Estate Trustees

What is an Estate Trustee?

An Estate Trustee (also known as an “executor”) is the person you appoint as the executor of your Will and the Trustee of your estate. Choosing your Estate Trustee is one of the most important decisions in making a Will as he or she takes charge of your affairs after your pass away. You can appoint one or more people to act jointly, independently, or in substitution for one another.

What are the responsibilities of an Estate Trustee?

Estate Trustees have total control of your affairs after you pass away, subject to the instructions in your Will. Their responsibilities include:

• • Reading your Will – Your Estate Trustees’ direction as to what will happen to all property must be taken from your Will.
  • Determining that the Will is your last Will and that you have not prepared any more recent Wills (this may require advertising for any Wills another lawyer or person may have in their possession or otherwise be aware of).
  • Preparing documents necessary to apply for a Certificate of Appointment of Estate Trustee with a Will or “Letters Probate.”
  • Locating the Beneficiaries – Determining names, addresses, and ages of the Beneficiaries and sending a Notice of Application to all Beneficiaries.
  • Determining the nature and value of the assets and debts of the deceased and compiling a detailed inventory.
  • Setting up and administering any Trusts established by the Will, such as a Henson Trust or a Staged Trust (for minors).
  • Determining how to provide for any dependent Beneficiaries and how to pay any estate expenses while your estate is being administered.
  • Managing and, where appropriate, investing the funds in the estate (or any Trusts for which they are responsible) prudently.
  • Opening an estate bank account (where necessary). Estate money should not be mixed with any other money. A separate account should be maintained for all estate funds.
  • Advertising for creditors.
  • Dealing with liabilities and arranging for the payment of debts.
  • Preparing and filing the necessary tax returns on time and paying any tax owing.
  • Dealing with claims against the estate.
  • Distributing specific bequests.
  • Issuing interim distributions to residual Beneficiaries according to the terms of the Will and obtaining releases from all residual Beneficiaries.
  • Obtaining a Clearance Certificate from the Canada Revenue Agency “(CRA”) following payment of all taxes.
  • Issuing final distributions to the Beneficiaries, along with final accounting, once the Clearance Certificate is received from the CRA.
  • Maintaining accurate accounting records in relation to all estate assets. The Estate Trustee will need to have these accounts approved by the Beneficiaries periodically and at the conclusion of the administration of the estate. The accounting must include a full report and disclosure of capital and revenue receipts received, disbursements, and investments made.
  • Ensuring that receipts, cancelled cheques, bills, etc., are maintained in order to prove the accounts, if that should be necessary.
  • Submitting the amount of compensation being requested for work done in the administration of an estate to the Beneficiaries for their approval during the final stages of the administration of an estate.

Note: With regards to the care, decision-making or financial management of a Beneficiary with a disability, your Estate Trustee only has authority when acting as the Trustee of a Trust established in your Will.

Who should I appoint as an Estate Trustee?

Given the complexity of an Estate Trustee’s responsibilities and how time consuming they can be, it is very important that you appoint the right person. Who that person is will depend on your specific circumstances, the people in your life, the assets you hold, and the Beneficiaries for whom you intend to provide.

In the vast majority of cases, people name their spouse (if any) as the primary Estate Trustee. The spouse is also typically the person to whom most, if not all, assets are left. Where a person does not have a spouse but has children, then most often one or more of those children will be named (again, because they are usually the Beneficiaries of the estate). There are, however, many circumstances where a spouse or children are not available or are not appropriate Estate Trustees for one reason or another.

Some of the most important factors in determining who to appoint as an Estate Trustee are set out here:

• • Sensitivity: Estate trustees should be sensitive to your wishes and the needs of your family, particularly when you have a family member with a disability. They will be responsible for ensuring that your family has the resources they need while your estate is administered and ensure the fair and appropriate distribution of your assets, subject to any specific wishes you may leave in that regard.
  • Time: Estate trustees should have the time to devote to their responsibilities. This may mean that an individual with a very demanding job of their own, and/or numerous personal demands on their time, may not be the best person to appoint. Estates may take years to administer, particularly if they are neglected by an Estate Trustee who fails to take the appropriate steps as and when required. 

