Tag: trust company

Categories
Brandon Blog Post

A CANADA TRUSTEE’S COMPLETE VIEW OF CANADA’S ‘TWO-SPEED’ ECONOMY: WHY CONSUMER INSOLVENCIES ARE SOARING WHILE CORPORATIONS AREN’T

An image showing the diverse and essential roles of a Canada trustee in managing legal, financial, and personal affairs, being different types of Canadian trustees at work: a female Estate Trustee, a male licensed insolvency trustee and a male and female trustee assisting an elderly person.
Canada trustee

The economy, much like a highway during rush hour, can move at different speeds. For some, it’s a smooth, open road. For others, it’s a gridlock of financial stress and mounting debt. As a Canada Trustee, I just read the new 2024-25 Annual Report from the Office of the Superintendent of Bankruptcy (OSB). It shows that Canada’s economy is looking more and more like this “two-speed” highway.

On one side, we have everyday Canadians and small businesses facing a significant increase in financial trouble requiring help with debt solutions. On the other hand, large corporations appear to be cruising along, handling economic bumps with ease. This striking difference is at the heart of the OSB’s 2024-25 Annual Report. It tells a powerful story about why more people are struggling and what the country’s official insolvency watchdog is doing about it.

This blog post will explore the key findings of the report, dive into the reasons behind this two-speed economy, and explain the important role of a Canada Trustee in helping people navigate these challenging times.

The Numbers Tell the Story: A Tale of Two Economies

The most surprising and important finding in the OSB’s report is the clear split between consumer and corporate financial health. The numbers don’t lie.

First, let’s look at the side of the road where most people are stuck: the world of consumer debt.

  • The OSB accepted 143,864 insolvency filings in the 2024-25 fiscal year.
  • This represents a notable increase of 7.6% from the year before.

To put this into perspective, an insolvency filing is when an individual or a small business officially asks for help with their debts, usually through a bankruptcy or a consumer proposal. Both these administrations occur under the Canadian Bankruptcy and Insolvency Act (BIA). A 7.6% jump in one year is a significant red flag. It points to a growing number of Canadians who are feeling the squeeze and can no longer keep up with their financial commitments.

Now, let’s look at the other side of the highway, where the big companies are. The OSB also tracks filings under the Companies’ Creditors Arrangement Act (CCAA). The CCAA is a law used by large corporations that need to restructure and reorganize their business when they are in serious financial trouble.

  • There were only 70 CCAA filings in 2024-25.
  • This is actually a decline of 2.8% from the previous year.

This is the core of the “two-speed” economy. The number of everyday people needing help is climbing fast, while the number of big companies in distress is going down. This trend suggests a Canada where financial stability depends heavily on your size. If you are a large, well-established company, you have been able to navigate recent economic challenges. But if you’re an individual, a family, or a small business, the ride has been much bumpier.

Why Are More Canadians Drowning in Debt?

The OSB report doesn’t go into a deep analysis of the “why” behind these numbers, but it points to some key factors that are widely recognized as the main drivers of financial stress. These are not new headlines, but their combined effect has been felt more deeply this year.

  1. Inflation and the Rising Cost of Living: We’ve all felt it at the grocery store, the gas pump, and in our monthly bills. Inflation means that our money doesn’t go as far as it used to. For many families, this has made it harder and harder to afford the necessities of life. When prices for food, housing, and transportation keep climbing, it leaves less money for everything else, making it difficult to pay off existing debts.
  2. High Interest Rates: Over the past couple of years, central banks have raised interest rates to try and control inflation. While this is a necessary step for the economy, it has a direct and painful effect on anyone with a mortgage, car loan, or credit card debt. Higher interest rates mean that more of your money goes toward interest payments and less goes toward paying down the actual debt. This can turn a manageable debt load into an impossible one very quickly. A higher interest rate on a mortgage can add hundreds, or even thousands, of dollars to a person’s monthly expenses, putting immense pressure on their budget.

When you combine these two factors, you get the perfect storm for consumer financial distress. A family might be earning the same income, but their expenses are higher, and the cost of servicing their debt is higher. Something has to give, and for many, that “something” is their ability to stay on top of their financial obligations. It’s a situation where hard work and careful budgeting are simply not enough to keep up with the rising costs. This is often the point where people begin to look for solutions and seek the help of a Canada Trustee.

Why Are Big Companies Staying Afloat?

The other half of the story is why large corporations seem to be faring so much better. While the OSB report does not provide a detailed explanation for this, we can draw some logical conclusions based on the nature of a large business.

Large companies are often more resilient to economic headwinds than small businesses or individuals. They have some advantages that help them ride out the storm:

  • Financial Resources: Large corporations typically have significant cash reserves and better access to credit. This means they can absorb higher costs and interest rates more easily. They can borrow money at lower rates and for longer terms than an individual.
  • Diversification: Many big companies operate in multiple industries or regions. If one part of their business is struggling, another part might be thriving, helping to balance things out.
  • Ability to Absorb Costs: Large companies have more power to pass along increased costs to their customers without losing them. They also have the resources to find ways to cut costs in their own operations, such as by streamlining processes or using new technology.

This creates a clear imbalance. While a single person might be overwhelmed by a credit card payment jump of $50, a large corporation can absorb an increase of millions of dollars in interest payments without having to file for protection. The system is designed to allow large corporations to handle big economic swings, but it leaves individuals and small businesses much more exposed. This is why the role of a Canada Trustee becomes so crucial.

Introduction: Understanding the Role of a Trustee in Canada

The OSB’s report mentions that a Canada Trustee is a key figure in the country’s insolvency system. But what exactly are licensed insolvency trustees, and what do they do? The term “trustee” is used to describe a professional who holds property and acts on behalf of others. This role is a foundation of Canada’s legal and financial system.

What is a Canada Trustee? Defining the Core Concept

Licensed Insolvency Trustees are federally regulated professionals. They help people and businesses with serious debt problems. They are the only professionals allowed to handle insolvencies in Canada. The OSB report shows they play a key role during financial hardship. They act as a link between a person in debt and their creditors. The person who gives the property to the trustee is called in this case, a bankrupt.

The Foundation of Trust: Legal Framework and Fiduciary Duty

The most important part of being a Canada Trustee is the “fiduciary duty.” The word “fiduciary” comes from a Latin word that means “trust,” and this is the core of the relationship. A trustee has a legal and moral obligation to always act with honesty, loyalty, diligence, and prudence. They must put the interests of the beneficiaries or creditors ahead of their own. This means they must avoid any personal conflicts of interest and not try to profit from their role. The trustee must also be ready to account for everything they do, keeping accurate records of all financial transactions concerning the trust property.

Why Canada Trustees are Essential in the Canadian Landscape

Trustees are an essential part of the Canadian legal landscape because they provide a way for someone to manage important assets or affairs for another person, especially if that person is unable to do so themselves. A trustee can be appointed in a will, chosen through a separate trust document, or appointed by a court. For instance, a trustee can be appointed to manage an inheritance for a minor or to handle the finances of an adult who is no longer capable of making their own decisions and handling their financial situation on their own.

An image showing the diverse and essential roles of a Canada trustee in managing legal, financial, and personal affairs, being different types of Canadian trustees at work: a female Estate Trustee, a male licensed insolvency trustee and a male and female trustee assisting an elderly person.
Canada trustee

The Diverse Landscape of Trusteeship in Canada

While the blog focuses on the Licensed Insolvency Trustee, it’s important to know that the term “trustee” covers a wide range of roles in Canada.

Licensed Insolvency Trustees (LITs): Navigating Financial Hardship

This is the specific type of Canada Trustee that the OSB report focuses on. A Licensed Trustee is a professional who specializes in helping individuals and businesses with serious debt problems. They are the only professionals legally authorized to administer insolvencies in Canada. As the OSB report shows, they play a critical role in times of financial hardship, acting as a link between a person in debt and their creditors.

Estate Trustees (Executors): Stewarding Legacies

An Estate Trustee, often called an executor, is a person named in a will to manage and settle the affairs of someone who has died. Their duties are numerous, including making funeral arrangements, locating all of the deceased’s assets, paying off any debts and taxes, and finally, distributing what is left to the beneficiaries as directed by the will.[8, 9] It is a legally demanding role that requires careful attention to detail.

The Public Guardian and Trustee (PGT): Protecting Vulnerable Interests

Each province has a Public Guardian and Trustee, a government office created to protect the legal and financial interests of the most vulnerable people in society.[10, 11, 12, 13] The PGT acts as a trustee of last resort when there is no trusted family or friend available to do so.[10, 13] This includes protecting the interests of mentally incapable adults, children under a certain age, and deceased or missing persons when no one else can administer their estate.

Professional Trustees and Trust Companies: Specialized Asset Management

For those with large or complex estates, or when family conflicts are a concern, a professional trustee or trust company can be appointed to handle the trust property. These are professional fiduciaries—often a trust department of a bank or a private trust company—that are fully staffed with experts in law, taxes, and finance. They offer expertise and impartiality and can take on the day-to-day work of managing a trust.

