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Wednesday, April 13, 2011

Adult trusteeship: what is a passing of accounts all about?

"Passing of accounts" involves a trustee showing the courts what he or she has done with the money and property he or she handles for an incapacitated adult. If the judge is satisfied with the transactions ("accounts") for a set period of time, then they are said to have been "passed" by the judge. In some jurisdictions the process takes place in an open courtroom, and in others it is all dealt with by way of paperwork.

A passing of accounts may take place for various reasons. In some places, the law states that a trustee will automatically have the responsibility of passing his or her accounts on a regular basis. In all parts of Canada, a trustee must pass his accounts if he no longer wants to be the trustee and wants to hand matters over to another person. In fact a trustee is not permitted to quit until he has passed them.

A judge can order at any time that a trustee bring his accounts to court for passing. The judge might do this, for example, if a concerned relative of the incapacited person has asked the court for help. While most passing of accounts applications go through smoothly and without problems, others are hotly contested.

When looking at a trustee's accounts, the judge is looking for several items of information, including:
  • the over-all financial situation of the incapacitated person, particularly in relation to the financial situation when the trustee first took over
  • whether the incapacitated adult is being properly provided for
  • whether money is missing, or everything is accounted for
  • whether the trustee is maximizing the incapacitated adult's finances, for example by applying for all pensions and benefits available and by investing wisely
  • how the incapacitated adult's property is being held, for example, whether the trustee has wrongly put the property in someone else's name
  • whether the trustee has stayed within his authority, which means not doing things like giving away the incapacitated adult's money or making loans with that money to family members
The court wants to know that the trustee is managing the money properly. Knowing that one day he or she might be called upon to pass accounts, trustees should keep very good records.

5 comments:

  1. Thank you so much for this post! This is EXACTLY the information I needed. I'm in the "concerned relative" position and anxious about what may be happening with the trust set up for my grandmother (who has dementia).

    So, I assume that I can just see an estate/trust lawyer and ask them to initiate the process? I'm in Ontario.

    ReplyDelete
    Replies
    1. I'm glad you found the post useful. Yes, your first step is to see a lawyer to find out about the law and process in your jurisdiction. The lawyer might even have some ideas for getting information without having the whole thing go through the courts. For example, upon receipt of a letter from a lawyer, the trustee might decide to volunteer the information you need.

      Best of luck,
      Lynne

      Delete
  2. Hello Lynne and thank you so much for your site. I live in New Brunswick and have a few questions concerning accountability when beneficiaries are minors and executors are named as trustees of their inheritance. We're not related to the children, we were close friends to the deceased who left his estate to his grand children. There are 6 beneficiaries aged 2 to 15. They will inherit at age 19. The will went thru probate. Are we obligated to file a passing of accounts because they are minors? Can a beneficiary once of legal age request a Passing of Accounts? We are also entitled to an executors fee, the provincial going rate. Should we consult a lawyer in case later on we're questioned about that fee? Should we give an account to the beneficiaries parents even if we're not obligated to do so. We don't like spending Estate money to consult a lawyer but we also want to avoid future problems as we're in our sixties. I have kept a detailed account of all Estate transactions todate. We're awaiting the Clearance certificate from CRA and will then divide the funds and invest in RESPs for the beneficiaries.

    ReplyDelete
  3. Hi Lynne,
    Thanks for your site. In British Columbia, my Mom set up a trust to happen after she died, (2009) and her executor became the trustee. The beneficiaries have never signed off on the will. The incapacitated individual has recently died. Three beneficiaries are to get the remainder of the trust. Now we cannot get any infornation on the trust account, except for a "figure on a piece of paper." (2016)

    Can a passing of accounts happen after the "incapacitated" individual has died and we suspect the trustee has mismanaged, even plundered, the account?
    Thanks for any help you can offer.

    ReplyDelete
    Replies
    1. Yes, you can. In fact, this is the appropriate time, since you were not entitled to receive the funds while that person was alive. Make your request for an accounting in writing. Most trustees get very hostile when someone asks for an accounting because they feel they are being accused of something, so be prepared that he or she might be reluctant. However, you are entitled to know how the "figure on a piece of paper" was arrived at.

      Lynne

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