• • Knowledge: The person appointed should have the knowledge and sophistication to deal with the decisions that need to be made in administering your estate. This may include knowledge of a technical nature (such as about your business, investments, finances, property, etc.) and knowledge about you, your relationships, and family members (including the needs of a family member with a disability). 

• • Longevity: Depending on your age and the nature of the Trusts you include in your Will, your Estate Trustee’s appointment may be in place for a long period of time. Where your Estate Trustee is also Trustee of a Henson Trust, the appointment may last for the length of the Beneficiary’s life (or as long as the funds in the Trust last). This means that it is important to appoint someone who is likely to be available for as long as the Trust will exist; in most cases, this means someone who is close to the same age as the Beneficiary or a younger person as an alternate Trustee. 

• • Trust and Conflicts of Interest: Your ideal Estate Trustee is trustworthy and capable of putting aside any personal interest they may have in your estate. Consider his or her relationship to your Beneficiaries and whether there is any risk that the person may take advantage of their position to the detriment of other Beneficiaries. Even if you trust the person you are appointing, it is also important that your Beneficiaries be able to trust him or her.

• • Professional Help: Failure to obtain professional help by your Estate Trustee (such as legal, financial, and accounting support) may result in delay, unnecessary expense, and/or disputes. Your Estate Trustee should get professional advice from the outset in order to ensure they understand their obligations, the timelines, and what types of professional services are available.

• • Proximity: In an ideal situation, your Estate Trustee will reside in close proximity to you, or at the very least, in Ontario. From a practical perspective, close proximity makes the Estate Trustee’s responsibilities easier to perform and more likely to be accomplished in a timely and inexpensive manner. Ontario Courts generally impose a bond requirement on non-resident Estate Trustees. In addition, there can be tax implications for you and your Estate Trustees associated with their residence in another jurisdiction.

Some people choose to appoint joint Estate Trustees – two or more persons to act together and with the supervision and agreement of one another. This has the effect of not only adding a degree of oversight, but also bringing to the table a wider range of skills and qualifications.

What if something happens to the person I’ve chosen as my Estate Trustee?

In addition to appointing a primary Estate Trustee (or Estate Trustees), it is a good idea to appoint an alternate Estate Trustee to act in place of your original Estate Trustee (or Estate Trustees) in the event that he, she, or they are unable to act by reason of death, mental incapacity, removal by the Court, or resignation. If you fail to appoint an alternate and your Estate Trustee passes away, then by law your Estate Trustee’s Estate Trustee may take over.

Another reason to appoint an alternate is that depending on the Trusts you have created in your Will, your Estate Trustees may be required to act for a very long period of time. This means that unless your Estate Trustee is very close in age to the Beneficiary, there is a strong possibility of the Beneficiary outliving the Estate Trustee. Appointing an alternate Estate Trustee is one way of making sure that there is always someone available to act, regardless of how long after your death they may be called upon to do so.

Where you do not have anyone that you are comfortable appointing as an alternate, you may also consider including language in your Will that allows (or even requires) your last remaining Estate Trustee to sign an instrument appointing an alternate Estate Trustee to act in his or her place upon his or her death, incapacity, removal by the Court, or resignation.

What if I don’t have anyone I feel is right for the job, or the people I’ve appointed need some professional support?

For one reason or another, you may not have anyone that you consider to be an appropriate Estate Trustee or alternate Estate Trustee. In that situation, you might consider naming a corporation to act as Estate Trustee, specifically a Trust Company. Trust companies are highly regulated entities whose business it is to manage and administer estates and Trusts of many different kinds. Most of the big banks have Trust arms, which offer Estate Trustee services, and there are also a number of private Trust companies offering these types of services.

