Testators can do their bit to ensure executors don’t have to post an administration bond.
Ontario’s Estates Act requires some foreign-based estate trustees to obtain a bond worth twice as much as the entire estate. Even Ontarians may have to post one if they are applying to be appointed executor when they weren’t named in the original will, or if the deceased died intestate.
The process can be costly – not to mention time consuming – for prospective executors who will have enough on their plates preparing for an already onerous job.
Although Ontario’s bonding requirements have a worthy aim – protecting beneficiaries from negligence or misappropriation by the executor – they are the product of a bygone era and in most cases, excessive. That’s why the province’s estates lawyers have been pushing for the rules to be loosened for more than a decade.
But until those complaints are heard at the governmental level, we’re stuck with administration bonds. In the meantime, there are certain steps testators can take to avoid the need for one.
The first and most important thing testators can do is to avoid intestacy by drafting a will. As well as taking control of what happens to their assets after they die, they will also spare their named Ontario-based executor the hassle of obtaining an administration bond.
For those who want to select an estate trustee based abroad, it’s important to know that the bond requirements do not generally apply to people living in Commonwealth nations. Unfortunately, U.S. residents enjoy no such exemption, although they may find the process of obtaining one slightly more straightforward than those based farther afield.
Executors who don’t fall within any of these exemptions may ask an Ontario court to dispense with the bonding requirement, but the test set by the leading case in the area is quite strict. In his decision, the judge wrote that foreign-based estate trustees must file a comprehensive affidavit with corroborating evidence regarding the assets and liabilities of the estate, as well as detailed information about beneficiaries, creditors and the deceased.
If your original choice for executor is scared off by the prospect of a bond requirement and you can’t think of an Ontario-based alternate, it may be worth considering a corporate trustee to act.
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