A long time ago, a family member or close friend asked you to be their estate trustee. While you accepted the request in the moment, you may not have fully understood just what this role entails. Among other queries, you're now wondering if you'll be liable for any of your actions and how long it will take to complete the job.
First things first. If you are named estate trustee in a Will, you do not have to accept. Secondly, once you accept the job and begin your duties, you will need a court order to renounce your role. Therefore, if you do not want the position, renounce it before you begin. To renounce, you will have to send a letter of renunciation to the lawyer handling the estate.
In the event you decide to accept, duties will include:
- Making proper funeral and burial arrangements. Contrary to what many people believe, these arrangements are not made by a surviving spouse or other family member;
- Determining that the Will appointing the estate trustee is the last Will of the deceased;
- Determining the names, addresses and ages of the beneficiaries;
- Notifying the beneficiaries of their interests in the estate;
- Determining the nature and value of the assets of the deceased, and compiling a detailed inventory which includes the contents of the safety deposit boxes;
- Determining what debts were owed at the time of death and arranging tor payment;
- Hiring a lawyer to assist with the administration of the estate, and to apply to the Ontario Superior Court of Justice for a Certificate of Appointment of Estate Trustee, if required;
- Ensuring property is protected (e.g., confirming real property has sufficient insurance and appropriate supervision);
- Contesting and/or settling any debts;
- Ppening an estate bank account;
- Preparing and filing the necessary tax returns in all relevant jurisdictions and paying any tax owing;
- Maintaining proper accounts;
- If required, providing the beneficiaries and the court with an account of ail dealings with the estate assets during the term of the estate administration;
- Setting up and administering any trusts established by the Will; and
- Distributing the assets according to the terms of the Will and obtaining releases from the beneficiaries.
New liability for estate trustees
Under the new regulation of the Estate Administration Tax Act, 1998, an estate trustee who receives a Certificate of Appointment of Estate Trustee will be required to complete and file an Estate Information Return (EI Return) with the Ministry of Finance no later than 90 days after the issuance of the Certificate of Appointment of Estate Trustee. This new regulation came into effect January 1 , 2015.
As part of the new duties, an estate trustee has to record that the EI Return was delivered by fax, mail, or in person, to the Ministry of Finance. Under the new regulations, if the estate trustee fails to file the EI Return or makes a false or misleading statement on the EI Return, then the estate trustee may be guilty of an offence and could be liable to pay a fine of at least $1,000 and/or be subject to imprisonment for no more than two years. A late-filed EI Return can be reassessed at any time.
What information is required on the EI Return?
On the EI Return, the estate trustee has to provide:
Details about the Certificate of Appointment of Estate Trustee.
- For example, the court file number, the court where the application was filed, and the estimated value of the estate.
Details about the deceased.
- For example: name, date of birth, date of death and last place of residence.
Details about the estate assets and the fair market value of the assets at the time of death, including all of the following assets:
- Real estate in Ontario
- Bank accounts, wherever situated
- Investments, wherever situated
- Vehicles and vessels, wherever situated
- Insurance proceeds if the proceeds pass through the estate
- Any goods, intangible property or business interests
Under the new regulations, the Ministry of Finance can assess or reassess the El Returns for four years after the estate administration tax is payable. As a result of the potential audit by the Ministry of Finance, it is prudent for the estate trustee to substantiate the valuations obtained for the estate assets and to keep those valuations for a minimum of four years.
When do the duties of an estate trustee end?
Generally, the duties of an estate trustee end when they have filed all of the estate tax returns, paid any additional taxes and received a Tax Clearance Certificate. However, under the new regulations, if the Tax Clearance Certificate is received earlier than the expiration of the four-year assessment period, the liability of the estate trustee continues until the end of this assessment period.
There is a possibility that, upon request, the Ministry of Finance will provide a comfort letter to estate trustees to provide some assurance that they will not be personally liable in the event the estate is either assessed or reassessed. But whether the Ministry of Finance will honour that assurance is a question that remains to be answered.
Marcia A. Green is an associate lawyers with the Ottawa law firm of Nelligan O’Brien Payne LLP (www.nelligan.ca) and a member of the Wills and Estates Practice Group.
[This article was originally published in the May 2016 edition of Fifty-Five Plus Magazine.]
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