Chapter 10

Estate and Trust Accounts

10.1 The Duty to Provide Information .............................................................................10-5

10.1.1 The Duty to Account – Overview ................................................................................10-5
10.1.2 Duty to Account: Basic Principles ...............................................................................10-5
10.1.2.1 Right to Enforce the Terms of the Trust ....................................................10-5
10.1.2.2 Right to Information in Order to Enforce the Terms of the Trust ................10-6
10.1.2.3 Rights of Legatees and Creditors .............................................................10-6
10.1.2.4 Three Categories of Information ...............................................................10-6
10.2 Existence of the Trust ..............................................................................................10-6
10.2.1 Legal and Practical Issues ..........................................................................................10-7
10.2.2 Best Practices when Providing Notice and Accounts ..................................................10-7
10.3 Trust Accounts .........................................................................................................10-9
10.3.1 The General Rule for Trust Accounts .........................................................................10-9
10.3.1.1 Common Law Only: Duty to Account ........................................................10-9
10.3.1.2 Quebec Only: Duty to Account and Right to Supervision ..........................10-9
10.3.2 Practical Reasons for Preparing and Voluntarily Providing Accounts ........................10-10
10.3.3 Accounts for an Estate .............................................................................................10-10
10.3.3.1 Quebec Only: The Liquidator’s Inventory ................................................10-11
10.3.4 Accounts for Trusts...................................................................................................10-11
10.3.5 Common Law Only: Recent Case Law on Providing Trust Accounts ........................10-11
10.3.6 Trust Account Information.........................................................................................10-12
10.3.6.1 Corporate Trustee Statements ...............................................................10-13
10.3.6.2 Other Trust Accounting Formats.............................................................10-13
10.3.7 Trust Accounts Compared to Financial Statements for Businesses ..........................10-14
10.3.8 Capital and Revenue Accounts ................................................................................10-14
10.3.9 Capital Receipts and Disbursements ........................................................................10-15
10.3.10 Revenue Receipts ..................................................................................................10-16
10.3.10.1 Dividends ...............................................................................................10-16
10.3.10.2 Dividend Reinvestment Plans .................................................................10-16
10.3.11 Revenue Expenses and Disbursements .................................................................10-17
10.3.12 Amortization Rules .................................................................................................10-17
10.3.13 Common Law Only: Apportionment Rules ..............................................................10-18
10.3.13.1 The Rule in Howe v. Dartmouth..............................................................10-18
10.3.13.2 The Rule in Re Chesterfield’s Trusts ......................................................10-18
10.3.13.3 The Rule of Allhusen v. Whittall ..............................................................10-19
10.4 Approval to Accounts ............................................................................................10-19
10.4.1 Release and Discharge from Beneficiaries ...............................................................10-20
10.4.2 Indemnity from Beneficiary .......................................................................................10-20
10.4.3 Interim Approvals .....................................................................................................10-20
10.4.4 Court Passings/Court Approvals ...............................................................................10-20

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 10.4.4.1 Common Objections on a Review of Accounts .......................................10-20
10.4.4.2 Process for Court Review of Accounts ...................................................10-21
10.4.4.3 Effect of Passing Accounts/Court Approval ............................................10-22
10.4.4.4 Costs of Passing/Court Approval of Accounts ........................................10-22
10.5 Trustee Records .....................................................................................................10-23
10.5.1 Trustee Decisions .....................................................................................................10-23
10.5.2 Investment Records .................................................................................................10-24
10.5.3 Tax Records .............................................................................................................10-24
10.5.4 Agreements and Contracts .......................................................................................10-24
10.5.5 Retention of Records ................................................................................................10-24
10.6 Testamentary Trust Considerations......................................................................10-24
10.7 Setting Up Voluntary Trust Account Reporting....................................................10-25
10.8 Diaries and Reminders ...........................................................................................10-25
10.9 Substitute Decision-Makers ...................................................................................10-25
10.9.1 Property Guardians ..................................................................................................10-25
10.9.2 Enduring Powers of Attorney ....................................................................................10-25

Figure 10.1: Jurisdictional Requirements for Court Review of Accounts ...............................10-27

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 Chapter 10

Estate and Trust Accounts

Learning Objectives
One of a trustee’s core duties is to provide information to the beneficiaries. In addition to
notifying a beneficiary of his or her entitlement under a will or trust, the executor and
trustee must be ready to account to the beneficiaries for the administration. Property
guardians must be ready to account to the court and others. An attorney acting under
an enduring power of attorney1 must also be ready to account to the donor or others
when the donor is no longer capable.
Accounts are also required if a fiduciary intends to ask a court to discharge the fiduciary
from his or her duties.
Finally, a fiduciary must keep records of the administration.
Upon completion of this Chapter students will be able to:
• Distinguish trust accounting from financial accounting
• Summarize the purposes for maintaining and preparing accounts
• Identify the information that must be included in the accounts
• Summarize the rules governing who is entitled to the accounts and when
• Explain the reasons for distinguishing between capital and income in the
accounts
• Summarize the general rules that guide a trustee on how to allocate receipts and
disbursements between capital and income
• Summarize the options for approval to accounts
• Explain the purpose for requesting a release from a beneficiary
• Explain the purpose for requesting approval to accounts from the court
• Summarize the information required when applying to court for approval to
accounts
• Identify information that should be maintained as part of the trust record
• Identify the rules that govern maintenance of trust records

1
Or a continuing power of attorney in Ontario, or a mandate in case of incapacity in Quebec. See Generic Terms
Cheat Sheet.

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 • Discuss the practical considerations when preparing to keep trust records
• Discuss the practical issues to be addressed when there is more than one
fiduciary
• Compare the accounting requirement for substitute decision-makers with the
requirements for executors and trustees
• Demonstrate learning by applying rules and concepts to a given scenario.
The focus of this Chapter is on the accounts that must be kept by executors and
trustees. Unless otherwise noted “trustee” is used to refer to both executors (all
personal representatives) and trustees of both inter vivos and testamentary trusts and
“trust” is used to refer to both estates and trusts.

REMINDER: Terminology varies significantly between provinces, and even

more so with Quebec. For ease of reading, as terminology is defined one word or
phrase is selected for purposes of the materials in this course. Jurisdiction-
specific terminology is only used if required. See the Generic Terms Cheat Sheet
for the full list of generic terminology.