The advantages of naming a corporate Trustee include:

• • Specialized knowledge and significant experience in managing the administration of estates;
  • Longevity;
  • Absence of a conflict of interest with the Beneficiary;
  • Corporate accountability;
  • Less susceptible to delays occasioned by indifference, procrastination, or innocent mistakes;
  • Corporate Trustees usually have accounting and investment services in-house, which simplifies the management of the estate.

The disadvantage of appointing a Corporate Trustee is that it can be quite expensive. A Corporate Trustee will typically enter into a lengthy and very detailed compensation agreement that clearly outlines each service they offer and the related charges. These charges are usually based on a percentage of the value of the assets of your estate, subject to certain minimums. Many Corporate Trustees also have a minimum estate or Trust value that they will accept, usually not less than $500,000, because their fees would be so exorbitant as to erode the value of the Trust or estate.

A further disadvantage is that while a Corporate Trustee may be highly knowledgeable in estates administration generally, they may also be seriously deficient in sensitivity and knowledge about your family, your unique circumstances, and the needs of a person with a disability in particular.

As a professional law corporation devoted to the disability services sector, PooranLaw is uniquely qualified to advise executors or trustees. Our PooranLaw Estate & Trust Program can provide you with a personalized program of trust and estate services at an affordable cost.

INDIVIDUAL PROFESSIONALS

Where you do not have any friends or family you are comfortable in appointing, another alternative is to work with a professional as your Estate Trustee, such as a lawyer or an accountant. Unlike a corporation, a professional cannot live forever, but they are likely to have procedures in place to ensure continuity of service in the event that they are unable to continue to act. They are also governed by a very onerous reporting and professional responsibility regime, which ensures that they act in a timely and professional manner while adding a degree of oversight that does not exist for a layperson.

Similar to a Corporate Trustee, professionals do not come cheap. They will usually require that you enter into a retainer or compensation agreement that is based on an hourly rate or other measure for compensation. Unlike a Corporate Trustee, however, they may be willing to take on estates of a smaller value because their fees are usually not based on a percentage of the value of your assets, but rather on the actual work they perform and the hourly rate associated with that work.

The PooranLaw Estate & Trust Program can provide you with affordable assistance in the management and administration of your estate or trust.

NON-TRUSTEE ADVISORS

Many families have built strong relationships with not-for-profit agencies, support networks, and service providers in the community and seek to appoint these organizations as Estate Trustees. Unfortunately, this type of appointment is not legally permissible.

Only a Trust company or a natural person (whether a professional or private individual) can be named as an Estate Trustee. These agencies, networks, and providers can, however, be identified in your Will or estate plan as advisors that you wish your Estate Trustees to consult with when making significant decisions related to your family’s affairs. Indeed, you can name any number of individuals, entities, and organizations as advisors to your Estate Trustees, either informally by way of verbal instructions, in a wish stated in your Will, or in a side letter you can leave with your Will describing our family situation, the needs of your Beneficiaries, your interests, and objectives in the distribution of your estate, and so forth.

What if I don’t appoint anyone as my Estate Trustee?

The PGT has the authority to act as an Estate Trustee. This is viewed by many as being the worst-case scenario, and many families will go to great lengths to avoid the involvement of the PGT in their affairs and in the lives of their children. Right or wrong, the common perception is that the PGT may not act in the best interests of the Estate or the Beneficiaries when it comes to taxation, timeliness, or the long-term financial security of a person with a disability.

Where no other options exist, however, at the very least, the PGT is familiar with the estates administration process while being knowledgeable about the rights, needs, and interests of people with disabilities.

 What is the PooranLaw Estate & Trust Program?

Corporate Trustees, professional Trustees (such as a lawyer or law firm appointed as Trustee), and professional Trustee supports (such as lawyers or accountants retained by your Trustees to assist with the Trust administration) may offer valuable alternatives or additions to the plan of care for your loved one who has a disability.

As a professional law corporation devoted to the disability services sector, PooranLaw is uniquely qualified to advise executors or trustees. Our PooranLaw Estate & Trust Program, in collaboration with Concentra Trust and Ability Tax & Trust, can provide you with a personalized basket of trust and estates services.

