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Disclaimer: This article on estate administration bonds is intended for the purpose of providing information only. It is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
We have noted in other articles an estate trustee’s responsibilities. In this article, we will talk about one requirement that you may face when you probate an estate in Ontario.
(If you are appointed as an estate trustee, you may be interested in this article about your responsibilities. If you are preparing your estate documentation, you may enjoy this article about how to select an estate trustee.)
What is an administration bond?
An administration bond is a type of surety bond required in Ontario when someone becomes an estate trustee for a deceased person’s estate. Its purpose is to protect the beneficiaries and ensure that the estate trustee fulfills their duties properly. Generally, the bond is at least double the value of the assets of the deceased.
When is an administration bond required?
Ordering an administration bond is at the discretion of the courts, but a judge will typically require an administration bond in these scenarios:
- There is no will;
- There is a will, but an estate trustee was not named and one needs to be appointed; or
- A foreign estate trustee is appointed.
When referring to a “foreign estate trustee”, the courts will not only apply that definition to someone who lives outside of Canada. It can also be applied to estate trustees that live outside of the province. (Read below for how this can affect your decisions when selecting an estate trustee.)
The Estates Act sets out some situations where an administration bond is not required, including:
- In cases where the Government of Ontario or any Ministry, Provincial Commission, or Board established under legislative Acts submits an application to act as an estate trustee;
- There is no will, but the surviving spouse is applying to be an estate trustee and the value of the estate is less than the preferential share and an affidavit sets out the estate’s debts; or
- It is a small estate (meaning a total value of less than $150,000) and none of the beneficiaries are minors or incapable (as defined by the Substitute Decisions Act, 1992).
Waiving the requirement for an administration bond
Most people do not have easy access to the amount required by an administration bond, so you will want to apply for an order waiving the requirement for an administration bond.
Previously, this was a simple matter that could be handled over the counter with the court registrar. However, as of July 2022, the procedure has changed. A full motion is now required, and it is more likely to require a hearing before a judge. This is a more involved (and more costly) procedure than before.
If you are looking for an order to dispense with the bond requirement, you must convince the court that the protection that a bond provides to any creditors and beneficiaries is not required.
In some cases, an application to waive an administration bond is unsuccessful, meaning the court will still require it. What are your options in that case?
You can turn to insurance companies that offer bond insurance policies. From the court’s point of view, these insurance policies serve as the equivalent of a bond, eliminating the need to come up with the full cash amount.
It is typically a straightforward application that resembles a credit check, where the insurance company assesses the applicant’s financial standing. There is a one-time premium that you must pay. However, this is considered a proper estate expense. Therefore, the estate trustee can be reimbursed once they receive a certificate of appointment.
Choosing your executor
Knowing that an administrative bond is more likely when your estate trustee lives outside of Ontario can impact who you appoint. It may make sense to select someone who lives locally rather than someone who is geographically distant or transient. For example, this might include a young adult child with an inclination for a nomadic lifestyle.
Navigating estate law with Beeksma Law
At Beeksma Law, we know that estate law can be complex, especially when it comes to requirements like administration bonds. Our team of experienced estate lawyers is here to guide you through the probate process in Ontario with confidence and ease.
Whether you’re stepping into the role of an estate trustee or diligently preparing your estate documentation, we’ve got you covered. We offer comprehensive services tailored to your specific needs. This includes ensuring you understand the ins and outs of administration bonds and how they impact you and the beneficiaries. With our expertise, we’ll find the best solution to protect your interests and streamline the estate administration process.
Reach out to Beeksma Law today. Let us be your trusted partner in managing your estate matters – we’re ready to assist you every step of the way!
Disclaimer: This article on preparing estate documents is intended for the purpose of providing information only. It is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
We have talked before about the importance of having a will and powers of attorney in place. But what does it look like to have them done? We turned to one of our recent clients to tell us about her experience working with our firm.
Tell us about yourself
I am a 30-something-year-old married mother with one child. My husband and I have been married for quite a while, and up until recently, we did not have any estate planning documents.
I had met Shayna in a networking group, and when we decided it was time for a will, we turned to the incredible team at Beeksma Law.
What made me think about estate planning?
Like many people, we had not spent much time thinking about our own mortality. Yes, anything could happen, but it was not at the top of our minds. A couple of things convinced us that it was time to document our wishes.
First, we became parents, which changed everything for us. The question of what would happen to our son if something happened to both of us loomed over us. While we knew that our families would step in and care for him, what would that look like? Would he be receiving money at 18 that he is ill-equipped to handle? What if there were disagreements about who would be his guardian?
Also, the pandemic taught us that anything is possible. Anything can happen at any time. We had fooled ourselves into thinking that we didn’t need to do this process because we were relatively young and healthy. However, we came to realize that that didn’t matter.
While we considered a will kit, ultimately, we decided to work with Beeksma Law. Yes, it was more expensive, but I work with other types of templates in my line of work. They can be okay. However, they will usually not give you the same kind of quality that you get when you make an investment and work with an expert.
What did you appreciate about the experience?
I like to do my research, and when we approached Shayna and her team, I thought we had thought things through. I was wrong! During our first meeting, we outlined a number of areas that had never even crossed my mind. We appreciated how thorough she was and that the documents that we prepared fully considered what happens after we are gone.
We also appreciated being able to do our powers of attorney at the same time. During our conversations, we were helped to appreciate that a will only comes into effect when we die. What would happen if we were in a terrible accident? Who would handle our affairs?
We appreciated Shayna’s patience with us, answering every single question that we had under the sun. She was more than willing to make sure we understood our options and the implications of our choices.
What was it like working with a virtual law firm?
We loved it! We last worked with a lawyer when we purchased our house. At that time, we had to take time off work, travel to the lawyer’s office, and discuss and sign the documents.
We had wanted to work with Beeksma Law and were grateful that things were done virtually. Her offices are in Hamilton and Owen Sound. We are located east of Toronto. It would not have been practical if we couldn’t have attended virtual meetings and signings.
With a virtual law firm, we did not have to do any of that! We had one meeting where I was in the car between appointments, and my husband was able to step away while working. It was so much easier to schedule and attend our meetings with Beeksma Law. When it came time to sign, again, it was so simple. Everything was set up for us to sign virtually, saving us time and effort.
Simply put, we are pretty busy, and anything easy and straightforward is a big win for us.
How do you feel after preparing estate documents?
We feel so much better – this had been hanging over our heads. With strong documents in place, we feel so much more confident knowing our child will be well cared for.
We are so glad that we also worked with the team at Beeksma Law. They made everything so clear, simple and easy to understand. They ensured that nothing fell through the cracks and were incredibly organized.
We are extremely pleased with our decision to work with a firm specializing in estate law. We didn’t get the feeling that they dabbled in it or treated it as just another service they provided. Their expertise and passion were evident throughout the process, and there was no doubt that this was their area of expertise.
Preparing Estate Documents with Beeksma Law
At Beeksma Law, we love helping families feel confident about their futures by creating strong estate documents. Contact our team today to learn more about how we can help you.