.
If the Court makes such an order, the trustee then must submit their Application to Pass Accounts and the process will begin. The beneficiary will be provided with the estate or trust accounts and have an opportunity to raise their objections.
Not everyone can ask the Court to compel a passing of accounts. There are specific criteria for who is entitled to make the request for an accounting both in the Substitute Decisions Act and in the Estates Act. Examples of people who can demand a passing of accounts include the person who appointed the attorney for property or their guardian, their dependent, residual beneficiaries of the estate, judgment creditors, the Public Guardian and Trustee and the Children’s Lawyer.
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