Judicial Trustees: Court-Appointed Oversight

In some cases, a court may appoint a judicial trustee.] This happens when a person with mental or physical challenges needs help with their finances, and there is no one else to step in. A judicial trustee is authorized by the court to manage a person’s money and property, ensuring their bills are paid and their needs are met.

Core Responsibilities and Fiduciary Duties of a Trustee

Regardless of the type, every Canada Trustee is held to a high standard of conduct and has specific duties that are legally binding.

The Paramount Fiduciary Duty: Acting in the Best Interest of Beneficiaries/Creditors

An Estate Trustee, also called an executor, is named in a will to manage and settle a deceased person’s affairs. Their duties include making funeral arrangements, finding all assets, paying debts and taxes, and distributing what is left to beneficiaries as the will directs. This role requires careful attention to detail. The licensed trustee firm, Ira Smith Trustee & Receiver Inc., also acts as a court-appointed independent Estate Trustee.

Prudent Management of Trust Property and Assets

A Canada Trustee has a duty to manage and invest the assets they control responsibly and prudently. This means they must make informed decisions and act as a careful person would in similar circumstances. They must avoid risky or speculative investments and must treat all beneficiaries fairly.

Legal Compliance and Regulatory Adherence

A trustee must always follow the law. This can be complex, as a Canada Trustee must comply with a range of federal and provincial laws, as well as the terms of any will or trust document. For example, an Estate Trustee must ensure that all debts and taxes are paid before distributing assets, or they could face personal liability. In Ontario, the Trustee Act comes into play.

Reporting, Disclosure, and Accountability

A trustee must keep detailed and accurate records of all transactions and be ready to show these to the beneficiaries at any time. This “duty to account” is a crucial part of their role, ensuring that they are transparent and accountable for their actions. If a trustee fails in their duties, they can be removed by the court and ordered to pay for any losses.

Trustee Remuneration: Compensation for Services Rendered

Trustees are entitled to be paid for their services.] How much they are paid is usually determined by the will or trust document, or if not specified, it is decided by provincial law or the court. For example, the Public Guardian and Trustee of British Columbia charges prescribed fees for their services, typically ranging from 3% to 5% of the estate’s value.

An image showing the diverse and essential roles of a Canada trustee in managing legal, financial, and personal affairs, being different types of Canadian trustees at work: a female Estate Trustee, a male licensed insolvency trustee and a male and female trustee assisting an elderly person.
Canada trustee

Navigating Financial Challenges: How Trustees Provide Debt Relief

As the OSB report highlights, the need for debt relief is growing. This is where the Licensed Insolvency Trustee becomes the most relevant kind of Canada Trustee for many people.

Understanding Financial Difficulties and Debt Problems

The first step in seeking help is acknowledging the problem. The OSB report shows that more Canadians are facing a financial gridlock due to factors like high interest rates and the rising cost of living. When you find yourself unable to pay your bills, a Licensed Insolvency Trustee is the professional to consult.

Options for Individuals: Consumer Proposals and Personal Bankruptcy

While consumer credit counselling can help many Canadians manage their debts, sometimes your financial situation requires more powerful legal solutions. When your debt load exceeds what you can realistically repay through traditional methods, consumer proposals and personal bankruptcy offer legal protection and genuine fresh starts.

As a Licensed Insolvency Trustee serving the Greater Toronto Area, I help people understand when these formal insolvency options become necessary alternatives to credit counselling. These government-regulated processes can eliminate or significantly reduce your debts while protecting you from creditor actions – something that consumer credit counselling services cannot legally provide.

If you’re facing overwhelming debt that exceeds 40% of your annual income, dealing with aggressive collection actions, or finding that minimum payments aren’t making a real dent in your balances, it may be time to explore these more comprehensive debt relief solutions that only Licensed Insolvency Trustees can administer:

  1. Consumer Proposals: A consumer proposal is a legally binding offer to your creditors to pay back a portion of what you owe over a set period (up to five years).
  2. Personal Bankruptcy: This is a legal process that allows you to be released from your debts and get a fresh financial start.

A Licensed Insolvency Trustee ensures that your rights are protected throughout these processes.

Corporate Insolvency and Restructuring

Beyond personal debt, a Licensed Insolvency Trustee also plays a key role in helping businesses that are in financial trouble. They can help companies reorganize and restructure their debt, which can save the business and its jobs. The OSB report’s mention of a decline in corporate filings suggests that this part of the economy is holding steady, but the service remains critical for businesses in distress.

Choosing the Right Canada Trustee for Your Specific Needs

The type of Canada Trustee you need depends entirely on your situation. Knowing who to turn to is the first step toward finding a solution.

When to Consult a Licensed Insolvency Trustee

You should consult a Licensed Insolvency Trustee when you are facing debt problems that you cannot solve on your own. They are the only ones who can legally help you with options like a consumer proposal or bankruptcy. A consultation with an LIT is free and will help you understand your situation and your legal options without any obligation.

When to Plan for an Estate Trustee/Executor

This is a step you should take when you are planning your will. Naming a trustworthy and competent person or company as your Estate Trustee is crucial for ensuring that your wishes are carried out and your beneficiaries are protected.

When the Public Guardian and Trustee May Be Involved

The PGT is an office of last resort. This means you should only expect them to be involved if there is no other suitable person to act as a trustee for a vulnerable individual or an estate. If you are worried about a family member who needs help, but no one is available to act, you can contact the PGT’s office.

When to Engage a Professional Trustee or Trust Company

A professional trustee is a good choice if you have a large and complex estate, or if you anticipate conflicts between family members after your death. They can provide professional expertise and impartiality, which can save a lot of stress and family disputes in the long run.

Key Factors in Trustee Selection

When choosing any type of Canada Trustee, remember to consider factors beyond just a personal relationship. Trustworthiness is a given, but you should also look for someone with the right skills, knowledge of tax and legal requirements, and the ability to act prudently and impartially.

An image showing the diverse and essential roles of a Canada trustee in managing legal, financial, and personal affairs, being different types of Canadian trustees at work: a female Estate Trustee, a male licensed insolvency trustee and a male and female trustee assisting an elderly person.
Canada trustee

Regulatory Oversight and Professional Standards for Canadian Trustees

The different types of trustees in Canada are held accountable by various regulatory bodies and legal frameworks, ensuring they maintain high professional standards.

  • Licensed Insolvency Trustees (LITs): As the OSB report makes clear, LITs are strictly regulated by the Office of the Superintendent of Bankruptcy. The OSB conducts office visits, initiates compliance actions, and launches professional conduct investigations to ensure that LITs are following all the rules.
  • Estate Trustees: The duties of an Estate Trustee are regulated by provincial laws and overseen by the courts. If a trustee fails in their duties or mismanages an estate, the courts can remove them and hold them personally responsible for any losses.
  • Public Guardian and Trustee (PGT): These are government-appointed roles, and their authority and duties are set out in provincial laws.] They are held to the highest ethical and legal standards.
  • Trust Companies: Trust companies, which are often a part of a bank, are highly regulated entities.[16] They are regulated at the federal level by organizations like the Financial Consumer Agency of Canada (FCAC) and the Office of the Superintendent of Financial Institutions (OSFI).

Canada Trustee Conclusion

The OSB’s 2024-25 Annual Report shows that Canada’s economic reality is difficult for a growing number of people. In this “two-speed” economy, the role of a trusted professional like a Canada Trustee is more important than ever. Whether you need help with debt, are planning your will, or are a family member of a vulnerable person, knowing who these professionals are and how they can help is the first step toward securing your financial future.

The path to financial freedom in Canada’s current economic climate may be challenging, but it is not impossible. With the right information, a clear plan, and professional guidance, you can overcome your cost-of-living and debt challenges and move towards a more secure and hopeful financial future.

You’re not alone in this. There’s a path forward, and it starts with reaching out for the right kind of help. Take that step—you deserve it. If you’re a GTA resident dealing with overwhelming debt, don’t wait for your credit situation to get worse. As a licensed insolvency trustee serving Toronto, Mississauga, Brampton, Markham, and surrounding areas, I’m here to help you understand your debt relief options.

Free consultation available:

  • No obligation to proceed
  • Complete review of your debt and credit situation
  • Clear explanation of how debt relief options affect your Equifax credit score
  • Practical next steps you can take immediately

Remember: Your current financial situation doesn’t define your future. With the right help and information, you can overcome both debt challenges and credit score problems.

As a licensed insolvency trustee serving the Greater Toronto Area, I encourage consumers and business owners to view financial difficulties not as failures but as challenges that can be addressed with proper guidance. By understanding the warning signs of insolvency and seeking professional advice early, many people and businesses can find a path forward – whether through restructuring, strategic changes, or in some cases, an orderly wind-down that protects their future opportunities.

Remember: The earlier you seek help for company insolvency concerns, the more options you’ll have.