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 Estate and Trust Accounts

10.1 THE DUTY TO PROVIDE INFORMATION

10.1.1 The Duty to Account – Overview
As noted in Chapter 2, Trustees, Personal Representatives, and Substitute Decision-makers, a
trustee has a duty to provide information to beneficiaries.2 Beneficiaries are entitled to know
their entitlements under a will, and if there is a trust, the nature of their interest. They are also
entitled to receive an accounting, subject to rules set out in the legislation and/or the trust
document.
Personal representatives and property guardians also have a duty to account. The laws that
govern an enduring power of attorney are set out in legislation or may be found in the common
law.
The rules for personal representatives and property guardians are generally well established in
each jurisdiction and are noted in this Chapter. Some provinces (including Quebec) also have
rules that govern the attorney acting under an enduring power of attorney. Some do not. Those
that do not must rely on the case law.
The obligations of a trustee are found in a combination of legislation and case law. On their face,
the rules that govern a trustee seem clear. In practice there are many scenarios where the law is
less clear. These issues are discussed in this Chapter to alert students to the fact that it may be
necessary to escalate a decision on how to apply the rules. Corporate trustees often have policies
to address the various situations. Law firms may have their own guidelines to deal with situations
that are problematic and/or less clear. For purposes of this course, students should focus on the
legal rules. In practice they will need to know the policies and guidelines that have been
established by their employer.

10.1.2 Duty to Account: Basic Principles

10.1.2.1 Right to Enforce the Terms of the Trust

While a beneficiary does not have the right to control the management of the trust assets,
the beneficiary has rights under the law to take steps to require the trustee to comply with
his or her duties and to ensure that the beneficiary is receiving his or her entitlements
(e.g. income, capital, or use of a property).
Common Law Only: These rights are often referred to as the “right to enforce the
trust”. The right is found in the common law. Some jurisdictions address this right in the
Trustee Acts and/or their laws governing estate administration.3

2
Alberta’s Estate Administration Act, S.A. 2104, c. E-12.5 has codified these rules for an executor. See the core
tasks of a personal representative set out in s. 7(1)(d). The Schedule to the Act also requires regular
communication with the beneficiaries and provision of financial statements.
3
See rules for approval to compensation. See also the Uniform Law Conference of Canada Uniform Trustee Act that
sets out suggested provisions for clarifying who has a right to information. http://www.ulcc.ca/en/uniform-acts-
new-order/current-uniform-acts/633-trusts/trustee-act/1255-uniform-trustee-act

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 Estate and Trust Accounts

Quebec Only: Article 1284 CCQ specifically provides that the beneficiary may require
the benefit or payment of capital or revenue pursuant to the terms of the trust.

10.1.2.2 Right to Information in Order to Enforce the Terms of the Trust

Beneficiaries cannot enforce their rights if they do not have information about the terms
of the trust and the activities of the trust. Therefore, the law provides a right to
beneficiaries to review the accounts in order to satisfy themselves that the trustee is
complying with the trustee’s duties and the terms of the trust.
Common Law Only: The right is found in the common law. Most jurisdictions set out
the right in the Trustee Acts and/or estate administration laws. These statutes set out the
rules and procedures for court review and approval to accounts.4
Quebec Only: Article 1287 CCQ sets out the right of supervision by the settlor, heirs
and/or beneficiaries.
Note that the residuary beneficiaries of an estate are also entitled to a full accounting of
the administration to ensure that each beneficiary received the amount that he or she is
entitled to.

10.1.2.3 Rights of Legatees and Creditors

If the assets are insufficient to pay the specific legacies and/or some or all of the debts
and liabilities of the estate, the legatees and/or creditors who will receive less than their
full entitlements also have a right to an accounting to ensure that there has been no
mismanagement by the executor that has limited their right to receive full payment.

10.1.2.4 Three Categories of Information

There are three categories of trust information covered by the duty to account.
1. Providing notice to beneficiaries of the existence of the trust
2. Accounting to beneficiaries for the financial activities of the trust
3. Providing access to trust records
The rules that apply to each category are reviewed in the sections that follow.

10.2 EXISTENCE OF THE TRUST

The general rule is that beneficiaries who have a current or future entitlement under a trust
should be advised of the trust’s existence and the terms of the trust. This includes current
beneficiaries (e.g. revenue beneficiaries and those who are entitled to discretionary payments

4
See rules for approval to compensation. See also the Uniform Law Conference of Canada Uniform Trustee Act that
sets out suggested provisions for clarifying who has a right to information. http://www.ulcc.ca/en/uniform-acts-
new-order/current-uniform-acts/633-trusts/trustee-act/1255-uniform-trustee-act

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from the trust) and future beneficiaries (e.g. capital beneficiaries). In some jurisdictions it may
also be necessary to notify the Public Guardian and Trustee when there are charitable interests.5
In the absence of knowledge of the trust and its terms, a beneficiary is unaware of his or her right
to make inquiries, make requests and/or enforce his or her entitlements.
Beneficiaries of a testamentary trust will usually receive notice of their interest according to
provincial rules.6 In contrast, when an inter vivos trust is established the rules are less clear.
Although the law sets out a number of rules7 the rules often lack sufficient precision and trustees
must make decisions about who to notify, when and what information is to be provided.

10.2.1 Legal and Practical Issues

The forgoing rules for disclosing the existence of a trust and a beneficiary’s entitlements appear
simple to apply on a first reading. However, a trustee’s duty to notify beneficiaries is not always
clear or easy to apply. In the absence of precise rules, practical and legal issues and questions can
arise.
The following list illustrates the practical issues that can arise when a trustee needs to determine
who should receive the trust accounts. The questions include:
• Should notice be given to contingent beneficiaries who have a remote chance of a
possible future entitlement?
• Should notice be given to contingent beneficiaries when there is high likelihood that
their future entitlement will actually arise?
• Should notice be given to a person who may not ever receive a distribution? For
example, the trustee may have a discretion to pay income or capital to one or more
beneficiaries or members of a class of beneficiaries. There is no duty or requirement to
make a payment. In the common law, this category of beneficiary is referred to as the
object of a mere power?
• How much of a trust’s resources should be used to locate more remote beneficiaries?
Beneficiary searches can become expensive.

10.2.2 Best Practices when Providing Notice and Accounts

When a trustee needs to determine who should receive notice of a trust and who should receive
periodic accounting, a best practice is to ensure that notice is provided to those with an
immediate interest, including the right to receive distributions, and those who are expected to be
the capital beneficiaries, whether vested or contingent. There are practical reasons for this
approach. For instance, if a future beneficiary receives information throughout the administration
of the trust:

5
For example, Ontario requires notice be given to the Public Guardian and Trustee when a written instrument that is
not a will includes a donation for a religious, educational, charitable, or public purpose. See the Charities
Accounting Act, R.S.O. 1990, c. C.10.
6
See Chapter 4, Initial Stages of an Estate Administration.
7
The common law cases and the CCQ set out rules that are discussed later in this chapter.

