Passing of Accounts

If any beneficiary is requesting a passing of accounts, he/she can be proactive by filing a Petition with the Court

When the executor/ personal representative has completed the wind-up of the financial matters of the estate, he/she will send the accounting to all beneficiaries. In the vast majority of cases, the beneficiaries will consent to the accounting of the executor and all fees payable to the executor and the estate lawyer.

However, if a beneficiary disagrees with the estate accounting, the executor must attend Court for a “passing of accounts”. This is a formal hearing in which the Court receives and reviews the executor’s accounts to assess whether or not the disputed items are reasonable.

If any beneficiary is requesting a passing of accounts, he/she can be proactive by filing a Petition with the Court. Otherwise, the executor needs to file a Notice of Application with the Court for a hearing before the Registrar. The executor cannot distribute the estate funds to the beneficiaries if there is not unanimous consent.

The first step in the process is to obtain a hearing date from the Court for a Registrar’s hearing. This application to obtain a court order may be done without notice because all of the interested parties will be notified of the Registrar’s hearing once it is set. It is good practice to ask the Court to order that the Registrar will have authority to certify his/her findings as this will ensure that the findings become a court order and will not require a further court appearance to certify them. The advantage of this approach is the obvious time and cost savings to the estate. A potential disadvantage is the removal of one level of appeal as the interested parties will have a more difficult time challenging the Registrar’s findings.

In situations where the accounts are not consented to but there is uncertainty as to what the issues are, individuals are encouraged to set down a pre-hearing conference. You may even request to attend this pre-hearing conference via telephone if it is difficult for you to attend in person. However, take note that it may be worthwhile to attend in person as it allows you the opportunity to speak with the other party beforehand and perhaps come to some sort of agreement. In person conferences tend to be more effective in the majority of cases, but they are more expensive and more time consuming.

At the pre-hearing conference, the Registrar will determine an appropriate length of time for the hearing and may make numerous orders such as:

1. An order to establish which witnesses will be called;
2. An order for document production prior to the hearing date (i.e. the account of the executor and the legal account for the estate); and/or
3. An order confirming whether evidence will be by way of written affidavit or if there will be in person or “viva voce” evidence as well.

At the main hearing, an opening statement should direct the attention of the Registrar as to what the issues are and what witnesses will be called to provide what evidence. Each issue raised by the disputing beneficiary will be ruled on after evidence is entered at the hearing by each party to the dispute.

Note that forcing a passing of accounts out of spite or suspicion without any evidence is not a good idea. The Registrar will ultimately determine if the estate was put to unnecessary or unreasonable expense. The beneficiary causing the unnecessary expense will generally be ordered to bear some or all of the legal costs of the hearing.

As a practical point, if you are an executor of an estate where you have a feeling that matters will be opposed by one of the beneficiaries, it is prudent to keep a written log of all estate activities as they occur. This log may have to be disclosed to other interested parties in the proceeding, so it should not contain any material that you are not comfortable with being disclosed to the Court.