Tag: estates act

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ESTATE TRUSTEE DURING LITIGATION: THE GOOD AND PRACTICAL WAY TO SAFEGUARD ASSETS DURING ESTATE LITIGAT1ON

estate trustee during litigationWe hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to the audio version of this Brandon Blog, please scroll to the very bottom and click play on the podcast.

Estate Trustee During Litigation: What is it?

All of us with business or family assets and/or debts can be subject to litigation or worry about it. Whatever the reason, the reality is that no one can remove themselves from the litigation process…not at the beginning, not at the end, and not even in death. Perhaps it is an employee or partner, a spouse or ex-spouse, your children or grandchildren, or even your parents.

Many times a person’s death creates Estate litigation between family members; either over a Will or because there is no Will! Sometimes it is necessary for the appointment of a neutral, independent court officer to control the Estate assets and deal with Estate issues while the beneficiaries and other potential stakeholders are involved in Estate litigation.

In our sister business, Smith Estate Trustee Ontario, we accept the appointment of Estate Trustee and we can also act as the independent court officer Estate Trustee During Litigation. This Brandon Blog is about why it may be necessary for the court to appoint an Estate Trustee During Litigation and why it may turn out to be a necessity.

The role of an Estate Trustee During Litigation

An Estate Trustee During Litigation is tasked with protecting the Estate while the litigation is ongoing and gathering information and, sometimes, helping to resolve the litigation.

The duties include, in particular:

  • Calculating the fair market value of the estate’s assets and liabilities.
  • Keeping its assets safe and secure.
  • Retaining and, if necessary, tracing anything discovered to be missing.
  • Keeping separate trust accounts.
  • Reviewing and handling protective and other expenditures.
  • Establishing, defending, settling and paying any debts.
  • The filing of income tax returns and if the situation allows for it, whatever tax planning to reduce income taxes can take place.
  • Investing estate funds to maximize yields until the Estate Trustee During Litigation is discharged of its obligations and funds.

Because of their experience, resources, objectivity, and integrity are sometimes viewed as the best option. As a matter of common law, responsibilities of the Estate Trustee During Litigation cease upon the termination of the litigation, and they are required to transfer assets without having to be ordered to do so separately.estate trustee during litigation

Appointing an Estate Trustee During Litigation

A court appoints an Estate Trustee During Litigation to handle the deceased estate. Section 28 of the Ontario Estates Act, R.S.O. 1990, c. E.21 provides the statutory authority. The Ontario Superior Court of Justice grants administration in the case of either intestacy (when there is no Will) or pending a valid challenge to the validity of the Will, or some other action involving the Will and the deceased estate.

While the ongoing litigation continues, the Estate Trustee During Litigation has all the powers and rights of a general administrator, except for the right to distribute the residue of the property. Administrators of such estates are subject to the immediate control and direction of the court, and the court may order that the administrator receive reasonable remuneration from the estate of the decedent.

Court Appoints Estate Trustee During Litigation

The court appoints the Estate Trustee During Litigation and can set its remuneration. Therefore, the court must have some guiding principles it follows to determine when it is appropriate to make such an appointment. Well, it does. It comes from a situation I previously wrote about in my July 24, 2019, Brandon Blog DYING WITHOUT A WILL IN ONTARIO: DISTRIBUTION TO HEIRS NOT EASY. In that Brandon Blog, I wrote about Toller James Montague Cranston, deceased.

Toller Cranston was a popular Canadian figure skater and artist. He passed away on January 23, 2015, in Mexico where he lived for some 23 years. He passed away without leaving a Will. His sister, Phillipa Baran, was appointed Estate Trustee of the Estate of Toller Cranston by the Mexican court on September 3, 2015, on the consent of Phillipa and her two brothers, Guy Francis Cranston and Hugh Goldie Cranston. These three siblings were the only beneficiaries. In December 2016, her appointment as Estate Trustee of the Estate of Toller Cranston was confirmed by the Ontario court, also on consent. Phillipa Baran, therefore, had sole authority for Estate administration.