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• information can be provided, or requested with regard to tax planning or other

administration decisions that could affect the beneficiary, and appropriate tax and
investment planning can occur; or
• questions and complaints about decisions can be addressed sooner rather than later
and if there is no complaint, the trustee may be able to invoke a legal defence based
on the expiration of a limitation period.8
Where the terms of the trust are such that it is possible that nothing will remain for the capital
beneficiaries, notice might not be provided. Ultimately, the trustee decisions will be based on
legal requirements and practical considerations. In some situations legal advice may be required.
Examples:
Spousal Trust: A spousal trust permits capital encroachments to Natalie during her lifetime. On
Natalie’s death, the capital is paid to her three children. If a child dies before Natalie and leaves
children (Natalie’s grandchildren), the grandchildren take the parent’s share.
In this situation, while Natalie is alive, Natalie and her three children will receive information
about the trust. If one of her children dies, then that child’s children will be given information
once they become adults.
Discretionary Trust: Jordan settles an inter vivos trust for his two sons and their four adult
children, Jordan’s grandchildren. The trust is fully discretionary. Each year the trustee must
decide whether or not any of the children or grandchildren should receive income or capital
from the trust. Upon the death of all children and grandchildren, remaining assets should be
distributed to the Canadian Red Cross.
In this situation, a decision is required as to whether or not the Canadian Red Cross should be
notified and whether all of the other classes of beneficiaries should be notified of the trust. A
decision will also be required as to whether or not annual statements should be provided to some
or all of the future beneficiaries.
Common Law Only: The law in this field is evolving. It has been suggested that the test that
may be emerging is “whether it could be said to be to the unreasonable disadvantage of the
beneficiary not to be informed.”9
Quebec Only: There is no standard practice in these situations. Legal advice may be required.

8
See Chapter 6.3.4 Defences and Other Considerations.
9
Waters at p. 1126. See also note 579 and the example provided: “Is it unreasonable not to inform a contingent
beneficiary of the interest when the likelihood of vesting is not remote, and, if the condition is satisfied, a
considerable sum requiring tax planning will come to the beneficiary?”

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10.3 TRUST ACCOUNTS

10.3.1 The General Rule for Trust Accounts
Trust accounts detail the history of the administration. They include a listing of the original
assets, a record of all purchases, sales, receipts and disbursements, and a list of assets at the end
of the period for the accounting.
The accounts will demonstrate how the trust has been managed and allow a beneficiary to ensure
that the trustee complied with the terms of the trust and has not committed any fraud or
misappropriation.

10.3.1.1 Common Law Only: Duty to Account

The beneficiaries entitled to review the trust accounts are the current vested beneficiaries,
as well as future beneficiaries (both vested and contingent). This could include a large
number of beneficiaries. The law does not require the trustee to provide accounts
voluntarily, but the trustee must be ready to account at any time to permit a beneficiary to
inspect the accounts. If a trustee fails in his or her duty to account, the beneficiaries may
apply to court to have the trustee removed.
Generally, the accounts must include the asset listing with opening and closing balances,
chronological and/or categories of expenses and disbursements and revenues. Depending
on the jurisdiction and the type of fiduciary, there may or may not be a required or
suggested format to use. Students should consult their employer practices in their
jurisdictions. See the STEP website under “Student Resources” for an example of a set of
accounts under the Ontario rules.

10.3.1.2 Quebec Only: Duty to Account and Right to Supervision

The settlor (or his heirs, if he is deceased) and the beneficiaries (including future
beneficiaries) have a right of supervision over the trust administration (art. 1287 CCQ).
However, this right of supervision is given a narrow scope. Essentially, the right of
supervision is a right to apply to the court for redress. It does not give the beneficiary the
right to interfere or closely monitor the administration. The right of supervision is closely
linked to the trustee’s obligation to account.
The trustee is bound to render an account of his or her administration to the beneficiaries
at least once per year (arts. 1351-1354 CCQ; see also arts. 675-678 of the Civil Code of
Procedure (CCP)). The account must be sufficiently detailed so as to verify its accuracy.
On request, the trustee must make the supporting vouchers of the account (such as
receipts, invoices and other proofs of payment) available to the beneficiaries (art. 1354
CCQ).
At the termination of his or her administration, the trustee must render a final account of
the administration. If the beneficiaries do not accept the accounting by agreement, it will
be necessary to have it ratified by the court (arts. 1363 and 1364 CCQ).

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The CCQ does not prescribe the format for annual or periodic accounts for a trust.
However the form provided for curators and tutors on the Public Curator’s website
provides a helpful template.10 Ultimately, the accounts should identify the assets, with
opening and closing values, and summarize all receipts and disbursements. Students
should also inquire into their corporate/firm precedents. In the absence of an internal
practice, the practices and guidance set out in this Chapter should be considered.

10.3.2 Practical Reasons for Preparing and Voluntarily Providing Accounts

Preparing and providing accounts serve a number of additional purposes. These include:
• Issues and questions can be dealt with before they become problems and while those
familiar with the administration are available to respond.
• Transparency in the administration helps to foster trust and protects the trustee from
allegations of impropriety.
• There is a reduced risk that beneficiaries will:
o refuse to approve informal accounts,
o demand a formal passing of accounts before the court, or
o raise objections during a passing of accounts.
• The accounts assist with the preparation of the tax returns.
• The records assist with the calculation of compensation.
Finally, where there has been open disclosure throughout the administration, if a beneficiary
alleges a breach of trust or complains many years later, the trustee may be able to rely on the
doctrine of laches or doctrine of acquiescence as a defence. The doctrine of laches allows a court
to dismiss a claim because of the long delay. The doctrine of acquiescence requires that in
addition to the delay, the beneficiary was aware, or ought to have known of, his or her rights.
The defences for breach of trust are explored further in the Advanced Topics in Estate and Trust
Administration course (CETA 2).11
The details of what must be included in the accounts is addressed in the sections below.

10.3.3 Accounts for an Estate

The beneficiaries of the residue of an estate are entitled to receive a full accounting from the
executor. This will begin with the estate summary and will include capital and revenue
transaction records up to and including the final distributions. Where the beneficiary is
incapable, the accounts should be provided to the substitute decision-maker (e.g. a property
guardian (Quebec: tutor, curator) or attorney). In some jurisdictions, the Public Guardian and

10
This form captures the necessary information: assets, income and expenses/disbursements. The form as at
December 4, 2016, may be found here: http://www.curateur.gouv.qc.ca/cura/pdf/form_rapp_an_maj_en.pdf
11
This is the second course in the Certificate to Estate and Trust Administration program. Hereafter referred to as
CETA 2.

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Trustee (Quebec: Public Curator) may also have to receive the accounts on behalf of an
incapable beneficiary or minor.
Legatees and creditors are entitled to see the accounts if they do not receive their full
entitlements.