If you or someone you know is struggling with too much debt, remember that the financial restructuring process, while complex, offers viable solutions with the right guidance. As a licensed insolvency trustee serving the Greater Toronto Area, I help entrepreneurs understand their options and find a path forward during financial challenges.

At the Ira Smith Team, we understand the financial and emotional components of debt struggles. We’ve seen how traditional approaches often fall short in today’s economic environment, so we focus on modern debt relief options that can help you avoid bankruptcy while still achieving financial freedom.

The stress of financial challenges can be overwhelming. We take the time to understand your unique situation and develop customized strategies that address both your financial needs and emotional well-being. There’s no “one-size-fits-all” approach here—your financial solution should be as unique as the challenges you’re facing.

If any of this sounds familiar and you’re serious about finding a solution, reach out to the Ira Smith Trustee & Receiver Inc. team today for a free consultation. We’re committed to helping you or your company get back on the road to healthy, stress-free operations and recover from financial difficulties. Starting Over, Starting Now.

The information provided in this blog is intended for educational purposes only. It is not intended to constitute legal, financial, or professional advice. Readers are encouraged to seek professional advice regarding their specific situations. The content should not be relied upon as a substitute for professional guidance or consultation. The author, Ira Smith Trustee & Receiver Inc., and any contributors do not assume any liability for any loss or damage.

An image showing the diverse and essential roles of a Canada trustee in managing legal, financial, and personal affairs, being different types of Canadian trustees at work: a female Estate Trustee, a male licensed insolvency trustee and a male and female trustee assisting an elderly person.
Canada trustee
Categories
Brandon Blog Post

WHEN FAMILY DISPUTES PUT WILLS AND EXECUTORS AT ODDS: OUR COMPLETE GUIDE ON YOUR RIGHTS WHEN THINGS GO WRONG

wills and executors
wills and executors

wills and executors

Wills and Executors: Introduction

Losing a parent hurts deeply. During this difficult time, families should unite to honour their loved one and handle their affairs. But what happens when the person named in the will to manage everything – the executor – isn’t doing their job properly?

If you’re worried about how an executor is handling your parent’s will, you’re not alone. While your parent chose this person in their will, that appointment isn’t permanent, especially if the executor is causing harm to beneficiaries like you.

Wills and Executors Real-Life Example: When Executors Go Wrong

A recent court case, Spellman v. Spellman, 2025 ONSC 1187 (CanLII), shows just how serious these situations can become. In this case, a brother named as executor mishandled his father’s estate so badly that his sister had to take him to court. This Ontario case highlights the problems that can arise with wills and executors, and the legal remedies available.

In this comprehensive guide, we’ll explore everything you need to know about wills and executors in Ontario, including what happens when things go wrong.

wills and executors
wills and executors

Understanding Wills and Executors

Definition and Purpose

A will is a legal document that outlines how you want your property distributed after death. In Ontario, wills are governed by the Succession Law Reform Act, R.S.O. 1990, c. S.26. The primary purpose of a will is to ensure your wishes are followed, to name an executor to manage your estate, and to potentially appoint guardians for minor children.

Ontario law recognizes three types of wills: formal wills (typed and signed with witnesses), holograph wills (entirely handwritten and signed by the testator), and international wills (for those with assets in multiple countries). Each must meet specific requirements to be valid under Ontario law.

Key Elements of a Will

For a will to be legally valid in Ontario, it must contain certain elements:

  1. Testamentary intent – clear indication that this document is intended to be your will
  2. Testator information – your full name and declaration that this is your last will
  3. Revocation clause – cancelling any previous wills
  4. Executor appointment – naming the person(s) who will administer your estate
  5. Distribution of assets – specific instructions for who gets what
  6. Signatures – yours and those of two witnesses (except for holograph wills)

Ontario law requires that the testator (the person making the will) be at least 18 years old and of “sound mind,” meaning they understand what a will does, what assets they own, who their potential beneficiaries are, and how these elements connect in the will.

Common Misconceptions

Many Ontario residents hold misconceptions about wills and executors that can lead to problems:

Misconception #1: Verbal promises count as much as written instructions. In Ontario, verbal promises about inheritance hold no legal weight against written instructions in a valid will. Always ensure important wishes are properly documented.

Misconception #2: The oldest child automatically becomes the executor. There is no legal requirement that the oldest child (or any family member) must be the executor. This is entirely the testator’s choice.

Misconception #3: Executors can do whatever they want. Executors in Ontario have a fiduciary duty to act in the best interests of all beneficiaries and follow the will’s instructions. They can be held personally liable for breaches of this duty.

Misconception #4: A will cannot be challenged. Ontario’s Succession Law Reform Act allows wills to be challenged on several grounds, including improper execution, lack of testamentary capacity, undue influence, or fraud.

Wills and Executors: Role of an Executor

Definition and Responsibilities

An executor (also called an estate trustee in Ontario) is the person named in a will to administer the deceased’s estate. Their legal duties under Ontario law include:

  • Locating the original will and filing it with the Superior Court of Justice for probate
  • Arranging the funeral according to the will’s instructions
  • Notify all beneficiaries named in the will
  • Creating an inventory of all assets and liabilities
  • Protecting the estate assets until distribution
  • Filing final tax returns and obtaining tax clearance from the Canada Revenue Agency
  • Distributing the assets according to the will’s instructions
  • Providing a detailed accounting of all financial transactions to beneficiaries

The Ontario Trustee Act, R.S.O. 1990, c. T.23 sets out the standard of care required: executors must exercise the care, skill, diligence and judgment that a prudent investor would exercise in making investments.

Steps to Take After Death

When serving as an executor in Ontario, these are the immediate steps to take after someone dies:

  1. Secure the original will – You’ll need this to apply for the Certificate of Appointment of Estate Trustee (probate).
  2. Register the death – Obtain a death certificate from the funeral director, which you’ll need for multiple purposes.
  3. Notify relevant parties – This includes Service Canada (for CPP/OAS benefits), banks, insurance companies, and the Canada Revenue Agency.
  4. Apply for probate – In Ontario, this is called a Certificate of Appointment of Estate Trustee. This application goes to the Superior Court of Justice and includes filing an Estate Information Return with the Ministry of Finance within 180 days.
  5. Place a Notice to Creditors – This protects the Estate Trustee from personal liability for unknown debts. Historically, it was published in local newspapers. More recently, advertising for creditors on the NoticeConnect online portal has replaced publishing a notice in the local newspaper.

The Ontario Estate Administration Tax (EAT), formerly called probate fees, must be paid based on the estate’s value. Current rates are $15 per $1,000 for estates over $50,000, with the first $50,000 taxed at $250.

Managing and Protecting Estate Assets

Ontario law places strict requirements on executors regarding estate assets:

  • Estate account – Open a separate estate bank account for all financial transactions
  • Asset security – Ensure valuable property is secured, insured, and maintained
  • Prudent investments – Follow the “prudent investor rule” for any investments
  • Record keeping – Maintain detailed records of all transactions
  • Asset valuation – Obtain professional appraisals of significant assets

In the Spellman case, the executor failed to properly manage and account for estate assets, which directly violated Ontario’s Trustee Act. This resulted in significant financial penalties against the executor.

wills and executors
wills and executors

Wills and Executors: Choosing an Executor

Personal vs. Professional Executor

Ontario law allows you to name either personal connections (family/friends) or professionals (lawyers/trust companies/Smith Estate Trustee Ontario) as executors:

Personal Executors:

  • Cost-effective (may serve without compensation)
  • Familiar with family dynamics
  • May have personal knowledge of your wishes

Professional Executors:

  • Experienced in estate administration
  • Objective third party in family conflicts
  • Knowledge of tax and legal requirements
  • Continuity (won’t die or become incapacitated)

The complexity of your estate, family relationships, and the competence of potential personal executors should guide this decision.

Factors to Consider

When choosing an executor for your Ontario will, consider:

  1. Financial capability – The executor should understand basic financial matters and be capable of working with professionals when needed.
  2. Trustworthiness – Ontario law holds executors to a high fiduciary standard; choose someone with impeccable integrity.
  3. Availability – The role typically requires 1-2 years of active involvement.
  4. Location – While non-residents can serve as executors in Ontario, they face additional requirements and may need to post a bond.
  5. Personal qualities – Organization, attention to detail, and communication skills are essential.
  6. Age and health – Choose someone likely to outlive you and be physically and mentally capable of serving.

Ontario allows for alternate executors to be named in case your first choice is unable or unwilling to serve.

Implications of Multiple Executors

Ontario wills can name multiple executors who must act jointly unless the will specifies otherwise. Potential benefits include:

  • Shared workload and responsibility
  • Complementary skills and knowledge
  • Checks and balances in decision-making

However, this arrangement can also create challenges:

  • Decision gridlock if executors disagree
  • Increased administration time and costs
  • Communication difficulties

If you choose multiple executors in Ontario, the will should specify whether they must act jointly (all decisions require unanimous agreement) or severally (each can act independently).

