In some situations, when a party applies to the Court to be granted a certificate of appointment of estate trustee (also known as probate) and, thereby, be formally appointed as Estate Trustee (also called executor), they must provide an administration bond of indemnity with the application. This essentially means that the proposed estate trustee has promised to administer the estate properly and along with a third party, to indemnify any creditors or beneficiaries who suffer a loss by the breaking of this promise. The required form of the bond will depend on whether the third party agreeing to indemnify the beneficiaries and creditors is a private person or a bonding company, usually an insurance company. A bonding company will agree to act in this capacity in exchange for a premium that is paid annually for as long as the bond remains active.
The general legislative rule is that an administration bond is always required before the court issues any certificate of appointment. Furthermore, the requirement for an administration bond usually arises in cases where an application for a Certificate is made and the deceased has died without a will or, where there is a will, the will does not appoint an estate trustee. However, this rule is subject to exceptions. For example, government bodies, such as the Public Guardian and Trustee, and Canadian residents who seek to administer an estate for which the deceased left a will, do not have to submit a bond. In other cases, a court may reduce the bond on application.
In Henderson (Re), 2008 CanLII 69136 (ON SC), Justice Brown examined the criteria to be met in order to grant a request to dispense with the requirement to file an administration bond. Generally, an applicant seeking to dispense with an administration bond must demonstrate, by way of evidence, to a judge that all adult beneficiaries have consented to the order and all debts have been paid OR the required supporting affidavit lists the debts and the judge is satisfied that the creditors are protected. In this case, Justice Brown, noted the fact that each week a significant portion of the two dozen or so requests for orders dispensing with the posting of an administration bond are rejected because of deficiencies in the filed materials.
With respect to the particular applications before him, Justice Brown rejected the requests to dispense with the filing of an administration bond. For one estate, the supporting affidavit purported to guarantee that the estate will be fully paid and satisfied out of the estate assets. For the other estate, the supporting affidavit stated that there are sufficient assets to pay all claims against the estate. In both instances, Justice Brown concluded that the evidence presented in support of these claims was insufficient.
If you need assistance in preparing and filing an application for certificate of appointment, have questions about an estate administration bond of indemnity or how to avoid having to file one, please contact Andrea Kelly.
Andrea Kelly, Lawyer, has extensive experience in wills, trusts, powers of attorney and estate administration matters. She provides clients with a high standard of timely professionalism and expertise, incorporating a very thorough fact finding process. This is quite often enlightening for her clients and facilitates individually tailored services. If you would like to know more, feel free to use the easy contact form or read Andrea’s bio.