10.3.3.1 Quebec Only: The Liquidator’s Inventory

The rules governing the liquidator’s inventory are set out in the CCQ. The inventory must
be communicated to the heirs, the successors who haven’t yet exercised their option, the
legatees by particular title and the known creditors (art. 796 CCQ). Copies are provided if
easily done. The closure of inventory is published on the RDPRM and a notice of closure
is published in a local newspaper (art. 795 CCQ).

10.3.4 Accounts for Trusts

As discussed above, beneficiaries are entitled to information about the trust in order to ensure
that the trustee has complied with the terms of the trust and the beneficiary has received what he
or she is entitled to receive. Prudent practice for both testamentary and inter vivos trusts is to
provide a copy of the will or trust document and to provide periodic accountings to the life tenant
or revenue beneficiary(ies). Where the identity of the capital beneficiaries is known and the
beneficiaries are vested or vested subject to divestment, these beneficiaries should receive the
same information.
Voluntary accounting also ensures that appropriate tax and investment planning occurs, taking
into consideration relevant information about a beneficiary’s particular circumstances where it is
appropriate to do so.
The frequency of the preparation of the accounts may depend on the activity in the account and
the size of the trust. Corporate trustees provide accounts at least annually. In the examples under
10.2 Existence of the Trust, accounts would be sent to:
• For the spousal trust: Natalie and her children
• For the discretionary trust: Jordan’s sons and grandchildren
There are times, however, where there may be a large class of beneficiaries and voluntary
disclosure could be expensive or even difficult to implement. There may be concerns about
providing too much information to someone with a mental illness or for other reasons, or the
beneficiaries may be contingent or only the objects of a mere power. In this case, one needs to
consider the requirements under the law and exercise some discretion. Corporate trustees will
have guidelines and/or policies to assist staff in making these decisions. Whenever there is
uncertainty, legal advice should be sought.

10.3.5 Common Law Only: Recent Case Law on Providing Trust Accounts
The general rules are relatively straightforward to apply when there is a life tenant and a
distribution on the life tenant’s death to another beneficiary(ies).

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The rules are less clear and more difficult when there is a fully discretionary trust, or the capital
interest is a contingent interest in law but it is expected that one or more people will be the
ultimate beneficiary.
Relatively recent case law in Canada12 and the United Kingdom13 has started to change the law
in this area.14 Generally, two rules are emerging and can be used to guide trustees. Legal advice
will be required where there are concerns or uncertainty. The rules are:
1. The court has the jurisdiction to decide whether or not and who should receive
information.
2. The test that will be applied is a “balance of interests” test.
Although the court has the ultimate discretion, it will not be appropriate to require every
beneficiary to apply to court in order to obtain information. Therefore, trustees should consider
such factors as:
• Whether the beneficiary is entitled to distributions now or in the future
• Whether the beneficiary is expected to receive distributions in the future
• Confidentiality issues and/or other reasons to not disclose information
• The amount of information that can or needs to be shared in order to address the
beneficiary’s concerns or expectations.

10.3.6 Trust Account Information

The information required when accounting to beneficiaries of an estate or trust can be divided
into four main categories.
1. An Inventory: The inventory lists the assets and liabilities of the estate or trust and the
fair market values at a point in time. Each set of accounts begins with a list of the assets
at the beginning of the period, and a list of assets at the end of the period. The Adjusted
Cost Base (ACB) should also be included.
2. Investment Transactions: These are the purchases, sales, and other changes to
investment holdings. Each transaction records the number of shares or units, the price
paid or received, commissions paid, and total proceeds. The net gain or loss on each
transaction is also recorded.
3. Capital Transactions: These are all of the receipts and disbursements in the main estate
or trust. Once a trust is settled, or an executor has collected in the assets, most capital
transactions that are not investment purchases and sales will be disbursements.

12
Ontario (Attorney General) v. Ballard Estate (1994), 20 O.R. (3d) 350 (sub nom. Re Ballard Estate), 119 D.L.R.
(4th) 750 (Gen. Div.); and Webster-Tweel v. Royal Trust Corp. of Canada, 2010 ABQB 139, 2010 Carswell Alta
1609 (Q.B.).
13
Schmidt v. Rosewood Trust Ltd., [2003] 2 A.C. 709, [2003] 3 All E.R. 76 (England P.C.).
14
See discussion in Waters beginning at p. 1126.

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Disbursements include distributions to beneficiaries and certain trust expenses (see 10.3.9
Capital Receipts and Disbursements).
4. Revenue Transactions: These include all receipts and disbursements of income,
including interest, dividends, rents, payments to beneficiaries, non-resident withholding
tax remitted to the CRA, and certain trust expenses (see 10.3.11 Revenue Expenses and
Disbursements).
While there is no required format for informal accounts, most jurisdictions have required formats
if there is a formal review by the court or other officials. These provide a helpful guide. See 10.4
Approval to Accounts.
Quebec Only: A trustee is not required to make an inventory unless it is stated otherwise in the
constituting act of the trust (art. 1324 CCQ). Under the new rules of civil procedure (in force
since January 1, 2016), the annual accounting is prepared according to generally accepted
accounting standards, and the rules governing the administration of the property of others (art.
676 CCP and arts. 1351-1354 CCQ). Receivables are considered to be income, and the cost of
preparing and verifying the account are expenditures.

10.3.6.1 Corporate Trustee Statements

Each corporate trustee will have its own system for generating statements to create a
complete set of accounts. Generally, there are three statements generated.
1. Investment Statements: These statements list the assets owned by the trust and
will include the ACB as well as the Fair Market Value (FMV) at the beginning
and end of the period.
2. Capital Cash Transaction Statements: These statements list all assets received,
transferred out, sold or purchased, along with payments to beneficiaries, and any
capital expenses, including taxes and compensation. These statements effectively
combine the investment transaction and capital transaction statements described
under 10.3.6, Categories of Trust Accounts.
3. Revenue Cash Transaction Statements: These statements list all income
received, amounts paid to beneficiaries, and all expenses charged to the revenue
account.
Additional statements may need to be created if there are liabilities to be recorded, or to
show how compensation is calculated.

