Today’s Post is by Ashley Thornton, Articling Student, Gowling WLG (Canada) LLP
When an estate trustee steps down from their role, whether voluntarily or by removal, they face a critical question: what obligations remain, and what risks do they carry forward? The transition out of a trusteeship is not simply a matter of handing over the keys. In Ontario, departing trustees must navigate procedural requirements, accounting duties, and potential liability for their prior administration. Failure to address these matters properly may expose the former estate trustee to claims long after they have ceased to serve. This article examines how estate trustees leave their role, why a final accounting is essential, and the circumstances under which a departing estate trustee may face personal liability.
How Estate Trustees Leave Their Role:
The manner in which an estate trustee departs may depend on whether the departure is voluntary or involuntary, and whether the estate trustee has already begun administering the estate.
An estate trustee who has not taken any steps to deal with the estate (such as collecting or managing estate assets, paying debts or liabilities, distributing property to beneficiaries, or filing tax returns on behalf of the estate) may renounce their appointment without a court order. This is typically accomplished by filing a renunciation before the court issues the certificate of appointment of estate trustee.[1]
Once an estate trustee has taken steps to administer the estate, including, but not limited to, applying for probate, renunciation may no longer be possible and resignation may require an application for a court order pursuant to s. 37(1) of the Trustee Act, RSO 1990, c T.23.[2]
The Ontario Court of Appeal in Chambers v. Chambers, 2013 ONCA 511[3] clarified that an estate trustee who has intermeddled with estate assets cannot simply renounce – a court order is necessary to be relieved of their duties.[4] Even a “slight act of intermeddling with a deceased’s assets” may preclude an estate trustee from renouncing, and would require a formal resignation.[5]
When a Departing Estate Trustee Could Face Liability:
The Supreme Court of Canada has established that the standard of care required of an estate trustee is that of a person of ordinary prudence, and estate trustees are not liable for mere errors of judgment if acting honestly and reasonably, but are liable for losses resulting from breaches of trust.[6] A resigning estate trustee may face liability in several scenarios, particularly if their actions or omissions before or during their resignation constitute a breach of trust, misconduct, or negligent administration.
Case law demonstrates that estate trustees who fail to keep proper accounts may be found in breach of their duties and held personally liable for losses incurred by the estate.[7]
Other potential consequences that may arise from inadequate record keeping by an estate trustee and unexplained expenses include:
- withholding or reducing compensation payable to the fiduciary.[8]
- ordering any compensation pre-taken by the fiduciary to be repaid, with interest.[9]
- ordering the fiduciary to reimburse funds used to pay for the preparation of the accounts, or instead deducting the expense from the fiduciary’s claim for compensation.[10]
Why Departing Estate Trustees Should Seek an Accounting or Release from Beneficiaries:
When estate trustees are resigning from their position, they should obtain either a release from all of the beneficiaries of the estate, or seek a passing of accounts to prevent future claims from arising relating to their administration of the estate.
A release which is a binding contract that generally bars the beneficiaries from suing the estate trustee for claims related to the period covered by the document and indicates their approval of how the estate was administered.[11] A passing of accounts allows the court to formally review the administration of an estate for the period of administration. This process will be required if any of the beneficiaries are unable to consent (i.e.: minors, individuals under a disability, or mentally incapable beneficiaries), or where the beneficiaries will not consent to a release.[12]
A passing of accounts serves multiple important purposes for a departing estate trustee, offering both transparency to beneficiaries and protection against future claims for the period of administration. Estate trustees have a fiduciary duty to keep accurate accounts and to be ready at all times to explain their dealings with the estate.[13]. An estate trustee who cannot satisfactorily account for assets may be chargeable for them.[14]
Passings of accounts provide a mechanism for estate trustees to obtain court approval of their administration. Under section 23 of the Trustee Act, an estate trustee desiring to pass accounts may file them with the Superior Court of Justice.[15] Upon passing accounts, the court can also fix the estate trustee’s compensation, providing clarity and finality for both the estate trustee and beneficiaries.[16] This process protects estate trustees from future claims regarding their administration, as beneficiaries typically cannot later challenge matters already approved by the court.
The methods of an estate trustee obtaining a formal release when resigning from their position was articulated in the case of Sheard Estate, 2013 ONSC 7729:
[26] Executors must have their administration approved and be discharged. There are two ways of doing so. First, they may apply for a passing of accounts. Alternatively, they can avoid the cost and delay of a passing, and instead ask the beneficiaries to approve their administration and provide for their informal discharge directly.[17]
By contrast, an estate trustee who does not obtain a proper release leaves themselves exposed. Without court approval or beneficiary releases, claims relating to the administration period remain open, and beneficiaries may later seek to hold the former estate trustee accountable for perceived deficiencies or losses, even many years later.
Conclusion:
The departure of an estate trustee from their role marks not an end to their obligations, but a transition that must be carefully managed. The prudent course for any departing estate trustee is to seek a final accounting, obtain either court approval or beneficiary releases, and ensure a complete and transparent handover of assets and records to the successor estate trustee. By taking a proactive approach, a departing estate trustee can minimize their exposure to future liability, achieve finality with respect to their administration, and provide the beneficiaries with the assurance that the estate has been properly managed. Failing to take these steps, by contrast, leaves the door open to claims that may surface years after the estate trustee believed their responsibilities had ended.
[1] Estates Act, RSO 1990, c E.21, s. 34; Form 74G: Renunciation and Consent, Ontario Court Services; Rules of Civil Procedure, RRO 1990, Reg 194, s. 74.04(1)(e).
[2] Trustee Act, RSO 1990, c T.23, s. 37(1).
[3] Chambers v. Chambers, 2013 ONCA 511.
[4] Chambers v. Chambers, 2013 ONCA 511 at para 66.
[5] Chambers v. Chambers, 2013 ONCA 511 at para 66.
[6] Lis v. Korol et al, 2024 ONSC 1316 at para 59 citing Fales v. Canada Permanent Trust Co., 1976 CanLII 14 (SCC) at p. 315.
[7] Re Hartin Estate, 2024 ONSC 5754 at para 52; Lanthier v. Dufresne Estate, 2002 CanLII 2653 (ONSC) at paras 52-57; Zimmerman v. McMichael Estate, 2010 ONSC 2947 at para 36.
[8] Menno v Menno, 2018 ONSC 2497 at para 10; Benjamin Cochrane Trust (Re), 2023 ONCA 546 at para 4; Zimmerman v. McMichael Estate, 2010 ONSC 2947 at para 35.
[9] Zimmerman v. McMichael Estate, 2010 ONSC 2947 at paras 74-87 & 115.
[10] Zimmerman v. McMichael Estate, 2010 ONSC 2947 at paras 103 & 116.
[11] Sheard Estate, 2013 ONSC 7729 at para 39.
[12] Jennifer J. Jenkins, Mark Scott & Edward Olkovich, Compensation & Duties of Estate Trustees, Guardians & Attorneys § 12:10 When are Passing of Accounts Necessary?
[13] Wall v Shaw, 2018 ONCA 929 at para 23; Cochrane v. Cochrane, 2021 ONSC 5228 at para 12; Last v. Last, 2025 ONSC 1407 at para 50; Zimmerman v. McMichael Estate, 2010 ONSC 2947 at para 31; Antzon v. Rogovsky, 2025 ONSC 915 at para 53.
[14] Elizabeth Portman, CED Executors and Administrators (Ontario) § 28. Standard of Duty (updated January 2024).
[15] Trustee Act, RSO 1990, c T.23, s. 23(1).
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