Michael Ford (post until Oct. 31/19)
Estates & Wills & Trusts

Consider whether a passing of accounts is worth it

Beneficiaries of an estate should take time to consider, from a monetary point of view, what’s at stake before insisting on a passing of accounts, says Toronto trust and estate litigator Felice Kirsh.


“It’s like any piece of litigation – you have to do a cost-benefit analysis,” says Kirsh, partner with Schnurr Kirsh Schnurr Oelbaum Tator LLP.


A passing of accounts is a formal court process to have the practices of an estate trustee approved by a judge, and is required when any of the estate beneficiaries will not sign off on the trustee’s accounting.


“Every estate trustee has an obligation to keep accounts. They’re acting as a fiduciary and have to keep a record of every penny in and every penny out,” explains Kirsh.


“If I’m acting as an estate trustee, I am responsible to somebody in law – to the beneficiaries of the estate.


“In many cases the estate trustee will present an informal accounting to the beneficiaries. The beneficiaries might have some questions and the trustee will respond and that’s the end of it, but in some cases the beneficiaries or sometimes estate trustees want the process to be formalized, and that’s called the passing of accounts. It means the accounts are being presented to the court.”


Kirsh says, “Sometimes, a beneficiary has complaints such as how much a house or other assets were sold for. They have complaints and they’re not prepared to provide the estate trustee with a release. The only way for the estate trustee to obtain a release is to proceed with a passing of accounts.”


As a beneficiary, it’s important to consider whether the cost of a passing of accounts is worth it for the outcome, says Kirsh.


“Sometimes the objections from a monetary point of view don’t add up to that much as far as the beneficiaries are concerned,” she says. “If you look at an issue like selling a house, and it was sold at $700,000 but there’s four beneficiaries and they think it should have been sold for $750,000, you must determine if this is really an issue that is worthy of a passing of accounts."


Another common concern from beneficiaries is that executors are taking too much compensation, Kirsh adds.


“The passing of accounts either gets settled, just like many court cases, or if you can't work it out, then you must proceed to trial."


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