Wills and Executors: Executor Compensation

Standard Practices

In Ontario, executors are entitled to “fair and reasonable compensation” for their services, even if the will doesn’t mention compensation. The Trustee Act doesn’t specify exact amounts, but Ontario courts have established guidelines:

  • 2.5% of capital receipts
  • 2.5% of capital disbursements
  • 2.5% of revenue receipts
  • 2.5% of revenue disbursements
  • An annual care and management fee of 0.4% of the average gross value

The total typically ranges from 3-5% of the estate value, depending on complexity, time involved, results achieved, and executor expertise.

How Compensation is Determined

Ontario courts consider these factors when assessing appropriate executor compensation:

  1. Size of the estate – Larger estates may justify higher percentage fees
  2. Time spent – Detailed time records strengthen compensation claims
  3. Complexity – Business assets, litigation, or tax complications may justify higher fees
  4. Skill and expertise required and applied
  5. Success in administering the estate efficiently

Executors should keep detailed records of their activities and time spent, as this documentation is critical if compensation is challenged.

Handling Disputes over Fees

Disputes over executor compensation are common in Ontario. If beneficiaries object to proposed fees, these are the typical steps:

  1. The executor “passes their accounts” by filing a formal accounting with the court
  2. Beneficiaries can file objections to specific items or overall compensation
  3. A hearing is held before a judge, who makes the final determination

In contentious cases like Spellman v. Spellman, the court can even deny compensation entirely if the executor has breached their fiduciary duties or mismanaged the estate.

wills and executors
wills and executors

Legal Considerations for Wills and Executors

Jurisdictional Differences

While this guide focuses on Ontario law, executors should be aware that different provinces have varying rules.

  • Ontario’s Estate Administration Tax is higher than some provinces but allows for multiple will strategies to reduce taxes
  • Quebec uses civil law rather than common law, with notarial wills being the norm
  • British Columbia has specific rules regarding will variation claims
  • Alberta has different probate fee structures

If the deceased owned property in multiple provinces or countries, executors may need to apply for probate in each jurisdiction, significantly complicating the process.

Executors and Beneficiaries

Ontario law creates a special relationship between executors and beneficiaries:

  1. Fiduciary duty – Executors must put beneficiaries’ interests first
  2. Duty to inform – Beneficiaries have a right to basic information about the estate
  3. Impartiality – Executors must treat all beneficiaries fairly
  4. No self-dealing – Executors cannot purchase estate assets without court approval

When executors are also beneficiaries (common in family situations), they must be especially careful to separate their interests from their executor duties. The Spellman case demonstrates how severely Ontario courts view executor self-dealing.

Corporate Trustees as Executors

Ontario allows trust companies to serve as executors. Advantages include:

  • Professional expertise in estate administration
  • Continuity (no risk of death or incapacity)
  • Objectivity in family disagreements
  • Infrastructure for record-keeping and reporting

However, corporate executors charge professional fees (typically 3-5% of the estate) and may lack personal knowledge of family dynamics. They’re usually most appropriate for complex or high-value estates or when no suitable individual is available.

Smith Estate Trustee Ontario acts as an independent court-appointed estate trustee. We act impartially as an officer of the court, while being sensitive to the family dynamics.

Wills and Executors: Will Disputes and Resolutions

Common Causes for Disputes

Ontario courts frequently see these common triggers for will disputes:

  1. Validity challenges – Claims that the will wasn’t properly executed, the testator lacked capacity, or was unduly influenced
  2. Executor misconduct – Similar to the Spellman case, where the executor breached their fiduciary duties
  3. Interpretation issues – Unclear or ambiguous language in the will
  4. Dependent support claims – Under Ontario’s Succession Law Reform Act, dependents can claim adequate support if the will doesn’t provide for them
  5. Family law claims – Surviving spouses have special rights under the Family Law Act, R.S.O. 1990, c. F.3

The Ontario Limitations Act, 2002, S.O. 2002, c. 24, Sched. B generally provides a two-year window for most estate-related claims.

Legal Recourse and Mediation

When disputes arise over wills and executors in Ontario, these resolution options exist:

  1. Negotiation – Often the first step, with beneficiaries and executors attempting to resolve issues directly
  2. Mediation – A neutral third party helps facilitate a voluntary resolution (mandatory in some Ontario jurisdictions before court proceedings)
  3. Court applications – Formal proceedings where a judge makes a binding decision
  4. Passing of accounts – A specific court process where executors present a detailed accounting for approval

Ontario courts have broad powers to:

  • Remove and replace problematic executors
  • Order the return of misappropriated assets
  • Interpret ambiguous will provisions
  • Award compensation for damages caused by executor misconduct
wills and executors
wills and executors

Wills and Executors: When No Executor is Named

Appointment of Administrator

If someone dies without naming an executor in their will (or dies without a will), the Ontario Superior Court of Justice can appoint an administrator. The Estates Act establishes this priority order:

  1. Spouse
  2. Children
  3. Grandchildren
  4. Parents
  5. Siblings
  6. Next of kin

The appointed administrator has essentially the same duties and powers as an executor, but typically must post a bond unless the court waives this requirement.

Legal Process and Challenges

The process for appointing an administrator in Ontario involves:

  1. Filing an Application for Certificate of Appointment of Estate Trustee Without a Will (if no will exists) or With a Will (if there’s a will but no named executor)
  2. Providing notice to all interested parties
  3. Paying the required Estate Administration Tax
  4. Posting a bond, in many cases

Challenges in administrator appointments often include:

  • Competing applications from multiple family members
  • Disputes over who is best suited to serve
  • Difficulties in obtaining the required bond
  • Family conflicts that make administration difficult

Smith Estate Trustee Ontario acts many times as a court-appointed administrator where a person dies intestate (without a will).

Wills and Executors: Renouncing Executorship

Reasons for Renunciation

Ontario law allows named executors to decline the role, provided they haven’t “intermeddled” in the estate. Common reasons include:

  1. Health issues – Physical or mental health challenges that make the role difficult
  2. Distance – Living far from where the estate needs to be administered
  3. Time constraints – Inability to devote necessary time to executor duties
  4. Complexity – Feeling unequipped to handle a complex estate
  5. Family conflict – Wanting to avoid being caught in family disputes

In the Spellman case, Dawn initially renounced her right to be an administrator, showing that this is sometimes done to facilitate the process—though in this case, it unfortunately led to problems.

To properly renounce in Ontario, the executor must file a Renunciation of Prior Right to a Certificate of Appointment of Estate Trustee (Form 74.18) with the court before taking any actions that would constitute accepting the role.

Smith Estate Trustee Ontario also acts in situations where the named executor(s) renounces their role.

wills and executors
wills and executors

Frequently Asked Questions About Wills and Executors in Ontario

What is a will in Ontario, and what key elements must it contain to be legally valid?

A will in Ontario is a legal document that outlines how you want your property distributed after death. Under the Succession Law Reform Act, a valid will must include:

  • Clear indication that it’s intended to be your will (testamentary intent)
  • Your full name and a declaration that this is your last will
  • A statement cancelling any previous wills (revocation clause)
  • Appointment of an executor to manage your estate
  • Instructions for distributing your assets
  • Your signature and those of two witnesses (except for holograph wills)

To create a valid will, you must be at least 18 years old and of “sound mind,” meaning you understand what a will does, what you own, who your potential beneficiaries are, and how these connect in your will.

What are some common misconceptions about wills and executors in Ontario?

Several misunderstandings can lead to problems with wills and executors:

  • Verbal promises don’t count: In Ontario, what you’ve written in your will overrules any verbal promises you made about inheritance.
  • No automatic executor: The oldest child or any specific family member doesn’t automatically become the executor – this choice belongs solely to the person making the will.
  • Executors have limits: Executors must follow the will’s instructions and act in all beneficiaries’ best interests, facing personal liability if they don’t.
  • Wills can be challenged: Under the Succession Law Reform Act, wills can be contested for reasons like improper execution, lack of mental capacity, undue influence, or fraud.

What responsibilities do executors have after someone passes away?

Executors in Ontario (also called estate trustees) must:

  • Locate the original will and file for probate with the Superior Court of Justice
  • Arrange the funeral according to the will’s instructions
  • Notify all beneficiaries named in the will
  • Create a complete inventory of all assets and debts
  • Protect estate assets until they’re distributed
  • File final tax returns and get clearance from the Canada Revenue Agency
  • Distribute assets according to the will’s instructions
  • Provide beneficiaries with detailed financial accounting

Ontario’s Trustee Act requires executors to follow the “prudent investor rule” when managing estate investments.

What immediate steps should an executor take after someone dies?