10.3.6.2 Other Trust Accounting Formats

Accounting firms and law firms that assist a trustee may have their own programs or
methods for generating statements. Students are encouraged to review sample statements
from their organizations and firms. For students who do not have access to a sample set
of accounts, including a compensation calculation, see the paper “A Discussion of Estates

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Accounts”.15

10.3.7 Trust Accounts Compared to Financial Statements for Businesses

It is important to note that trust accounts are not the same as financial statements for a business.
Trust accounts present transactions in the order that they occur and distinguish capital and
revenue transactions. They also list assets at the FMV.
Financial statements, on the other hand, are prepared in accordance with generally accepted
accounting principles and include:
• A Balance Sheet: A balance sheet lists assets on one side and liabilities and any owner
equity on the other. The value of the assets equals the value of outstanding liabilities and
the owner equity. Asset values, however, are reported in accordance with accounting
rules and may not reflect FMV.
• An Income Statement: The income statement records all income received or earned and
deducts allowable expenses in accordance with the relevant accounting rules. The net
income is the amount that remains for distribution or reinvestment.
Neither of these statements are suited to the type of accounting required by trustees.
Quebec Only: The CCP rules provide that the generally accepted accounting standards should
be applied. The rules came into effect in 2016. Ultimately, the division of capital and revenue
interests must be reflected. Students will need to monitor trends and practices. In the meantime,
the rules set out in this Chapter provide guidance.

10.3.8 Capital and Revenue Accounts

If the beneficiaries of capital and income are the same, such as when an estate will be distributed
immediately, it may not be necessary to distinguish between capital and revenue receipts and
disbursements. This may also be true if a trust is fully discretionary, and all of the beneficiaries
may receive income or capital. However, in both cases, a separation of capital and revenue can
assist with preparation of tax returns, and will be required if a formal court passing is needed.
Capital and revenue accounting becomes particularly important, however, when there are
successive interests where one or more beneficiaries is entitled to income and another
beneficiary or group of beneficiaries is entitled to capital. As a result, a number of rules have
emerged to guide trustees on how to allocate receipts and disbursements. These are reviewed in
the sections that follow (see10.3.9 Capital Receipts and Disbursements and 10.3.10 Revenue
Receipts).
It is important to note that these rules are a guide. The trust document may give specific
instructions, or it may be necessary to ask for a legal opinion or court interpretation as to the
meaning or intention of the settlor. Sometimes it is necessary or appropriate for a receipt, or

15
Ian Hull, Suzana Popovic-Montag and Jordan Atin, June 16, 2010, at http://www.hullandhull.com/Text-From-
2010-Breakfast-Series-Presentations/June-2010-Estate-Accounts.pdf.

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more likely an expense, to be shared by the capital and revenue accounts to ensure an even hand
(impartial treatment) between different groups of beneficiaries who all benefit from the
expenditure.
Where there is uncertainty, the cautious approach is to deposit receipts into capital until the
matter is resolved. This ensures that it is not inadvertently paid to the revenue beneficiary.
CAUTION: If a trust is a testamentary trust, a deposit to capital could “taint” the
trust if it is not a proper capital receipt. A tainted testamentary trust loses its
special tax status. Tax advice should be obtained before depositing an amount that
is uncertain.
Uncertain expenses, on the other hand, should be paid from the revenue account if the payment
cannot wait until the matter is resolved. If it is determined that the amount should be paid out of
capital, the revenue can be reimbursed.
Quebec Only: Unless the constituting act of the trust provides otherwise, the apportionment of
profit and expenditure between beneficiaries of the revenue and capital beneficiaries is made as
equitably as possible, keeping in mind the objective of the trust and generally recognized
accounting practices (art. 1345 CCQ), as well as the general rules stipulated at articles 1346
and 1347 CCQ, discussed below.

10.3.9 Capital Receipts and Disbursements

All assets are recorded as received or deposited in the capital account. Any subsequent sale or
new purchase is also recorded as a capital transaction. This means that any capital gain or loss
resulting from a sale or deemed disposition, when applicable, accrues to the benefit (or
detriment) of the capital account. Any resulting tax on a net capital gain will be paid from the
capital account.16 When assets are transferred to a beneficiary, the delivery is recorded through
the capital account as well.
When an executor has collected cash or assets that were originally held in an account in the
deceased’s name, it will be necessary to record any transactions that occurred between the date
of death and the date of receipt. This information can be found on the institution’s account
statements.
In addition to the amounts of executor or trustee compensation that are charged to the capital
account (see Chapter 9 Compensation and Expenses) and tax on capital gains, a number of other
expenses are charged to the capital account. Examples of the more common expenses include:
• commissions and fees paid to purchase or sell an asset,
• legal fees incurred on behalf of the trust to resolve a legal question, defend a claim, or
replace a trustee,

16
Widdifield at para. 7.2.10 and citing Dicks v. Dicks Estate 2010 CarswellNfld 162 (C.A) leave to appeal refused
2010 CarswellNfld 402 (S.C.C.). “Net income” includes “the interest and dividends derived from the use or value
of the assets. It does not include any underlying increase in the value of those assets.”

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• insurance and other costs incurred to protect trust property that is non-income producing
property,
• costs incurred to replace a roof or fence or other major expenditure to protect or improve
a trust asset,
• special assessments to condominium owners for major improvements or structural
replacements, and/or
• other one-time costs or expenses that are incurred for the benefit of the trust or to protect
the trust assets.
Quebec Only: The general rule regarding apportionment of expenditure to the capital account
is set out at article 1347 CCQ:
1347. The capital account is generally debited for expenditures that are not debited from the
revenues, including expenses pertaining to capital investment, alienation of property, and
safeguard of the rights of the capital beneficiary or the right of ownership of the administered
property.
Taxes on gains and other amounts attributable to capital, even where the law governing such
taxes considers them to be income taxes, are also generally debited from the capital account.

10.3.10 Revenue Receipts

The revenue account records all interest, dividends, rents, and other income earned on the assets
held, compensation charged to the revenue account (see Chapter 9 Compensation and Expenses),
tax on income not distributed, and income distributions to beneficiaries.

10.3.10.1 Dividends
Companies declare different kinds of dividends. For purposes of trust accounting the
following general rules apply:
• Cash dividends are paid to revenue.
• Dividends in kind (usually shares in another company) are paid to revenue.
• Stock dividends (more shares in the same company) are paid to capital.
The implications of these rules will be reviewed in more detail in CETA 2.

10.3.10.2 Dividend Reinvestment Plans

Investors who purchase shares in a company or mutual funds are sometimes offered an
opportunity to set up a dividend reinvestment plan (often called a DRIP). This allows the
dividends or mutual fund distributions to be immediately reinvested. DRIPs are not
appropriate for trusts where income must be paid out and/or where there are income and
capital beneficiaries with different interests.