Estate litigation ensued and the court-appointed an Estate Trustee During Litigation. A rift between the three beneficiaries developed. The brothers filed a motion to remove their sister as Estate Trustee. One of the points of contention between the siblings was the manner ins which Phillippa Baran was handling the sale of Estate Assets, namely, the artwork of Toller Cranston. While that Estate litigation was pending, in 2019, the Master in the Estates court appointed an Estate Trustee During Litigation to take charge of trust property remaining in the meantime until the issue could be resolved.

During the litigation involving the Estate of Toller James Montague Cranston, the Master ordered the Estate Trustee During Litigation to act without posting an Administration Bond. The Master also ordered that all assets of the Estate shall be immediately turned over to the Estate Trustee Under Litigation who shall also file a Consent with the court. Phillipa Baran was ordered to fully cooperate in the transfer of the Estate assets and the production of records, including all financial records.estate trustee during litigation

Philipa Baran appeals the appointment of the Estate Trustee During Litigation

Philippa Baran sought to set aside the Master’s decision and order appointing an Estate Trustee During Litigation. Her appeal was heard by the Divisional Court. According to the court, the Ontario Superior Court of Justice has statutory authority to appoint an Estate Trustee During Litigation.

On this appeal, the Divisional Court Judge felt the appeal boiled down to two points. Specifically, whether the decision of the Master should be set aside and whether the order issued exceeded the Master’s jurisdiction.

The Divisional Court determined that the Master did not err in either law or fact based on its review of the relevant statutory provisions and jurisprudence. The Judge found nothing wrong with the Master’s Order.

To be fair to Ms. Baran, the Judge noted that there is evidence that she has worked very hard to manage the estate’s assets and debts since Toller Cranston died. It has been a challenging task. It appears, however, that the parties have reached a deadlock.

The Judge also thought Ms. Baran’s handling of the remaining artwork, including either selling the art over her brothers’ objections or planning future rights to the artwork without consulting Guy Cranston or Goldie Cranston, was unreasonable and contrary to her obligations as Estate Trustee.

Ms. Baran was, in the court’s view, in a conflict of interest in this litigation. Ms. Baran’s appeal was therefore dismissed, the appointment of the Estate Trustee During Litigation stands and Ms. Baran must temporarily return her Certificate of Appointment to the court.

Estate Trustee During Litigation: A Primer for Accountants and Lawyers

In addition, the Divisional Court noted some of the factors that will be considered by the court in determining whether or not it should exercise its discretion to appoint an Estate Trustee During Litigation. Accounting firms, lawyers, and anyone advising in the Estates area should be aware of these factors.

In terms of the court’s jurisdiction to appoint an Estate Trustee During Litigation, the following points were confirmed:

  • When necessary, the court can draw upon its inherent jurisdiction to protect parties and ensure justice in the proceeding by supervising the management of estates and controlling its own processes.
  • It is in the court’s inherent jurisdiction to appoint an officer to preserve and protect the assets of an Estate that may be at risk during litigation.
  • A level playing field must be ensured and the assets of the estate protected from the tactics used by litigating parties. No one should be able to use their control over the Estate to benefit themselves or to hurt the other beneficiaries.
  • It is crucial to administer an Estate’s assets to the maximum advantage of its beneficiaries. When an Estate Trustee faces an adversarial position towards his/her co-trustees or beneficiary, it is prudent to replace that trustee temporarily;’simple prudence demands it.
  • A court should only refuse the appointment of an Estate Trustee During Litigation in the clearest of cases since it is not an extraordinary measure. In most conflicts between the trustee and beneficiaries, the court will favour the appointment, unless it is not one of those very challenging Estates thereby making the estate administration straightforward.

According to the Divisional Court:

Whether an Estate Trustee During Litigation should be appointed is a discretionary decision. In determining whether the discretion to appoint an Estate Trustee During Litigation should be exercised, the following factors should be considered:

  • An Estate Trustee may be a witness in litigation.
  • Conflicts of interest are possible.
  • Conflict of interests between the Estate Trustee and/or beneficiaries.
  • There is hostility between the Estate Trustee and/or beneficiaries.
  • There is a lack of communication between the parties.
  • There is evidence that some parties were excluded from settlement discussions.estate trustee during litigation

Estate Trustee During Litigation summary

I hope you have found this Estate Trustee During Litigation Brandon Blog informative. The death of a loved one is probably the most traumatic life event you will encounter. It is doubly so if your loved one dies intestate and family members tie up the Estate with costly litigation.