If you’re serving as an executor in Ontario, take these steps right away:

  1. Secure the original will for your probate application
  2. Get a death certificate from the funeral director
  3. Notify important organizations like Service Canada, banks, insurance companies, and the Canada Revenue Agency
  4. Apply for probate (Certificate of Appointment of Estate Trustee) with the Superior Court of Justice
  5. File an Estate Information Return with the Ministry of Finance within 180 days
  6. Place a Notice to Creditors in local newspapers to protect yourself from unknown debts
  7. Pay the Estate Administration Tax based on the estate’s value

How are executors compensated, and what can beneficiaries do if they disagree with the fees?

Ontario executors are entitled to “fair and reasonable compensation,” typically based on court guidelines:

  • 2.5% of capital receipts
  • 2.5% of capital disbursements
  • 2.5% of revenue receipts
  • 2.5% of revenue disbursements
  • 0.4% annual care and management fee based on average gross value

Total compensation usually ranges from 3-5% of the estate’s value, depending on factors like size, time spent, complexity, skill required, and success in administration.

If beneficiaries dispute these fees, the executor must “pass their accounts” by filing a formal accounting with the court. Beneficiaries can then object, leading to a hearing where a judge makes the final decision. In cases of executor misconduct, as seen in the Spellman case, the court may deny compensation entirely.

What’s the difference between choosing a personal executor versus a professional executor?

When choosing between personal and professional executors for your Ontario will, consider:

Personal Executors (family/friends):

  • More cost-effective (may serve without compensation)
  • Better understanding of family dynamics
  • Personal knowledge of your wishes

Professional Executors (lawyers/trust companies):

  • Experience in estate administration
  • Objectivity during family conflicts
  • Knowledge of tax and legal requirements
  • Continuity (won’t die or become incapacitated)

Your decision should be based on your estate’s complexity, family relationships, and the capabilities of potential personal executors.

What legal options do beneficiaries have if an executor isn’t doing their job properly?

If you’re concerned about executor misconduct in Ontario, as illustrated in the Spellman v. Spellman case, you can:

  1. Try negotiation or mediation first
  2. If unsuccessful, apply to the court for:
    • Removal and replacement of the executor
    • Return of misappropriated assets
    • Interpretation of unclear will provisions
    • Compensation for damages caused by executor misconduct

Ontario courts take executor misconduct seriously, as shown in the Spellman case, and will intervene to protect beneficiaries’ interests when necessary.

What happens if someone dies without a will or without naming an executor?

If someone dies without a will (intestate) or without naming an executor in Ontario, the Superior Court of Justice will appoint an administrator. The Estates Act establishes this order of priority:

  1. Spouse
  2. Children
  3. Grandchildren
  4. Parents
  5. Siblings
  6. Next of kin

The appointment process requires:

  • Filing an Application for Certificate of Appointment of Estate Trustee
  • Notifying all interested parties
  • Paying the Estate Administration Tax
  • Usually, posting a bond

Complications can arise from competing applications, disputes over who is most suitable, difficulties obtaining a bond, or existing family conflicts. Once appointed, the administrator has duties similar to an executor’s.

Wills and Executors: Protecting Your Rights Under Wills and Against Problem Executors

Family disputes over wills and executors create tremendous stress during an already difficult time. The Spellman case shows just how serious the consequences can be when executors neglect their duties.

While a will names a specific person as executor, Ontario courts have the power to remove and replace executors who breach their responsibilities. If you’re facing challenges with an executor who isn’t fulfilling their duties under a will, remember that legal options exist to protect your inheritance.

Whether you’re planning your estate, serving as an executor, or dealing with concerns about an existing executor, understanding Ontario’s laws on wills and executors is essential. Seek professional legal advice promptly to understand your specific situation and determine the best way forward for your family and your loved one’s legacy.

Wills and Executors: Seeking Professional Estate Trustee Solutions

When facing the complexities of estate administration or concerns about existing executors, professional expertise can make all the difference. Smith Estate Trustee Ontario, a specialized division of Ira Smith Trustee & Receiver Inc., offers independent court-appointed Estate Trustee services tailored to challenging situations. Our experienced team understands the intricacies of Ontario estate law and provides impartial administration when family disputes arise, when no suitable executor is available, or when professional oversight is needed.

As the Spellman case demonstrates, proper estate administration requires knowledge, integrity, and dedication to fiduciary duty. Whether you’re planning your estate, dealing with executor concerns, or need a professional trustee appointed by the court, Smith Estate Trustee Ontario delivers the expertise and objectivity your family deserves during difficult times.

Contact us today to learn how our professional Estate Trustee services can bring peace of mind and proper administration to complex estate matters.

The information provided in this blog is intended for educational purposes only. It is not intended to constitute legal, financial, or professional advice. Readers are encouraged to seek professional advice regarding their specific situations. The content should not be relied upon as a substitute for professional guidance or consultation. The authors, Ira Smith Trustee & Receiver Inc. and Smith Estate Trustee Ontario, and any contributors do not assume any liability for any loss or damage.

wills and executors
wills and executors
Categories
Brandon Blog Post

CANADA TRUSTEE: A COMPREHENSIVE GUIDE TO THE VARIOUS TYPES AND ROLES

canada trustee
Canada trustee

Canada trustee

Canada Trustee Introduction

As a Licensed Insolvency Trustee and Estate Trustee in Greater Toronto Ontario, Canada area, I have the honour of assisting individuals and families during some of the most challenging periods of their lives. Whether addressing personal bankruptcy, facilitating corporate restructuring, or managing the administration of a loved one’s estate, my role as a Canada Trustee is to offer services to individuals and businesses with debt problems through professional guidance, support, and expertise. My objective is to help clients navigate these complexities, achieve their goals, and confidently move forward.

But despite the importance of professional trustees in these situations, many people are unclear about what a licensed trustee does, trustee duties or the different types of trustees in Canada. Many Canadians are unaware of the role of a Licensed Insolvency Trustee, or that they may need one in the event of financial difficulties.

In this comprehensive guide, we’ll explore the various types of Canada trustees, including Licensed Insolvency Trustees (formerly called bankruptcy trustees), Estate Trustees, and others. We’ll delve into the roles and responsibilities of each, and provide examples of the types of cases they handle. Whether you’re an individual seeking guidance on personal bankruptcy, a business owner facing financial difficulties, or a grieving family trying to navigate the complexities of estate administration, this guide is designed to provide you with a clear understanding of the different types of trustees and their roles in the Canadian legal system.

A Brief Overview of the Role of a Canada Trustee

A Canada trustee is a qualified professional tasked with the management and administration of assets on behalf of individuals or entities that are unable to oversee their financial affairs. This role encompasses a variety of situations, including assisting individuals facing financial difficulties who seek to eliminate and restructure their debts through one of the available debt relief options such as a consumer proposal or bankruptcy. Additionally, Canada trustees may manage the estates of deceased persons or oversee the winding up of companies.

The role of a Canada trustee is to serve as an impartial third party responsible for the following duties:

  • Managing the assets of the individual or entity.
  • Distributing assets following the terms outlined in a court order from a legal process or agreement.
  • Ensuring that all debts and obligations are settled in compliance with applicable laws.
  • Offering guidance and support to the individual or entity to assist them in achieving their objectives.

    canada trustee
    Canada trustee

Importance of Understanding The Different Types and Responsibilities of Canada Trustees

There are different types of Canada trustees, the main ones being:

  1. Licensed Insolvency Trustee (LIT): A LIT is a professional specializing in bankruptcy and insolvency matters. A LIT is licensed by the Canadian government and is the only professional authorized to administer bankruptcies, proposals, and receiverships in Canada.
  2. Estate Trustee: An Estate Trustee, sometimes referred to as an Executor or Executrix, is an individual, firm, or trust company designated to oversee the estate of someone who has passed away. This role can be assigned through a will or for a complicated estate where there is no will or the named estate trustee does not wish to act, they can be appointed by a court. The Estate Trustee’s main responsibility is to manage the estate’s assets and ensure they are distributed according to the deceased person’s wishes outlined in the will or, if there is no will, according to the laws governing inheritance.
  3. Trustee for Children: A Trustee for Children is a professional who manages the assets of a minor child, usually in the context of trust funds or an estate.
  4. Office of the Public Guardian and Trustee (PGT): A Trustee for the PGT is responsible for managing the assets and affairs of individuals who cannot manage their affairs, such as those with mental or physical disabilities.
  5. Corporate trustees: A corporate trustee in Canada plays a crucial role in managing and administering trusts, ensuring that the trust’s objectives are met, and the beneficiaries’ interests are protected. The role and responsibilities of a corporate trustee in Canada typically include trust administration, investment management, tax compliance and beneficiary relations and management.

Qualifications for Canada Trustees

Licensed Insolvency Trustee

The Office of the Superintendent of Bankruptcy Canada (OSB) possesses the sole authority to issue licenses to Licensed Insolvency Trustees under the Bankruptcy and Insolvency Act (Canada) (BIA). Before granting a license, the Superintendent must ensure that candidates fulfill specific qualifications as outlined in the OSB’s Directive No. 13R8, Trustee Licensing.