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10.3.11 Revenue Expenses and Disbursements

In addition to the compensation that is charged to the revenue account (see Chapter 9
Compensation and Expenses), the revenue account is also responsible for certain trust expenses.
Subject to contrary instructions in the trust document, common expenses usually charged to
revenue include:
• interest expense on debt incurred to earn income,
• the cost of collecting rents or other income (e.g. property manager expenses),
• annual expenses for a home that a life tenant lives in (e.g. condominium fees,
property taxes, municipal water and utility fees), and/or
• insurance for income-producing properties.
Quebec Only: The general rule regarding apportionment of expenditures to the revenue account
are set out at article 1346 CCQ:
1346. The revenue account is generally debited for the following expenditures and other
expenditures of the same kind:
(1) insurance premiums, the cost of minor repairs and other ordinary expenses of
administration;
(2) one-half of the remuneration of the administrator and his reasonable expenses for
joint administration of the capital and fruits and revenues;
(3) taxes payable on the administered property;
(4) unless the court orders otherwise, costs paid to safeguard the rights of the beneficiary
of the fruits and revenues and one-half of the cost of the judicial rendering of account;
(5) amortization of the property, except property used by the beneficiary for personal
purposes.
The administrator may, to maintain revenue at a regular level, spread substantial expenses over a
reasonable period.

10.3.12 Amortization Rules

Historically, in order to be impartial between capital and revenue beneficiaries it was necessary
to consider applying the amortization rules where a receipt is comprised of both capital and
income. Amortization was a concern if a bond was purchased at a premium or a discount. This
was because if a bond was purchased at a premium, there would be a capital loss when it
matured. Amortization was used to prevent the loss and to ensure that the revenue beneficiary
only received the market rate of interest. If the bond was purchased at a discount, a capital gain is
realized on maturity. But in the meantime, the revenue beneficiary was receiving a lower than
market rate of interest. Amortization allowed the trust to share the gain between the capital and
income beneficiaries.17

17
See Chapter 5 Estate Assets, for a review of premiums and discounts.

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Amortization is complicated to perform and is rarely required today. This is because there are
other ways to ensure beneficiaries are treated impartially when investments are made. In addition
the prudent investor rule, or a version of it, which is the law in all jurisdictions, now allows a
trustee to look at the overall return or capital and income. The prudent investor rule is discussed
in detail in CETA 2.

10.3.13 Common Law Only: Apportionment Rules

The apportionment rules are common law rules that attempt to ensure impartiality between
capital and revenue interests in certain situations. Wills and trust documents often oust these
rules. Legislation in some jurisdictions have abolished the rules. The rules are briefly reviewed
below. Legal advice is required if it should become necessary to apply the rules.
Manitoba, Ontario, Newfoundland and Labrador, Nova Scotia, Prince Edward Island: In
these jurisdictions, it may be necessary to consider the application of the applicable
Apportionment Act. These statutes govern the allocation of income such as rents and interest
income and generally require daily accrual. These rules are outside the scope of this course.

10.3.13.1 The Rule in Howe v. Dartmouth

The rule in Howe v. Dartmouth18 applies to personal property owned by a testator that is
held in a testamentary trust and there is a duty to sell the asset and invest in appropriate
trustee investments. It may be necessary to sell the asset because it is wasting or is not
appropriate for the purposes of the trust. The asset may also not be generating income or
someone may owe the deceased money and not be paying interest. However, it may not
be possible or appropriate to sell the asset immediately. When the rule applies to the sale
of an asset after the executor’s year, the proceeds are apportioned between capital and
income.
If the asset was a wasting asset and was paying income while the asset was losing value,
the rule requires that the revenue beneficiary only receive what would have been the
current market yield and the excess would be paid to capital. Market yields will depend
on current economic conditions. One approach is to consider the court order interest rate,
which is the rate that is applied when an amount is due under a court order.

10.3.13.2 The Rule in Re Chesterfield’s Trusts

The rule in Re Chesterfield’s Trusts19 is a corollary rule to the rule in Howe v. Dartmouth.
It deals with the situation where there is a delay in the sale of a non-income-producing
property. It requires that the revenue beneficiary receive an amount equivalent to what
might have been received had the proceeds been invested at an appropriate rate,
compounded annually. The rate will depend on the market conditions. The rule applies to
personal property in testamentary trusts.

18
(1802), 7 Ves. 137.
19
(1883), 24 Ch. D. 643, 52 L.J. Ch. 958.

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10.3.13.3 The Rule of Allhusen v. Whittall

The rule of Allhusen v. Whittall20 applies to estates where debts and legacies must be paid
and the residue is held in trust. The question arises: who is entitled to the income earned
during the executor year? The court developed a formula that assumes debts and legacies
are paid at the end of the executor year. Generally the rule requires that all debts and
legacies are paid out of the residue and the income earned during the executor year.21 A
simple example is provided in Feeney.22
• The residue of an estate is $220,000 before payment of debts and liabilities.
• It is invested at 10% and earns $22,000 in the executor year.
• The will provides for a legacy of $10,000 to a nephew.
• The residue of the estate is to be held in trust for the widow.
• The estate debts total $12,000.
• The executors have $220,000 on hand at the end of the year ($220,000 + $22,000
- $10,000 – 12,000).
• The residue to be held in trust is $200,000. $20,000 of the income earned is paid
to the widow as income for the first year.
British Columbia and Ontario: The Trustee Acts of these two provinces have abolished
this rule and require debts and legacies to be paid from the capital.23

10.4 APPROVAL TO ACCOUNTS

Where possible, executors and trustees seek to have the beneficiaries approve the accounts
without the necessity of a formal approval by the court.
Common Law Only: The process of having accounts approved by the court is often called the
“passing of accounts”.
A court approval will be required if there is a dispute over transactions or compensation, or
where there are minor or incapable beneficiaries. It will also be required if there are future
unborn beneficiaries.
When a new trustee is being appointed, the retiring trustee may seek a release and discharge
from his or her duties. This will often require a court passing. It also ensures that the new trustee
does not become responsible for past breaches of trust.
Quebec Only: See articles 1351-1354 CCQ regarding the annual accounting, and articles 1363-
1370 CCQ regarding the final accounting discussed above.

20
(1867), L.R. 4 Eq 295.
21
As summarized in Feeney at para. 8.26.
22
See Feeney at pars 8.30, note 1.
23
See Wills, Estates and Succession Act, S.B.C. 2009, c. 13, s. 10; Trustee Act, R.S.O. 1990, c. T.23, s. 49.

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10.4.1 Release and Discharge from Beneficiaries

Prior to completing a final distribution, the executor or trustee usually seeks a release and
discharge from the beneficiaries, or from the court. This confirms that all of the estate or trust
information and accountings has been provided and there are no complaints. Where the
beneficiary has had the opportunity to obtain independent legal advice, the release provides the
fiduciary with some protection from the beneficiary making a claim in the future. A release
usually includes a clause stating that it is binding on the beneficiary’s estate, executors, heirs,
and successors. See also the discussion in Chapter 7 Estate Beneficiaries.