Are you a stakeholder in Estate litigation where the appointment of an independent, neutral court officer can at least unlock the jamming up of assets so that the assets can be preserved and their value maximized for the beneficiaries? If so, Smith Estate Trustee Ontario can help you. Contact us so that we can provide a no-cost consultation to see how we can help you and the other beneficiaries.

Do you have way too much financial debt? Prior to you getting to the phase where you can’t make ends meet reach out to me. I am a licensed insolvency trustee (previously called a bankruptcy trustee). In fact, if you understand that you can’t pay your financial debts heading into or in your retired life, contact us.

We understand the pain and stress excessive financial debt can trigger. We can aid you to get rid of that discomfort as well as address your financial problems by offering prompt action and the ideal plan.

Call Ira Smith Trustee & Receiver Inc. today. Make an appointment with one of the Ira Smith Team for a free, no-obligation consultation and you can be on your way to enjoying a carefree retirement Starting Over, Starting Now. Give us a call today so that we can help you get back to stress and pain-free life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

 

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PROBATE IN ONTARIO – SMITH ESTATE TRUSTEE ONTARIO BEGINS

probate in ontario

Introduction

I have written several blogs on the topic of when someone dies and their estate is insolvent. One of our most popular blogs is WHAT HAPPENS TO DEBT WHEN YOU DIE CANADA: ARE YOU FREE OF DEBT? I have also written on estate matters including probate in Ontario. Not from an insolvent estate perspective, but as to why a licensed insolvency trustee (formerly called a trustee in bankruptcy) has the skill set to be an estate trustee.

Historically, estate trustees have been a trust company, a lawyer or family of the deceased, such as children. Based on our work with insolvent deceased estates, we have learned all about the emotions and even pain that family and business ties can cause and place parties in conflict.

So, I am pleased to announce that today we have opened up a new business division, Smith Trustee Estate Ontario. You can click on the button above or below to take you to our website. Have a look and let us know what you think.

Why use a licensed insolvency trustee as an estate trustee?

We have the skillset to perform the duties of an estate trustee. We also understand the role and responsibilities that the statutes demand, such as the:

Estate trustee problems we can help solve

In Ontario, an estate trustee is the only person with the lawful authority to look after an estate. Probate in Ontario is a process to ask the court to:

  • give a person the authority to work as the estate trustee of an estate; or
  • verify the authority of a person named as the estate trustee in the deceased’s will.

Sometimes an objective and experienced party have to be assigned to function as the independent estate trustee. Take into consideration the possible circumstances:

  1. Moms and Dads select all their kids to work together as an estate trustee. Each child has various degree of abilities, and some may have no desire, to do is called for to carry out the estate trustee duties. Stress and anxiety, clashes and pain results without any end in sight.
  2. Lots of well-off family members have disagreements over just how the family’s assets need to be invested. Rich family members aren’t beyond turning family squabbles into public fights in the courts. Often the circumstance simply calls out for a caring, skilled and neutral party to become the Officer of the Court to aid everybody gets to a good and fair outcome. This also will ideally decrease or prevent the demand for costly lawsuits.
  3. Somebody passes away with assets however no will. Many people think they are entitled to all or part of the deceased’s estate. Somebody without a financial interest yet with the abilities and experience is required to intervene to work things out in a reasonable and objective and cost-effective method.
  4. You are the lawyer or financial advisor to a great client. You have hesitantly consented to be the estate trustee of the estate of the person that is the driving force behind one of your best corporate clients. The person passes away and you find that you are now in the middle of an illogical dispute amongst the beneficiaries that is driven not by business sense but by passion and hate. The dispute is so serious, it endangers your capability to maintain the corporate client and the prospective future earnings to your business that this client can generate.
  5. As the lawyer or financial advisor to a person, acting as the estate trustee is not a problem. Nevertheless, the time required to take care of all the intricate estate problems may be that it takes you far from the remainder of your professional practice. You believe that you really cannot afford to do so. You want to relinquish the estate trustee duty, however, you don’t have a reasonable alternative to make sure that the estate can be effectively carried out.
  6. The person names as the Estate Trustee has a real conflict and must be replaced. Again, a skilled party who has no financial interest in the outcome and is easily recognized as an expert by the Court is required, and fast!
  7. There is a crucial demand for an Estate Trustee Under Litigation. Our experience in working as an Officer of the Court has actually resulted in our being identified for acting in a proficient and neutral way. We comprehend exactly how to navigate the different regulations and Court procedures associated with being an estate trustee. The Court acknowledges our capabilities and approves our qualifications without question.

