July 17, 2023

An estate trustee has an ongoing duty to keep track of funds coming into and flowing out of an estate, and to keep beneficiaries reasonably apprised. Unfortunately, in estate litigation, we are often confronted with cases wherein estate trustees fail to advise the beneficiaries of the financial activity in an estate.

As such, it is often suggested that estate trustees produce an informal accounting. This is typically a more efficient and cost effective avenue than going to court and having an estate trustee commence a formal application to pass his or her accounts. Note that an estate trustee does not have an explicit obligation to bring such application. However, he or she may be compelled to do so by a person with a financial interest in the estate (i.e. a beneficiary).

A sufficient informal accounting should set out, from date of death (until the date of the accounting), what assets are in the estate. The informal accounting should provide for all of the funds which have left the estate, and on what basis (i.e. what expenses and liabilities have been paid, when and in what quantum). The informal accounting should include supporting documentation, such as receipted expenses, and generally provide a beneficiary with a full and complete financial picture of an estate. Depending on the nature of the estate and its complexity, further and additional supporting documentation may be required at the first instance.

Following the delivery of the informal accounting, it is generally agreed that the beneficiaries can ask questions (or raise “objections”, as would be the case in the formal passing of accounts process) and request further information or disclosure. The estate trustee would then respond, and hopefully in due course the accounting issues are narrowed, such that the beneficiaries are satisfied that the estate has been administered properly and prudently (until the end date of the accounting, at least).

As stated, the informal accounting process is ordinarily more proportionate and expeditious than going through a formal court passing of accounts. However, beneficiaries should typically reserve their rights to compel a formal passing, even when the informal accounting process has been agreed to.

Obtaining independent legal advice regarding the foregoing may often be appropriate.