Concentra Trust is a national, federally-regulated, trust company that has specialized in estates and trusts for over 65 years.

Ability Tax & Trust is a long-time PooranLaw partner that specializes in tax planning and compliance expertise required to optimize the value of assets being held in trusts and estates.

 How does the PooranLaw Estate & Trust Program work?

Clients who wish to retain the services of the PooranLaw Estate & Trust Program will appoint our partner, Concentra Trust, as their corporate executor or trustee. Once Concentra Trust is appointed, PooranLaw and Ability Tax & Trust will carry out some of the day-to-day responsibilities associated with administering the estate or trust.

 Why the PooranLaw Estate & Trust Program?

Your estate or trust will benefit from PooranLaw’s deep knowledge of estate/trust administration within the disability planning context.

The advantages of the PooranLaw Estate & Trust Program include:

Assistance and peace of mind

The work involved in managing an estate or trust can be daunting for an individual Trustee with his or her own competing responsibilities. Receiving professional advice may ease this burden and give the Trustee peace of mind that no details will be overlooked.

Expertise and Knowledge

Our team works with individuals, families and organizations in the disability and developmental services sector every day, assisting them in navigating the rules and requirements imposed by ODSP and the CRA and accessing funding and supports within the community for individuals with disabilities. We routinely manage Henson Trusts and provide advice, guidance and representation in the establishment and administration of Henson Trusts.

Understanding and Compassion

Our team knows that creating a safe, secure, healthy and happy life for individuals with disabilities is about more than just spending funds, keeping accounts and filing tax returns. It is about managing funds in a way that supports the inclusion of the individuals in the community and assisting them in achieving their goals and realizing their potential. Once appointed, we begin our relationship with the Beneficiary and his or her network of family, friends and community supports to build an understanding of his or her needs and to develop a “Care and Management Plan.”

Stability and Security

A Henson Trust is generally established for the life of the Beneficiary. In other words, the Trust will last as long as the Beneficiary is alive and there are funds remaining in the trust. PooranLaw is a team of lawyers and other legal service professionals that is bigger than just one person. As a team we are uniquely positioned to deal with transition. While each trust has a dedicated PooranLaw trust officer responsible for its administration, as part of our team that trust officer can share and, where necessary, seamlessly transfer responsibilities to other members of the team using our detailed record keeping processes and procedures.

Professionalism and Commitment

Providing advice, advocacy and services to individuals with disabilities, including trustee services, is our business. As a professional law corporation, we are also subject to the review and audit of the Law Society of Ontario and are required to submit annual filings regarding our trusts. This adds a layer of oversight in the management and administration of trusts.

Impartiality

As a professional law corporation without any personal stake in the trust or the individuals who may benefit from the trust, PooranLaw can be relied upon to be completely unbiased and impartial in its decision making and management of trust funds for the benefit of the Beneficiary.

Affordability

At PooranLaw we know that every dollar spent paying professional fees is a dollar that is not available to the Beneficiary. Our fees and those of our professional partners are charged at our affordable hourly rate. We have streamlined our processes for efficiency to minimize the costs of our services.

Collaboration

We believe that the PooranLaw Estate & Trust Program offers client the best of both worlds – PooranLaw and Ability Tax & Trust’s deep knowledge of estate/trust administration in relation to disability, and the peace of mind that comes from the support of an established trust company, Concentra Trust.

PooranLaw has also developed relationships with a vast network of accountants, financial advisors and community service providers in the disability and developmental services sector. These relationships allow PooranLaw to to ensure that the Beneficiary achieves his or her goals.

What is Concentra Trust?

Concentra Trust is a national, federally-regulated, trust company that has specialized in estates and trusts for over 65 years.

 What is Ability Tax & Trust?

Ability Tax & Trust is a long-time PooranLaw partner that specializes in tax planning and compliance expertise required to optimize the value of assets being held in trusts and estates.