The fact of the matter is with many problems such as these, the estate is most likely to be involved in significant expensive lawsuits. It will certainly not finish anytime quickly. Nevertheless, in the meanwhile, there are actual time problems that require to be attended to in managing the estate assets so they do not dissipate or otherwise are at risk.

Probate in Ontario – Why work with us?

Our mix of empathy, experience and impartiality provides us with a distinct viewpoint and the capability to appropriately administer the estate, minimize problems and accomplish outcomes for all stakeholders in an economical way.

Professional and impartial Officer of the Court

  • Acting as estate trustee
  • Obtain probate in Ontario
  • Asset management
  • Investigation and valuation
  • Monetization of assets
  • Trust accounting
  • Beneficiary reporting and distribution

Estate Trustee Under Litigation

  • Professional and impartial Officer of the Court
  • Asset investigation, valuation and safeguarding
  • Trust accounting
  • Reporting to the Court and all stakeholders

Conflict resolution

  • Protecting assets
  • Experienced as Officer of the Court if estate trustee has conflict – perceived or real
  • Minimize costs
  • Stakeholder strategies

Insolvency

  • Planning and strategy to safeguard assets
  • Restructuring and Turnaround
  • Acting as Trustee of an insolvent estate

We provide a full range of services to provide solutions for the complex Estate issues to end the pain and frustration the stakeholders are experiencing. We apply our expertise and creative thinking to take care of all details to end your pain and achieve the goals of the beneficiaries and other stakeholders. Contact Smith Estate Trustee Ontario today for your free consultation.

Get our free full-scale analysis of your issues and our recommended options to solve your problems allowing you to move forward confidently. Check out our website by clicking on the button below. All our details are there.

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SUCCESSION LAW REFORM ACT OPPORTUNITIES FROM A TORONTO BANKRUPTCY TRUSTEE

succession law reform act

If you would prefer to listen to the audio version of this Succession Law Reform Act Brandon’s Blog, please scroll down to the bottom and click on the podcast.

Succession Law Reform Act: Introduction

I wish to focus on the last provincial statute that is also important for the administration of a deceased estate; the Succession Law Reform Act, R.S.O. 1990, c. S.26.

This is my last blog in this collection to show how it would certainly be proper to appoint a licensed insolvency trustee (LIT or bankruptcy trustee) (formerly known as a bankruptcy trustee) as the estate trustee (formerly called an executor or executrix) of a solvent deceased estate.

As always, given that we are not lawyers, and I am not offering in this or any of the other Brandon’s Blogs in this series, suggestions on wills or estate issues. For that, you have to consult your lawyer.

My estate trustee blogs

In my blog TRUSTEE OF DECEASED ESTATE: WHAT A TORONTO BANKRUPTCY TRUSTEE KNOWS, I discussed some crucial issues when it entails a deceased estate and why a LIT would certainly be exceptionally knowledgable and qualified to serve as an estate trustee.

In the blog, TRUSTEE OF PARENTS ESTATE: DO I REALLY HAVE TO?, I discussed why many times moms and dads attempt doing the correct thing by selecting their youngsters as estate trustees and the several times it simply ends up all wrong.

In ESTATES ACT ONTARIO: TORONTO BANKRUPTCY TRUSTEE REVEALS HIDDEN SECRET, I describe how the needs and stipulations of the Estates Act are already very familiar to a bankruptcy trustee. As a matter of fact, a lot of the tasks called for by the Estates Act are currently carried out in the insolvency context by a LIT.