Candidates must, for instance:

  • Demonstrate good character and reputation.
  • Maintain solvency.
  • Complete the Chartered Insolvency and Restructuring Professional (CIRP) Qualification Program (CQP), as well as the CIRP National Insolvency Exam and either the Insolvency Counsellor’s Qualification Course or the Practical Course on Insolvency Counselling.
  • Pass an Oral Board Examination.

The OSB is a federal government agency so the licensing is therefore a federal matter.

Estate Trustee

In Canada, Estate Trustees who are appointed to manage the estates of deceased persons fall under the jurisdiction of the provinces and territories. The qualifications for an Estate Trustee in Canada vary depending on the province or territory, but generally, an individual should have the following qualifications:

    • Be at least 18 years old, as per the laws of the province or territory.
    • Have the mental capacity to manage the estate, as determined by a court or a medical professional.
    • Be a resident of the province or territory where the estate is located, or have a connection to the estate or the deceased.
    • Be a person of good character, integrity, and reputation.
    • Have some knowledge of estate administration, inheritance, and probate law.
    • Have experience in managing finances, accounting, or business, which can be beneficial in managing the estate.
    • Be able to manage the estate’s assets, debts, and liabilities.
    • Be able to prepare and file tax returns, as required.
    • Be able to resolve disputes and conflicts that may arise during the estate administration process.
    • Be able to maintain confidentiality and professional discretion when dealing with sensitive information.

When we act as Estate Trustees, we seek court approval for our appointment.

Note that some provinces or territories may have additional or different requirements for Estate Trustees. It is essential to check the specific laws and regulations in the province or territory where the estate is located.

Trustee for Children

If someone is going to be a Trustee for Children, there are certain qualifications and requirements they must meet. In Canada, a Trustee for Children is typically a person appointed to manage a trust that benefits children, such as a testamentary trust or a living trust. As a Trustee for Children operates under provincial law, like an Estate Trustee, the qualifications may vary depending on the province or territory.

Generally, the qualifications to act as a Trustee for Children are just like that of an Estate Trustee.

Office of the Public Guardian and Trustee (PGT)

The PGT is licensed and registered with their respective provincial government, and its staff are authorized to act as Public Guardians and Trustees. The PGT is a provincial government agency that provides protection and support to vulnerable individuals, including those with cognitive impairments, mental health issues, or other disabilities.

Staff members have experience working in the fields of law, finance, social work, or healthcare. Some staff members have experience working with vulnerable populations, such as seniors, individuals with disabilities, or those with mental health issues. The PGT staff also have university and other professional designations as well as experience to allow them to oversee their work.

If there is insufficient staff to handle a certain aspect of PGT work, they can outsource it to a law firm or accounting firm.

Corporate trustees

A corporate trustee in Canada is subject to provincial laws and supervision. Corporate trustees are a company or organization that is licensed to act as a trustee for trusts, estates, and other financial arrangements. The necessary qualifications for a corporate trustee in Canada vary depending on the province or territory, but generally, a corporate trustee should meet the provincial licensing requirements and obtain its license, in Ontario, from the relevant regulatory body, such as the Office of the Superintendent of Financial Institutions (OSFI) or the Financial Services Commission of Ontario (FSCO).

The staff at the corporate trustee administering the funds will generally have professional designations such as CPA or LLB/J.D. and have relevant experience.

canada trustee
Canada trustee

Canada Trustee Obligations

In Canada, Trustees have several obligations to fulfill in their role as fiduciaries. These obligations are outlined in relevant provincial and federal legislation. Examples for Ontario are the Trustee Act, R.S.O. 1990, c. T.23, the Succession Law Reform Act, R.S.O. 1990, c. S.26, the Estates Act, R.S.O. 1990, c. E.21 and the Estates Administration Act, R.S.O. 1990, c. E.22 .

Some of the key obligations of Canada Trustees that are common to all include:

  1. Duty of Loyalty: Trustees must act in the best interests of the beneficiaries and not in their interests.
  2. Duty of Care: Trustees must follow accepted standards of practice and exercise the care, diligence, and skill that a prudent person would exercise in similar circumstances.
  3. Duty of Confidentiality: Trustees must maintain the confidentiality of the trust and its affairs.
  4. Duty to Act in Good Faith: A Canada trustee must act in good faith and with honesty in all their dealings with the trust and its beneficiaries.
  5. Duty to Keep Accurate Records: Trustees must keep accurate and up-to-date records of the trust’s assets, liabilities, income, and expenses.
  6. Duty to File Tax Returns: Trustees must file tax returns on behalf of the trust and pay any taxes owed.
  7. Duty to Manage Trust Assets: Trustees must manage the trust’s assets prudently and follow the terms of the trust.
  8. Duty to Make Decisions: Trustees must make decisions in the best interests of the beneficiaries and under the terms of the trust.
  9. Duty to Report: Trustees must report to the beneficiaries and other interested parties on the status of the trust and its affairs.
  10. Duty to Comply with Laws and Regulations: Trustees must comply with all relevant laws and regulations, including tax laws, securities laws, and other regulatory requirements.
  11. Duty to Act Independently: Trustees must act independently and impartially in their decision-making and not be influenced by personal interests or biases.
  12. Duty to Keep Beneficiaries Informed: Canada trustees must keep beneficiaries informed of the trust’s activities and any changes to the trust’s terms or administration.
  13. Duty to Protect Trust Assets: Trustees must take reasonable steps to protect the trust’s assets from loss, damage, or theft.
  14. Duty to Ensure Compliance with Trust Terms: Trustees must ensure that the trust is administered under the terms of the trust and any applicable laws and regulations.
  15. Duty to Account for Trust Assets: Trustees must account for the trust’s assets and provide an accurate and detailed accounting of the trust’s activities and financial transactions.

Selecting and Working with a Canada Trustee

Factors to Consider

Selecting the right trustee can be a complicated task. Here are some important factors to think about:

  1. Canada Trustee Qualifications: What qualifications and experience does the trustee have? Are they licensed and certified?
  2. Trustee Reputation: What is the trustee’s reputation in the industry? Do they have a good track record of managing trusts and estates?
  3. Trustee Fees: What are the trustee’s fees and costs? Are they reasonable and transparent?
  4. Trustee Independence: Is the trustee independent and impartial, or do they have a conflict of interest?
  5. Trustee Communication: How will the trustee communicate with you and other stakeholders? Are they responsive and transparent?
  6. Trustee Expertise: Does the trustee have the necessary wide range of expertise and knowledge to manage your specific trust or estate?
  7. Canada Trustee Capacity: Does the trustee have the capacity to manage your trust or estate? Are they able to handle the complexity and scope of the trust or estate?
  8. Trustee Conflict of Interest: Does the trustee have a conflict of interest that could impact their ability to act in your best interests?
  9. Trustee Liability: Is the trustee liable for any mistakes or errors they make while managing your trust or estate?
  10. Trustee Succession: What happens if the trustee is unable to continue serving as the trustee? Is there a plan in place for succession?
  11. Trustee Reporting: How will the trustee report to you and other stakeholders? Are they transparent and accountable?
  12. Trustee Compliance: Does the trustee comply with all relevant laws and regulations? Are they up-to-date on changes to the law and regulations?
  13. Trustee Dispute Resolution: How will disputes be resolved between the trustee and other stakeholders? Are there procedures in place for resolving disputes?
  14. Trustee Termination: How can you terminate the trustee’s services if you are not satisfied with their performance?
  15. Canada Trustee Replacement: How can you replace the trustee if they are unable to continue serving or if you are not satisfied with their performance?

By considering these issues, you can make an informed decision about choosing the right trustee for your needs. It’s essential to carefully evaluate the trustee’s qualifications, reputation, fees, and expertise to ensure that they are the right fit for your trust or estate.

Questions to Ask a Potential Canada Trustee

When selecting a potential Canada Trustee, it’s essential to ask the right questions to ensure that you’re making an informed decision. Here are some questions you should consider asking:

  1. What is your experience in trust administration?
  2. What is your expertise in the specific area of trust administration that I need (e.g. estate administration, tax planning, etc.)?
  3. What is your approach to trust administration?
  4. Do you have a specific philosophy or methodology that you follow?
  5. How will you communicate with me and other stakeholders throughout the trust administration process?
  6. What is your fee structure?
  7. Are there any additional costs or expenses that I should be aware of?
  8. What is your policy on conflicts of interest?
  9. How do you handle situations where you may have a conflict of interest?
  10. How do you ensure that you are acting in the best interests of the beneficiaries?
  11. What is your process for managing and investing trust assets?
  12. How do you handle disputes or disagreements between beneficiaries?
  13. What is your policy on confidentiality and privacy?
  14. How do you ensure that you are complying with all relevant laws and regulations?
  15. What is your process for reporting to beneficiaries and other stakeholders?
  16. What steps do you take if you’re no longer able to fulfill your role as trustee?
  17. How do you address any errors or mistakes that might arise during the administration of the trust?
  18. What is your approach to indemnification?
  19. If any losses or damages occur during the trust administration, who is held accountable?
  20. How do you ensure that you consistently provide excellent service to your clients?
  21. What is your stance on receiving client feedback and handling complaints?
  22. How do you keep yourself informed about changes in laws and regulations that impact
  23. trust administration?
  24. What is your commitment to ongoing education and professional development?

