What is an Estate Trustee?

I have Been Named as an Estate Trustee in a Last Will and Testament – What Does this Entail?

Toronto Wills Fight Lawyer

What is an Estate Trustee?

An estate trustee, sometimes called an executor, is the representative who is designated to carry out the terms of a last will and testament.  In cases where a person dies without a last will and testament (i.e. “intestate”) a person may apply to the Court to be approved as the estate trustee.  If the application is approved, the applicant would be given a “Certificate of Appointment of Estate Trustee without a Will”.  Essentially, the estate trustee acts as the alter ego of the deceased; his or her fundamental role is to wind up the affairs of the deceased and distribute the estate to those entitled.  As an estate trustee you will be responsible for collecting, managing, and investing the assets of the deceased. You will need to pay any debts owed by the deceased and then distribute the remaining assets to the people who are entitled to them (i.e. beneficiaries).   As estate trustee, your first and foremost duty is to act in the best interests of the beneficiaries of the estate.

Be aware that the job of estate trustee can be quite onerous and should not be taken lightly.  If you agree to accept the role of estate trustee be aware that this will require a significant commitment of time and effort on your part.  You should also bear in mind that whatever you can do to help organize the deceased’s affairs will ultimately reduce the legal fees to be paid out of the estate.  If you do not feel that you are capable of or willing to performing the tasks of an estate trustee you can formally renounce the right to act as such.  In deciding whether to accept the job of estate trustee , it is important to consider that there may potentially be personal liability to the estate trustee for contracts made after the death of the testator and for debts incurred by the trustee in the course of carrying on a business of the deceased.  The estate trustee may also be personally liable if he or she mismanages the estate or commits a breach of trust.

What are the Duties of an Estate Trustee?

Toronto Lawyer PublicationsAn estate trustee’s duties begin immediately upon the death of the testator.  Although the last will and testament may need to be probated (i.e. formally approved by the Court), there are tasks that you can perform before the last will and testament is probated.   First of all, you need to know who the deceased was – what was their citizenship, where was their residence, and where was their domicile (i.e their place of permanent residence, which may be different from the place they were actually living at the time of their death).  A person’s residential history can have a dramatic impact on the administration of the estate and should always be considered prior to taking any steps in distributing the estate.  It is equally important to be aware of any changes in the deceased’s marital status.

In Ontario, a person’s last will and testament becomes invalidated upon marriage, so it is crucial to know any and all dates pertaining to the deceased’s marital status.  As well, if there is a last will and testament, you, as estate trustee, should make sure that you have the original last will and testament and any codicil’s (i.e. attachments or additions) to the last will and testament.  The estate trustee should also see if there are any historic last wills and testaments in existence and should try to take control of those as well, to minimize the chance of disputes arising from those documents. It is advisable that you obtained a few notarized copies of the last will and testament, as this will allow you to begin a lot of the estate administration, even before the last will and testament is probated,  Some of the other main duties of an estate trustee include the following:

·         Making funeral and burial arrangements;
·         Retain an estates lawyer;
·         Determine the names and locations of the beneficiaries/ next of kin, and notify them of their interests;
·         Dispose of all perishable assets;
·         Open an estate bank account;
·         Make provisions for the immediate needs of the deceased’s spouse and other dependants;
·         Pay bills, mortgage payments, insurance premiums and credit cards;
·         Advertise for creditors and prepare inventory of debts;
·         Settle and pay all legitimate claims against the estate;
·         Apply for any benefits payable upon death.
·         Obtain tax clearance from Canada Revenue Agency;
·         Dispose of or distribute assets according to instructions in the last will and testament;

This list is not exhaustive.  The duties of the estate trustee will depend on the particulars of each estate and on the instructions set out in the last will and testament.  If any complexities arise in the administration of the estate it is advisable for the estate trustee to seek professional legal advice to ensure that they are administering the estate properly.

Compensating the Estate Trustee

3366720659_b746789dfd[1]Estate trustees are entitled to compensation for the work that they do for the administration of an estate.   The Ontario Trustee Act states that an estate trustee is entitled to a fair and reasonable allowance for his or her “care, pains, trouble and time” spent administering the estate.  In a typical estate where the assets are gathered in and distributed relatively quickly, the executor’s compensation would be 5% of the value of the estate.  The amount of the trustee’s compensation may be adjusted up or down based upon a number of factors including the total value of the estate, the complexity of the estate, the time spent by the estate trustee in the discharge of their duties, the degree of care exercised by the trustee and the results of the administration and any investments made by the trustee.

Removal of Estate Trustee

Finally, as an estate trustee you should be aware that pursuant to section 37 of the Trustee Act, the Superior Court of Justice may remove an estate trustee“upon any ground upon which the court may remove any other trustee, and may appoint some other proper person or persons to act in the place of the executor or administrator so removed”.  An application to remove a trustee may be made by the estate trustee themselves, or by someone else who is interested in the estate and has grounds to seek the removal of the estate trustee in question.  There is little guidance in the legislation as to what constitutes grounds for removal, and accordingly, very broad discretion is given to the Court in removing an estate trustee.  Some typical situations where a trustee could be removed are when the trustee:

·         Declares bankruptcy;
·         Is convicted of a criminal offence;
·         Is removed from the jurisdiction;
·         Becomes incapacitated;
·         Commits a breach of trust;
·         Demonstrates a lack of appreciation of his or her duties;
·         Conflict of interests
·         Generally inappropriate behaviour

If you do accept the job of estate trustee you must be aware that your actions may well be scrutinized by other people who have an interest in the estate.  If an interested party feels that you are not performing your duties in a careful and diligent manner, they have the ability to remove you as estate trustee.