10.4.2 Indemnity from Beneficiary

An executor or trustee may also seek an indemnity from a beneficiary. Often it is included in the
release and discharge. The indemnity, if granted with the benefit of full disclosure and
independent legal advice, provides the executor or trustee with some protection should liability
arise in the future once there are no assets with which to pay a legitimate claim or defend a
claim. Indemnities also will usually include a statement that it is binding on the beneficiary’s
estate, executors, heirs, and successors.

10.4.3 Interim Approvals

Where there is an ongoing trust, trustees may wish to seek periodic approval to the accounts
informally or formally before the courts. Formal court passings may be important where there
are minor or incapable beneficiaries to ensure that there is no criticisms many years later. They
may also be required in order for the trustee to obtain approval to his or her compensation (see
Chapter 9 Compensation and Expenses).

10.4.4 Court Passings/Court Approvals

Beneficiaries, the Public Guardian and Trustee, creditors, or other persons having an interest in
the trust or estate may require accounts to be reviewed by the courts. Where the trustee does not
co-operate, a court order may be obtained to compel production of the accounts. If the fiduciary
has concerns about a beneficiary and the strength of a release and indemnity, a court passing may
be more appropriate to ensure the trustee is protected.
While beneficiaries and other interested parties may always require the accounts to be reviewed
by the court, it is not required in all jurisdictions. Figure 10.1 Jurisdictional Requirements for
Court Review of Accounts, at the end of this Chapter sets out the requirements by jurisdiction for
court review.

10.4.4.1 Common Objections on a Review of Accounts

Where beneficiaries or others are dissatisfied with the conduct of the trustee or executor,
they may refuse to approve informal accounts and they can have their objections
reviewed by the court. Many types of objections may be made. Some of the more
common ones include:
• complaints over the amount of the trustee or executor compensation,

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• allegations of a breach of trust causing a loss,

• failure of the trustee or executor to demonstrate the standard of care required in
discharging his or her duties that caused a loss,
• inadequate sale price on disposition of an asset,
• failure to act impartially,
• conflict of interest,
• improper investments resulting in loss or lost opportunity, and
• excessive expenses, including payments to professionals.
Where a beneficiary or other person entitled to pass accounts has an objection, there is a
formal process to file a notice of objection after the application to pass accounts has been
served.
The accounts must be prepared in the required court format, under the rules in the
particular jurisdiction, for the accounting period since the commencement of the trust or
since the close of the accounting period that accounts were last passed. The accounts are
verified by an affidavit sworn by the executor or trustee.
Beneficiaries and other interested parties must be given notice of the request to pass
accounts and may object to the passing of the accounts. Special rules may apply with
respect to notice to minors, incapable persons, and charities. All parties are entitled to
legal counsel. Subject to the court finding that one party was caused unnecessary
expenses or had other improper motives, all of the legal expenses are paid from the estate
or trust. Accordingly, wherever possible, the parties attempt to narrow the matters to be
heard to only the contentious issues.
Quebec Only: The final accounting is rendered by agreement, failing which it is
rendered judicially (art. 1364 CCQ). If the trustee has failed to render an accounting, the
beneficiaries or interested persons may apply to the court to compel him or her to do so
(art. 1290 CCQ). If the accounting is rendered pursuant to a court order, the account’s
format, the procedure for its examination by interested persons and any objections made
by them are governed by articles 675-678 CCP.

10.4.4.2 Process for Court Review of Accounts

If there are no objections the accounts may, in some jurisdictions, be passed (or
approved) “over the counter” at the court office without a hearing, although the court will
not approve the accounts without being satisfied that they are in order and there are no
deficiencies or irregularities. If a hearing is required, it will be presided over by a judge
or other judicial officer as provided in the applicable provincial rules of court. The
accounts will be presented and reviewed.

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Upon an application to pass (or approve) accounts, the court has the discretion to inquire
into any matter with respect to the administration of the estate, including any alleged
misconduct of the trustees, and provide for relief. The court may:
• inquire into any complaint or claim of misconduct,
• require additional information be submitted,
• hear evidence,
• decide any disputed matter,
• order a trial of an issue,
• vary the compensation of the trustee,
• assess any legal bill charged to the estate, and
• award damages payable to the trust or estate.
Once the accounts are passed, the court will issue an order approving the accounts.

10.4.4.3 Effect of Passing Accounts/Court Approval

An order passing (or approving) accounts will bind the beneficiaries with respect to any
objections for the accounting periods covered by the order. The order will also relieve the
trustee of any future liability with respect to trust property for that period except in the
case of fraud, mistake, or non-disclosure.
Because the court process brings closure to any objections and relieves the trustee of
liability, trustees often have their accounts approved voluntarily to ensure contentious
issues, decisions regarding complex assets, or large estates are not re-opened at a later
date.
Accounts are often approved by the courts when new trustees are appointed, either as a
condition of court approval for a retiring trustee or to protect the new trustee from
liability arising from any acts that took place prior to his or her appointment.

10.4.4.4 Costs of Passing/Court Approval of Accounts

Common Law Only: The cost of preparing informal accounts and communicating with
beneficiaries and others is generally included in the executor’s compensation. Assuming
no wrongdoing or neglect on the part of the executor, the cost of passing accounts and, in
some cases, the additional cost of preparing accounts in formal court format are proper
expenses of the estate.
Quebec Only: The cost of preparing the account is borne by the estate or trust patrimony
as an expense (arts. 1367 CCQ and 676 CCP). Legal costs are not taken into account
unless the court so allows (art. 676 CCP).

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10.5 TRUSTEE RECORDS

A third level of information that must be retained are the documents and other records generated
during the administration. These records provide the background and supporting information to
the accounts. Records that should be retained, in addition to the accounts, include:
• original copies of all agreements and contracts;
• beneficiary information, including evidence of date of birth and other identification
confirming the beneficiary’s identity;
• records of decisions made by the trustees and supporting information;
• legal opinions;
• valuation reports;
• invoices, assessments, and claims, along with evidence of payment;
• statements;
• receipts;
• releases, discharges, and indemnities and related correspondence; and
• court orders.
Because the law distinguishes who is entitled to what information and when, corporate trustees
and law firms may have further guidelines on how and where to store different types of
information to ensure that confidential information is only shared if required.

10.5.1 Trustee Decisions

Trustee decisions should always be documented. If there is more than one trustee, the decision
should confirm who participated. The level of detail about trustee decisions will depend on the
situation and is discussed further in CETA 2. Discretionary decisions and other important
decisions, such as the sale of a major asset, are often documented as trustee minutes or
resolutions.24
Templates are often used when documenting trustee decisions. This ensures that all necessary
information is captured and can be reviewed when the decision is made. Corporate trustees also
have policies on who can approve decisions. Authority levels will address both the nature of the
decisions and the monetary amounts involved. Evidence of the appropriate approvals are
included on these minutes.