By asking these questions, you can get a clearer picture of a potential trustee’s qualifications, experience, and how they handle trust administration. This will help you decide if they’re a good match for your needs.

canada trustee
Canada trustee

Canada Trustee FAQ

FAQs about LITs in Canada

1. What is a bankruptcy trustee?

A bankruptcy trustee, also known as a LIT, is a professional licensed by the Government of Canada to administer bankruptcies and consumer proposals. They help individuals navigate the bankruptcy process, ensuring compliance with the Bankruptcy and Insolvency Act and managing assets held in trust.

2. What are the main duties of a LIT?

The main duties of a LIT include:

  • Assessing an individual’s financial situation and providing advice on debt relief options, including bankruptcy and consumer proposals.
  • Administering the bankruptcy or consumer proposal process and ensuring compliance with legal requirements.
  • Distributing any assets to creditors as per the regulations.
  • Representing the interests of creditors and ensuring fairness in the process.
3. How do I find a LIT in Canada?

You can find a LIT by searching the Government of Canada’s searchable database of LITs. Additionally, local non-profit credit counselling organizations can provide referrals to reputable trustees. Please stay away from debt consultants.

4. What should I expect during a consultation with a LIT?

During a consultation, a LIT will review your financial situation, explain your debt relief options, and guide you through the bankruptcy or consumer proposal process. They will provide information about the implications of filing for bankruptcy and help you understand your rights and responsibilities.

5. Do I need a lawyer to file for bankruptcy in Canada?

No, in Canada, you do not need a lawyer to file for bankruptcy. You can file directly with a licensed trustee, who will guide you through the process. However, in certain complex cases, it may be beneficial to seek legal advice.

6. What are the costs associated with hiring a LIT?

The costs of hiring a LIT can vary depending on the complexity of your case. Generally, the fees are regulated and typically deducted from the funds collected from your assets during the bankruptcy process. Initial consultations are often free.

7. Can a LIT help with debt consolidation?

Yes, a bankruptcy trustee can provide advice on debt consolidation options and assist you in determining whether it is a viable solution for your financial situation. They consider all available debt relief options, not just bankruptcy.

8. What happens if a trustee does not perform their duties properly?

If a trustee fails to perform their duties as required by law, they may face disciplinary action from the OSB. This can include fines, suspension, or revocation of their license. If you have concerns about a trustee’s performance, you should report it to the appropriate regulatory body.

9. Can I file for bankruptcy more than once?

Yes, you can file for bankruptcy more than once in Canada. However, the implications and the length of time you must wait between filings depend on the circumstances of your financial situation and the previous bankruptcy discharge.

10. How long does the bankruptcy process take?

The bankruptcy process can vary in duration depending on individual circumstances, such as the complexity of the case and the debtor’s compliance with requirements. Typically, a straightforward first-time bankruptcy with no surplus income obligations can take about 9 months for the bankrupt person to receive their discharge.

FAQs about Estate Trustees in Canada

In acting as an Estate Trustee in the Province of Ontario, I encounter various questions from clients, family members, or beneficiaries. Here are some frequently asked questions about an Estate Trustee in the Province of Ontario, along with their answers:

1. What is the role of an Estate Trustee?

The Estate Trustee, commonly referred to as the executor, holds the responsibility of administering and distributing the estate of the deceased following the provisions outlined in the will. Their responsibilities encompass organizing the funeral, identifying and appraising assets, applying for probate, settling outstanding debts and tax obligations, and distributing the estate to the designated beneficiaries.

2. Who can be an Estate Trustee?

An Estate Trustee must be an adult who possesses the capacity to manage the associated responsibilities effectively. Suitable candidates may include a trusted family member, a close friend, or a qualified professional, such as an attorney or accountant. It is recommended to select an individual who demonstrates strong organizational skills, financial acumen, and a likelihood of longevity.

3. Do Estate Trustees get paid for their work?

Yes, Estate Trustees are entitled to reasonable compensation for their services, which can be specified in the will or determined by the trust law. The compensation may be a percentage of the estate’s value or based on the time and effort expended.

4. What happens if the Estate Trustee fails to perform their duties?

If an estate trustee doesn’t meet their obligations, the beneficiaries have the option to ask the court to remove the trustee and appoint someone else. Additionally, the original trustee could be held financially accountable for any losses that result from their negligence.

5. How do I choose an Estate Trustee?

When choosing an Estate Trustee, consider a trustworthy adult who will likely live longer than you, someone organized and knowledgeable about finances, and preferably someone who resides in Ontario. It’s also wise to discuss the role with them before naming them in your will.

6. Can I appoint more than one Estate Trustee?

Yes, you can appoint co-executors or multiple Estate Trustees to share the responsibilities. However, keep in mind that this may complicate the process since they will need to work together and make decisions collectively.

7. What qualifications should an Estate Trustee have?

While there are no formal qualifications required, an Estate Trustee should possess strong organizational skills, financial knowledge, and the ability to communicate effectively with beneficiaries and other involved parties.

8. What is probate, and does every estate need to go through it?

Probate is the legal procedure that involves confirming a will and giving the Estate Trustee the power to manage and distribute the estate. However, not all estates need to go through probate. Smaller or simpler estates might be exempt based on specific criteria.

9. What if there is no will?

If an individual passes away without a will, known as dying intestate, the distribution of their estate will follow the intestacy laws of Ontario. Under these laws, the court may appoint an Estate Trustee to oversee the management of the estate. When our firm assumes the role of Estate Trustee, this appointment is formalized through a court order.

10. How long does the role of Estate Trustee last?

The tenure of an Estate Trustee can vary considerably based on the complexity of the estate, typically ranging from several months to several years. This role entails numerous responsibilities, including the distribution of assets, which can be a time-intensive process.

The appointment of an Estate Trustee is a significant decision that necessitates careful consideration. A thorough understanding of the duties, rights, and obligations associated with this role can enhance the efficiency of the estate administration process.

Canada Trustee Conclusion

In conclusion, understanding the various types of Canada trustees is essential for anyone navigating the complexities of personal bankruptcy, estate administration, or corporate financial challenges. From Licensed Insolvency Trustees to Estate Trustees, each plays a critical role in providing support and guidance through difficult times. By familiarizing yourself with their responsibilities and the specific cases they handle, you can make informed decisions that align with your circumstances.

Whether you are dealing with financial distress or managing a loved one’s estate, this comprehensive guide aims to equip you with the knowledge needed to approach these situations with confidence and clarity. As you move forward, remember that seeking professional advice is a key step toward achieving the best possible outcomes in your financial and legal matters.

I hope you enjoyed this Canada Trustee Brandon’s Blog. Do you or your company have too much debt? Are you or your company in need of financial restructuring? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. However, more importantly, we understand the needs of the entrepreneur or someone with too much personal debt.

You are worried because you are facing significant financial challenges. It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

The stress placed upon you is huge. We understand your pain points. We look at your entire situation and devise a strategy that is as unique as you and your problems; financial and emotional. The way we take the load off of your shoulders and devise a plan, we know that we can help you.

We know that people facing financial problems need a realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team.

That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious about finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.

Call us now for a free consultation. We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

The information provided in this Brandon’s Blog is intended for educational purposes only. It is not intended to constitute legal, financial, or professional advice. Readers are encouraged to seek professional advice regarding their specific situations. The content of this Brandon’s Blog should not be relied upon as a substitute for professional guidance or consultation. The author, Ira Smith Trustee & Receiver Inc. as well as any contributors to this Brandon’s Blog, do not assume any liability for any loss or damage resulting from reliance on the information provided herein.

canada trustee
Canada trustee
Categories
Brandon Blog Post

WHY CHOOSING THE EXECUTOR OF THE WILL CAN BE SO INTENSE: NECESSARY INGREDIENTS FOR CHOOSING THE RIGHT EXECUTOR

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

Smith Estate Trustee Ontario and 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.

Choice of an executor of the Will: Choosing the right executor for your estate

When a person dies, that is not the time to begin preparing for who will carry out the wishes of the dead person in connection with their assets. Without a properly drafted Will, your family could be in for a long and uncomfortable legal battle. This is why it is so essential to obtain the right advice early on and naming the appropriate person or persons as the executor of the Will.

Whether you’re single, married, or have a blended family, there’s a good chance that you will certainly need to select an executor of the Will of your estate. This is the person who will supervise accomplishing your desires after you die. The executor will make certain your wishes are accomplished in such a way that is fair to your heirs under Ontario laws. However, without proper paperwork, this may not go as efficiently as you may really hope. To avoid this, you need to carefully think about and then pick who or whom should be your executor(s).