My blog ADMINISTRATION OF ESTATES ACT CANADA: EASY FOR TORONTO BANKRUPTCY TRUSTEE TO DO, I clarified why a LIT is an appropriate specialist to lead the management of Estates Act Canada.

In the blog TRUSTEE ACT ONTARIO BY A TORONTO BANKRUPTCY TRUSTEE, I describe the duties of a trustee under the Trustee Act Ontario and how a bankruptcy trustee is experienced to carry out those duties.

In this blog, I will explain why a bankruptcy trustee would be extremely comfortable working with this provincial legislation.

Things an estate trustee must be aware of

The Act has 79 sections and regulations. Sections 1 through 43 inclusive, set the ground rules for establishing wills and their validity.

The Act figures out how your estate and assets will be allocated to family members based on based upon guidance and a collection of policies.

This statute is different from the other ones I reviewed affecting acting as an estate trustee in a deceased estate. The Act is really just a set of guiding rules.

Intestacy and the entitlement of spouse and the preferential share

Section 44 of the Act deals with a person who has a spouse and no living children who die intestate. This section says that his or her spouse is entitled to all the property.

Section 45(1) of this Act deals with the situations where a person dies intestate and has both a spouse and living children. It says that where the value of the deceased’s property is not more than the preferential share, which is a defined term, then the spouse is entitled to all the property.

Preferential share is set by Ontario Regulation 54/95. It says that for the purpose of section 45 of the Act, the preferential share is $200,000.

Section 45(2) of the Act deals with the person who dies intestate, has a spouse and living children, and whose property is worth more than the preferential share. This section says that the spouse is absolutely entitled to the preferential share or the amount of $200,000. Presumably, the spouse and children then have to either agree or litigate about who is entitled to how much of the value above $200,000.

Just to add another wrinkle, Section 45(3) deals with the situation where the deceased dies with a will dealing with some property but intestate to the balance of the property and is survived by both a spouse and children. This section states that the spouse is always entitled to the preferential share out of the property not governed by a will. If the spouse is entitled to property under a will having a value of more than the preferential share ($200,000), then there is no need to be concerned with the workings of the preferential share.

Residue: spouse and children

Section 46(1) of this provincial statute says that where a person dies intestate and has a spouse and one living child, the spouse is entitled to one-half of the residue of the property AFTER payment of the preferential share.

Section 46(2) states that if the intestate dead person has a spouse and more than one child, the spouse is entitled to one-third of the residue. Again, this is after payment of the preferential share. Section 46(3) deals with the situation of any children predeceasing the parent who died intestate. This section says that for the purposes of calculating the spouse’s share, assume the deceased child(ren) is alive.

Distribution of kin

Section 47 of the Succession Law Reform Act deals with how property should be distributed when a person dies intestate. The general principle starts with the property being divided between the spouse and living children as described above. The balance of the section deals with the treatment of grandchildren, parents, siblings and nephews and nieces when a person dies intestate.

This section ultimately says that if there are no kin, then the intestate property becomes the property of the Crown under the Escheats Act, 2015.

Succession Law Reform Act: Designation of beneficiaries of interest in funds or plans, survivorship and support of dependants

The balance of the Act deals with specific rules about:

  • the designation in plans or funds of specific beneficiaries;
  • how to deal with the death of two or more persons at the same time who either hold property together or may be entitled to all or some of the other’s property; and
  • support of dependants.

Summary

I really hope that this collection of blogs show to you just how the various provincial statutes describing the obligations of a trustee or estate trustee tracks actually near to exactly how a LIT executes in either a Court-appointed receivership or bankruptcy mandate.

If you have any type of concerns about a deceased estate and the requirements for an estate trustee, whether it is solvent or insolvent, call the Ira Smith Team. We have decades and generations of experience in helping people and companies overcome their financial problems. You don’t need to suffer; we can end your pain.

If you have any questions at all, contact the Ira Smith Team.

 

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ADMINISTRATION OF ESTATES ACT CANADA: EASY FOR TORONTO BANKRUPTCY TRUSTEE TO DO

administration of estates act canada

If you would rather hear an audio version of this administration of estates act Canada, please scroll down to the bottom of this page and click on the podcast.