24
Trustee minutes or resolutions are formal documents that record the decisions taken. While there is no formal
format to be followed, these documents will record information such as the date of the decision, the amount
involved if relevant, the decision whether in favour or not, and, if appropriate, the relevant facts and rationale.

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10.5.2 Investment Records

Investment records will include any “Know Your Client” documents that were prepared with the
investment advisor and the Investment Policy Statement (IPS), which is prepared and signed by
the trustee(s).
Where the assets are not held on a corporate trustee’s trust system, all statements and
correspondence must be retained. Corporate trustees also have systems in place for retaining
statements.
Decisions made with co-trustees to buy or sell assets should be documented as well unless the
investment decision-making has been properly delegated to an investment manager.

10.5.3 Tax Records

The tax files for the trust, including all assessment notices, and elections should be retained.

10.5.4 Agreements and Contracts

Copies of all agreements and contracts entered into by the trustee should be retained. Trustees
should also retain information collected prior to choosing to hire an agent should it become
necessary to defend a decision. Information might include estimated costs, proposals, and fee
quotes.

10.5.5 Retention of Records

Estate and trust records, including accounts, correspondence, beneficiary consents, and
indemnities must be retained throughout the administration. Upon the termination of the trust,
further retention is required until the expiry of the relevant limitation periods for each
jurisdiction (ranging from three to thirty years)25 for breach of trust claims. Corporate and firm
policies will ensure that these records are retained.
For purposes of the ITA, tax records must be retained for at least seven years. However, given
the general retention periods, this is not a concern.

10.6 TESTAMENTARY TRUST CONSIDERATIONS

As noted in Chapter 2 Trustees, Personal Representatives, and Substitute Decision-makers, it is
important to distinguish between when an estate administration ends and a testamentary trust
begins. The line can be blurred when there is just one ongoing residual trust. Given the proposed
income tax changes and the special tax treatment that will apply to certain estates and certain
ongoing trusts, and the fact that there are an increasing number of situations where the executor
and trustee are not the same party, a prudent practice is to always establish a new trust account so
that the estate can be wound up and the beginning of the trust administration is clearly identified.
Where there are multiple testamentary trusts established, new accounts will be required as well.

25
In Quebec, see articles 2922, 2925, and note also that prescription does not run against an heir with respect to his
or her claims against the succession (art. 2907 CCQ).

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10.7 SETTING UP VOLUNTARY TRUST ACCOUNT REPORTING

Corporate trustees are able to set up the delivery of periodic statements to all beneficiaries who
are entitled to receive them. Co-trustees should also be included to receive the statements.
Where an estate is eligible to have a fiscal year end (not December 31), most corporate trustee
investment systems provide for non-calendar year end dates to be established. The system can
generate the statements to assist with preparing the estate tax returns for the estate or trust’s
taxation year.

10.8 DIARIES AND REMINDERS

Although diaries are not necessarily part of the trust record, diary systems are a critical
component of any administration. Every corporate trustee or law firm will have a system for
reminders that may include anything from distribution dates to dates when certain tax liabilities
may arise.

10.9 SUBSTITUTE DECISION-MAKERS

10.9.1 Property Guardians
Court-appointed property guardians (including statutory property guardians in Ontario, or tutors
and curators in Quebec) must maintain accounts. Depending on the jurisdiction, the accounts
must be presented on request or in accordance with the frequency set by the court or legislation.
When establishing the accounts, it is not necessary to maintain the capital and revenue
distinction since there are no successive or competing interests as with a trust. However,
accounting in this manner may assist the property guardian to better monitor how funds are being
spent and whether income is exceeding expenses. It also helps with the preparation of an annual
budget and a review of any management plan that has been prepared.26
Upon the death of the incapable adult, the property guardian will often present the final
accounting to the executor. If the executor is the property guardian, it may be necessary to have
the estate beneficiaries approve the accounts.

10.9.2 Enduring Powers of Attorney

An attorney should always be ready to account to the donor. However, where the donor is
incapable, this will not be possible. Legislation on the requirements for an attorney to account
vary significantly. Some are silent. Some have regulations that indicate the records that should be
kept and provide that the attorney can be compelled to account by interested parties, the Public
Guardian and Trustee and/or the court. Others require the attorney to provide an accounting to a
person identified in the document or a public official.

26
In Ontario, property guardians must prepare a management plan for the application to court to be appointed. It is
then periodically reviewed. Annual budgets and management plans are a best practice that all property guardians
should consider.

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Figure 10.1: Jurisdictional Requirements for Court Review of Accounts27

Legislation for
Jurisdiction Keeping and Passing Requirement of an Estate to Pass Accounts
Accounts

British Trustee Act, R.S.B.C. No general requirement to pass accounts; Trustee Act
Columbia 1996, c. 464, s. 99 provisions apply.
Alberta Administration of Accounts may be approved formally or informally
Estates Act, R.S.A. without passing accounts.
2000, c. A-2, ss. 43-46
Saskatchewan Administration of Estates TBD
Act, S.S. 1998, c. A-4.1,
ss. 35-37
Manitoba Trustee Act, C.C.S.M., TBD
c. T160, ss. 85-88
Ontario Estates Act, R.S.O. Passing accounts is not mandatory unless required by a
1990, c. E.21, ss. 48-50 beneficiary or other interested party.
Quebec Civil Code of Quebec, An account must be rendered at least once per year, and a
arts. 806 and 819-822 final account is rendered at the end of the liquidator or
for estate liquidators trustee’s administration.
and arts. 1351-1354 and
1363-1370 CCQ for
trustees and other
administrators of the
property of others.

New Brunswick Probate Court Act, Passing accounts is not mandatory unless required by a
S.N.B. 1982, c. P-17.1, beneficiary or other interested party.
ss. 69-72
Newfoundland/ Judicature Act, TBD
Labrador R.S.N.L. 1990, c. J-4,
s. 129
Nova Scotia Probate Act, S.N.S. Passing accounts for estates is mandatory within 18
2000, c. 31, ss. 69-82 months of the grant of probate with some exceptions.
Prince Edward Probate Act, R.S.P.E.I. Passing accounts is not mandatory unless required by a
Island 1988, c. P-21, ss. 13 and beneficiary or other interested party.
22

Yukon TBD

Northwest TBD
Territories

27
“Passing accounts” is a common law term. In Quebec, this requirement is referred to as rendering a judicial
account.

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Legislation for
Jurisdiction Keeping and Passing Requirement of an Estate to Pass Accounts
Accounts

Nunavut TBD
Source: STEP Diploma course, Wills, Trust and Estate Administration, Chapter 13 at 13.7.

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