January 23, 2014

At the beneficiaries’ insistence, or at his own initiation, a trustee may apply to court to pass his accounts. Once in court passing format, the accounts will list the deceased’s assets as of date of death, and trace any subsequent disposition of those assets. However, where the estate assets include one or more businesses, the accounts may not tell the entire story of whether the administration of the trust or estate has been a successful one. Sometimes, particularly when the business is a closely held family company, the beneficiaries will be deeply concerned about how the trustee has chosen to run, transfer or dispose of the business, and these issues will be front and centre at the passing of accounts.

This paper has two parts. In the first part, I review several common topics of complaints by beneficiaries of an estate or trust holding business assets. The first section is not by any means meant to be an exhaustive list of every issue that could come up in a passing of accounts involving a business asset. Such an exhaustive review is beyond the scope of this paper. Rather, I try to provide a taste of the kinds of issues that come into play when businesses are owned or controlled by a trust or estate. In the second part of the paper, I have attempted to summarize some of the things that a litigator embarking on a passing of accounts should consider when acting for either the accounting party or the objecting party. Many, if not all, of these suggestions are equally applicable to applications to pass accounts where the assets do not include business assets. I do, however, highlight some of the steps, issues, considerations and document reviews that will be particularly important when an estate holds or controls a business.

Read the full paper here: Passing the Trustee’s Accounts When There are Business Assets