Administration of estates act Canada: Introduction

I want to discuss with you another provincial statute that is very important for the administration of estates act Canada; the Estates Administration Act, R.S.O. 1990, c. E.22. It continues my series of blogs to show how it would be very natural to appoint a licensed insolvency trustee (LIT or bankruptcy trustee) (formerly known as a bankruptcy trustee) as the estate trustee (formerly called an executor or executrix) of a solvent deceased estate.

In my blog TRUSTEE OF DECEASED ESTATE: WHAT A TORONTO BANKRUPTCY TRUSTEE KNOWS, I looked at some essential matters when it involves a deceased estate and why a LIT would be extremely knowledgable and competent to act as an estate trustee of a deceased estate with those basic requirements.

In the blog, TRUSTEE OF PARENTS ESTATE: DO I REALLY HAVE TO?, I explained why many times parents try doing the proper thing by appointing their children as estate trustees and how many times it just turns out all wrong.

In ESTATES ACT ONTARIO: TORONTO BANKRUPTCY TRUSTEE REVEALS HIDDEN SECRET, I describe how the requirements and provisions of the Estates Act are already very familiar to a bankruptcy trustee. In fact, most of the duties required by the Estates Act are already performed in the insolvency context by a LIT.

In this and the next two blogs, I want to focus on the three more Ontario statutes that deal with the duties and responsibilities of an estate trustee of a deceased estate. The three statutes are:

  1. Estates Administration Act, R.S.O. 1990, c. E.22;
  2. Trustee Act, R.S.O. 1990, c. T.23; and
  3. Succession Law Reform Act, R.S.O. 1990, c. S.26

As you have by now correctly guessed, in this blog, I will show how a bankruptcy trustee would be very familiar with the workings of the Estates Administration Act.

As always, since we are not lawyers, and I am by no means providing in this and upcoming Brandon’s Blogs advice on wills or estate planning matters. For that, you must consult your lawyer.

Administration of estates act Canada: Things an estate trustee must be aware of

Payment of debts out of the residuary estate

Section 5 of the Estates Administration Act states that both the personal property and the real property (subject to the rights of mortgagees) is available to pay the debts, funeral and testamentary expenses and the costs of the estate trustee in administering the deceased estate. The LIT is familiar with such a provision.

Section 136(1)(a) of the Bankruptcy and Insolvency Act (Canada) (BIA) prioritizes the reasonable funeral and testamentary expenses incurred by the deceased’s legal representatives. In a bankruptcy, those costs are paid as a preferred unsecured claim, behind trust and secured claims but before payment of ordinary unsecured claims.

Vesting of real estate not disposed of within 3 years

Section 9(1) of the Estates Administration Act states that real property not disposed of or conveyed within three years after the date of death is automatically vested in the persons beneficially entitled to such real property. The exception is if the personal representative or estate trustee has registered a caution on the title, then the three-year period starts from the date the last caution was registered.

The purpose and intent of the BIA is that all property of the bankrupt, not subject to a valid trust claim, security interest or is otherwise exempt, will automatically vest in the bankruptcy trustee. Section 40(1) of the BIA establishes the rules a trustee must follow to return to the debtor any property that could not be realized upon, despite the LIT’s best efforts.

Powers of executors and administrators about selling and conveying real estate

Sections 16 and 17 of the Estates Administration Act gives the power to sell real estate to a personal representative or estate trustee. It also says that additional powers are not just for paying off the debts of the deceased, but also for distributing or dividing the estate among the beneficiaries.

A LIT, either in a receivership or bankruptcy, is very familiar with and experienced in the sale of real and personal property. The LIT also ensures that the creditors are paid in the proper priority.

Protection of purchasers from personal representatives and beneficiaries

Sections 19 and 21(1) of the Estates Administration Act protects a purchaser of real property in good faith and for value from a personal representative or estate trustee. The purchaser can hold the asset free and clear from any debts or liabilities of the deceased, or any claims of the beneficiaries. The only exception would be those claims secured by a specific charge on title against the real property, such as a mortgage.

In an insolvency context, and especially in a Court-appointed receivership or bankruptcy, a purchaser would be wise to insist on the receiver or bankruptcy trustee obtaining the approval of the Court and vesting Order. The purpose would be to have Court orders approving the sale to the purchaser and vesting the assets in the purchaser.