Who can be an executor of the Will in Ontario?

Have you ever heard of the term “executor”? You will come across it when you or a loved one create a Will. In Ontario, the executor is now called an Estate Trustee. However, in this Brandon Blog, I will continue to use the old name. It is normal that one of your closest friends or family members will be named in your Will as an executor, meaning they’re responsible for carrying out the instructions in your Will.

There are really no requirements in Ontario for someone to be an executor of the Will. To be an executor of someone’s Will, you must be at least 18 years old and have the ability to comprehend what is expected of you in that role. Hopefully, the person or people selected also have no record of fraud!

The executor is essentially the person holding the purse strings when it comes to your estate. They’re to see the will through from beginning to end: paying off bills, selling off any excess belongings, and distributing the rest to your beneficiaries.

The role of executor is an extremely important fiduciary role. Performing the duties of an executor of the Will incorrectly can have a profoundly serious effect on the beneficiaries and families involved for generations to come. So by now, it should be obvious to you that not everyone who can be an executor should be chosen to be THE executor. Having the right executor best suited for your estate should be the cornerstone of estate planning.

Choosing the ideal executor of the Will for your estate

The best estate trustee for your estate will depend upon the complexity of your estate, your specific wishes and needs. You and your lawyer ought to think about several elements when choosing an executor, consisting of:

  • Given your assets and beneficiaries, what skills should the executor possess and how active will their involvement be in the estate?
  • Whether they will need to make financial decisions.
  • Do they have the necessary skill set and financial acumen to properly administer your estate?
  • Whether they have a good and trusted relationship with your heir and with various other relatives.
  • Do they have good conflict-resolution skills?

You also must be mindful as to how normal life events may have changed your needs when considering an executor of the Will. The person or people you chose under your first Will when your family was young and your biggest asset might have been the proceeds under your life insurance policy may no longer be the right choice years later when your children have their own families and your estate assets look much different. Complex estates also require executors to have different skill sets than what is needed to administer simpler estates.

executor of the will
the executor of the Will

The executor of the Will: Consider people in good financial standing

Becoming a good executor of the will requires time and effort. To act as executor means you will have legal responsibilities and you’ll be making crucial choices regarding the deceased’s properties, including:

  • Paying off debts.
  • Taking the estate through probate and calculating and paying the Ontario probate fees called the Estate Administration Tax.
  • Completing one or more income tax returns that the deceased may have not filed and paying the taxes.
  • Managing and perhaps selling assets such as real estate.
  • Distributing assets to beneficiaries.
  • Filing the estate tax returns and paying the necessary tax.

You will want to make sure that whoever you pick as executor under the Will, will be able to properly administer your estate through the entire estate administration process.

So as a starting point, you will want to make sure that the estate trustee that you pick as your personal representative who will be dealing with your personal finances, should be someone trustworthy who has both the necessary skills to handle the financial matters and has a good financial standing. In Ontario, an undischarged bankrupt cannot be an estate trustee.

How much power does an executor of the Will have over the estate?

An executor of the Will is a person who has been named to administer an estate when someone dies, but what does that involve? The executor’s responsibilities include:

  • making sure that funeral arrangements have been properly made and funeral costs are paid;
  • gathering up important documents;
  • getting official copies of the death certificate;
  • paying off any debts;
  • wrapping up any loose ends like liaising with government agencies;
  • gathering up the funds and then closing out the deceased’s bank accounts; and
  • figuring out how to handle any property.

In other words, an executor has a lot of responsibility and a lot of power. So much power that an executor may be required to post a bond with the province of Ontario to cover any potential losses.

It’s a common misconception that the executor of an estate has complete control over the assets and can freely distribute them to whomever they choose. In reality, that’s not the case. When someone passes away, their estate becomes a separate legal entity, and once the executor has finished settling the estate’s affairs, the estate’s assets must pass to the designated beneficiaries. However, the executor has many powers that can help them better manage the estate.

The powers of an executor of the Will, come from the wording of the Will. If the executor finds that they do not have sufficient powers to properly carry out their duties, then the executor would have to retain a lawyer, get legal advice and then make an application to the court to get those additional powers. Since an executor has personal liability, they should not overstep their authority by taking actions they do not have the power to under the Will.

How do I make sure an executor of the Will is honest?

Succession preparation includes the estate planning documents. As part of that process, there needs to be a properly thought out procedure of picking a proficient, responsible, and trustworthy individual to handle an estate, trust, or business, upon the death of the creator of that wealth.

It is extremely essential to have a detailed succession plan in your estate and to make certain that your executor recognizes his/her duty, has the necessary skills and is willing to carry out what they will be called upon to do.

A well-known saying is “you get what you pay for” which is more often true when it involves choosing your executor. The executor is the person responsible to execute the terms of a Will or Trust. If they are not up to the task, your estate can get involved in a great deal of trouble.

At the end of the day, you have hopefully chosen someone to be the executor of the Will that not only has the ability to perform all necessary tasks but also someone who out of respect for their relationship with you and your wishes will carry them out honestly and efficiently.

executor of the will
the executor of the Will

Can there be 2 executors of a Will?

There are numerous concerns that emerge when a loved one passes away. One that is usually asked is can there can be more than one executor of the Will? In short, yes, there can be more than one executor, but there are some instances when that may not be the very best course of action.

So what are the realistic options? There can be a sole executor, an alternate executor or co-executors. Each one has its pluses and minuses. As the name suggests, a sole executor is 1 person only who has full responsibility to take all the necessary actions involved in settling the estate and then turn the money or specifically designated property over to the beneficiaries.

What is and why have an alternate executor? Just because someone is named as an executor of the Will, it may be the case that when the time comes, the person named is either unwilling or unable to act. Perhaps the Will was drawn up one or two decades ago and now the circumstances of the named executor have changed. So just in case, an alternate executor can be named in case the primary executor cannot act.

The Ontario Trustee Act contemplated such a situation. Examples of reasons why the primary executor may be unwilling or unable to act are because they are now:

  • Having a change of heart and is now unwilling to act. An executor can recuse themselves before they start to take any action as executor. Once they start acting though, the only way they can be removed is through a court order.
  • Is now is unfit to act.
  • Predeceased the one who just died.
  • Have been convicted of an indictable offence.
  • An undischarged bankrupt or insolvent and trying to settle their debts under the Proposal provisions of the Bankruptcy and Insolvency Act (Canada).

Our sister business, Smith Estate Trustee Ontario, acts as a substitute executor when an executor of the Will needs to be replaced by the court.

In any of these situations, the alternate executor hopefully can and is still willing to act. The alternate executor would have the estate’s lawyer make an application to the court, provide proof for the reason why the named executor cannot act and the court can appoint the alternate executor (or any other party the beneficiaries may wish to nominate if proven that the alternate is unfit to act).

As the name implies, co-executors means that two or more people have been appointed to act together as an executor of the Will. This can help ensure that your estate is divided up as you intended and the co-executors can both split the work between them and also be a check on each other’s work.

They have someone they can confer with when unsure about something, rather than putting the estate to expense by consulting first with one of the professional advisors. The main disadvantage of having co-executors is that if you have an even number of executors and there is a major disagreement right down the middle, it will probably take the intervention of the court to have the decision made. This creates otherwise unnecessary cost and delay.

It is probably one of the most serious decisions in estate planning. Yu do not want to pick the wrong executor.

Choice of the executor of the Will: Using a trust company

Should you consider naming an estates professional as your executor? A trust company is such a professional executor. If you named an estate professional to oversee the distribution of your estate as executor, this approach typically results in less conflict and fewer disagreements between family members than naming a family member to be executor.

However, you should know that in naming an estate professional trust company, you are naming a corporate executor with well-established and unwavering policies and procedures to handle the estate administration process. The person at the trust company handling your relative’s estate is not going to care about the relationship issues between the beneficiaries and other family members.

They also are not going to worry about hurting someone’s feelings. The cost of using a trust company is cut and dry where a close friend or family member may waive any fee they may be entitled to as executor.

In some situations choosing a trust company as your corporate executor of the Will can be a smart option. A trust company is a company authorized to act as a trustee for a trust. The trust company is not the creator of the trust, nor is it the owner of the trust property.

The trust company is an independent third party, which is chosen by the now-deceased person to act as the executor of the Will. A trust company is an excellent choice as executor when the estate is very large and complex.

Whether one or more people or a trust company is a better choice to be the executor really depends on the size and complexity of the estate and the relationships of all the family members involved.

The executor of the Will summary

I hope you enjoyed the executor of the Will Brandon Blog post. If you are concerned because it is now time to act under the Will, but the named executor is unwilling or incapable of acting, that is where Smith Estate Trustee Ontario can be of assistance. We act as substitute trustees appointed by the court in such situations.

Have you been administering an estate and now you have determined that it is an insolvent estate? Are you worried because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option? Call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

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

Smith Estate Trustee Ontario and 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.

executor of the will
the executor of the Will
Call a Trustee Now!