Estate Planning

The Name is Bond ... Administration Bond

By Hull & Hull LLP

In many estates, the estate trustee seeks to dispense with the normal requirement of posting an administration bond, if one is in fact necessary. (A bond is usually required where a person dies intestate, where the will does not name an estate trustee, where the will names a foreign estate trustee, or where the application is by a succeeding estate trustee where the will does not name a successor.)

The primary purpose of the bond is to ensure that the estate trustee pays the debts of the estate, and distributes the estate to those who are entitled to it. An applicant that wants to dispense with the bond must satisfy the court that the protection afforded by the bond is not required or will be met in some other way.

Brown J. in the recent decision of Re Henderson, 2008 CanLII 69136 addresses the issue, and highlights the evidence required by the court when determining whether a bond is to be dispensed with. He states that in order to allow the court to properly consider the matter, the applicant should file affidavit evidence setting out:

(a)               The identity of all beneficiaries of the estate;

(b)               The identity of any beneficiary who is a minor or incapable person;

(c)               The value of the interest of any minor or incapable person;

(d)               Executed consents from all sui juris beneficiaries to the appointment and to the dispensation of the bond. If consents cannot be obtained, the applicant must explain how the interests of those beneficiaries will be protected;

(e)               The last occupation of the deceased;

(f)                 Evidence as to whether all debts of the deceased have been paid, including any obligations under support agreements or orders;

(g)               Evidence as to whether the deceased operated a business at the time of death, and if so, whether any debts of that business have been or may be claimed against the estate, and a description of each debt and its amount;

(h)               If all debts of the estate have not been paid, evidence as to the value of the assets of the estate, particulars of each debt (amount and creditor), and an explanation of what arrangements have been made with those creditors to pay their debts and what security the applicant proposes to put in place to protect those creditors.

Thank you for reading.

Paul Trudelle

Full post as published by Toronto Estate Law Blog on January 16, 2009 (boomark / email).