In this way, the purchaser gains protection against any claims to the assets. The vesting Order vests out the asset(s), replacing it with the cash paid by the purchaser. Those with claims against the asset(s) now have to prove their claim against the cash. A LIT is very familiar and experienced in this aspect of selling assets.

Powers of personal representative about leasing and mortgaging

Section 22(1) of the Estates Administration Act gives the power to the personal representative or estate trustee to lease out real property to provide the deceased’s estate with income. It also allows for the mortgaging of real property to pay off the debts of the deceased.

Section 30(1) of the BIA gives various powers to a bankruptcy trustee. The leasing out of the real property and borrowing money, including giving mortgage security against real property, are two such powers. A Court-appointed receiver would get the same powers from the Order appointing the Receiver. A privately appointed receiver could also, with the permission of the secured creditor who made the private appointment, does the same thing. Therefore, a LIT is very familiar and experienced in exercising these powers and making the necessary business decisions.

Administration of estates act Canada: Summary

I hope that in this blog I have shown you that the provisions of the Estates Administration Act outlining the responsibilities of an estate trustee tracks very closely what a LIT does in either a Court-appointed receivership or bankruptcy administration.

Therefore, the LIT is used to acting as a Court officer and could very easily perform the requirements and duties of an estate trustee as described in the Estates Act Ontario.

If you have any questions about a deceased estate and the need for an estate trustee, whether it is solvent or insolvent, contact the Ira Smith Team. We have decades and generations of experience in helping people and companies overcome their financial problems. You don’t need to suffer; we can end your pain.

In my next blog, I am going to write a similar comparison. It will be about the requirements outlined in the Trustee Act and how a LIT is most familiar with them also.

In the meantime, if you have any questions at all, contact the Ira Smith Team.

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Brandon Blog Post

TRUSTEE OF DECEASED ESTATE: WHAT A TORONTO BANKRUPTCY TRUSTEE KNOWS

Trustee of deceased estate: Introduction

I have previously written on what happens when a person dies insolvent, i.e. their debts are greater than the value of their assets. My blogs on being a trustee of deceased estate that is insolvent are:

I am now switching a bit. Over the next few weeks, I am going to be writing a series of blogs and vlogs to explain why I believe that a licensed insolvency trustee (formerly called a bankruptcy trustee) is the professional you should be thinking of making the executor of a deceased estate and recording it in your will. I am talking about solvent estates. Those with many assets and beneficiaries. I will be making the case why over the next few weeks. I will not be on insolvent estates of deceased persons.

I repeat that these blogs and vlogs will have nothing to do with debt, insolvency or bankruptcy. However, I will show how, based on the knowledge and expertise possessed by licensed insolvency trustees, it makes them the perfect candidate to serve as an executor of a deceased estate that is rich with assets. I will also be focussing my comments on the Province of Ontario. There may be some variations from province to province.

I caution that I and my firm are not lawyers, and I am by no means providing in this and upcoming Brandon’s Blogs advice on wills or estate planning matters. For that, you must consult your lawyer.

In this blog, I wish to set the stage by going over some basics when it comes to a deceased estate.

Trustee of deceased estate: The executor/executrix or estate trustee

In Ontario, an estate trustee (also known as the executor or executrix) is the only individual with the lawful authority to handle or disperse an estate. When an individual dies they might leave items, property, real estate, cash and investments and other possessions which is called their estate.

Probate is a treatment to ask the court to:

  • provide an individual with the authority to work as the estate trustee of an estate;
  • verify the authority of an individual acting as the estate trustee named in the deceased’s will; and
  • officially accept that the deceased’s will is their legitimate last will.

You can apply for probate in the Ontario Superior Court of Justice. The procedure is governed by the Estates Act and the related Rules of Civil Procedure.dece

If your probate application succeeds, the court will provide a Certificate of Appointment of Estate Trustee, which is evidence that an individual has the lawful authority to manage the estate. If there is a will, it is also evidence that the will is valid.

Trustee of deceased estate: Must I always apply for probate?

A probate Certificate is not needed in every situation for a deceased estate. Prior to beginning an application for probate, you might want to establish whether the deceased estate actually needs a probate Certificate.

An application for a probate Certificate is normally made if:

  • the departed individual passed away without a will
  • the deceased’s will does not show an estate trustee
  • a financial institution desires evidence of an individual’s lawful authority to get the cash or financial investments of the deceased
  • the estate’s properties consist of real estate which does not pass to an individual by right of survivorship
  • there is a disagreement about who ought to be the estate trustee
  • there is a conflict or possible conflict about the legitimacy of the will; or
  • some of the beneficiaries are unable to supply legal consent.

Trustee of deceased estate: Trustee of estate responsibility

What should the estate trustee’s first steps be? Here is where the actions the estate trustee should immediately take are almost the same as when a licensed insolvency trustee is first appointed either as:

The will and financial records

Assuming the family has already made arrangements for and the funeral has taken place, the estate trustee should first find a copy of the will and any books and records of the deceased that will explain the deceased’s financial affairs. If the estate trustee cannot find a copy of the will, he or she should consult with the deceased’s family and lawyer. Hopefully one or both will have a copy.

As the licensed insolvency trustee, we must also find the books and records of the company or person, so that we can start learning about the financial affairs of the insolvent or bankrupt.

Proof of authority

The estate trustee will also require a certified copy of the death certificate, to prove the death to financial institutions and the government. The will, and/or the probate Certificate, will be proof of the estate trustee’s authority to act.

In the same way, the licensed insolvency trustee requires a copy of its Appointment Letter in a private receivership, the Court order in a Court-appointed receivership, or the Certificate of the Superintendent of Bankruptcy in a bankruptcy. These documents evidence the appointment of the licensed insolvency trustee.

Taking possession and control of the assets

The estate trustee must now take control of any assets that do not automatically by operation of law transfer to another person by right of survivorship. The estate trustee must establish physical control, take an inventory of the assets and arrange for appraisals to be performed where required. The estate trustee should establish the market value of the assets as soon as possible.

In the same way, upon being appointed as either receiver or trustee, a licensed insolvency trustee must establish control and/or possession of the assets, properties and undertakings of the insolvent/bankrupt debtor, whether in the debtor’s possession or that of a third party. The licensed insolvency trustee must make an inventory of the assets and where required, arrange for appraisals.

Insurance and bonding

The estate trustee must make sure that, in the case of real property and chattels, that the assets are properly insured. As well, if an application was made to Court for probate and the Court issued the Certificate, the Court may also require the estate trustee to get a bond for a specific value to protect the beneficiaries. The amount of the bond will have a relation to the estimated value of the assets.

In the same way, the receiver/trustee must make sure that the hard assets are properly insured. In a bankruptcy, the Superintendent of Bankruptcy sometimes requires the trustee to get a bond to protect the bankruptcy estate.

The bond will be issued by an insurance company licensed to provide such coverage in Ontario.

Trustee of deceased estate: The responsibilities of the estate trustee

In general terms, an estate trustee has the following responsibilities:

  • be impartial amongst beneficiaries
  • act in a commercially reasonable way
  • to act in the best interests of the beneficiaries
  • not make decisions for individual gain
  • keep accurate records of all decisions made and actions and activities; and
  • acting in accordance with the will if one exists

In every Court appointment, be it a receivership or bankruptcy, the licensed insolvency trustee must live up to these same standards. Rather than beneficiaries, there are stakeholders. The Court officer must be impartial and must act in the best interests of all stakeholders.

Trustee of deceased estate: Trustee vs executor of an estate

So hopefully from this blog, you can see that the knowledge, experience and expertise of a licensed insolvency trustee would stand him or her in a good position to act as executor, executrix or estate trustee of a deceased estate.

If you have any questions about a deceased estate and the need for an estate trustee, whether it is solvent or insolvent, contact the Ira Smith Team. We have decades and generations of experience in helping people and companies overcome their financial problems. You don’t need to suffer; we can end your pain.

In my next blog, I am going to write about a topic that is becoming more and more common in deceased estates; picking the right estate trustee. As you will see, it is much more than just finding the right skill set.

In the meantime, if you have any questions at all, contact the Ira Smith Team.

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