Passing Of Accounts

The formal presentation of a trustee's accounts to a court for approval.

A passing of accounts is a formal court hearing which receives and audits the trustee's accounts to review as to any item in dispute.

The trustee presents his/her written accounts and items of controversy are challenged by the beneficiary. All such points of dispute are ruled upon by the Court which, in the result, approves or passes the accounts as submitted by the trustee or with such alterations as directed by the court.

Also referred to as rendering an accounting in court or render accounts to court.

In the Canadian Estate Administration Guide, the authors write:

"The passing of accounts is a process whereby the personal representative of an estate files his or her accounts with the court and then requests the court's approval for such accounts for a certain period of administration."

The default rule in most common law jurisdictions is that a trustee must present his or her accounts to a Court for approval if formal demand is made for it.

In Halsbury's Laws of Canada, the authors wrote:

"Strictly speaking, the personal representative need not pass the accounts before the court of probate unless cited to do so but, in order to be relieved from the liability, it is always the prudent thing for the personal representative to do."

Often, an application to pass accounts will be accompanied by the trustee's application that he/she be discharged as it is generally the last step of trusteeship.

That process is referred to as passing accounts, as in passing them through the Court for approval.

In the vast majority of cases, trustees provide a summary accounting of their administration and on that basis, obtain consents, waivers or releases from the beneficiaries which approve the accounts. This action precludes the signatories from demanding that the trustee prepare the accounts in proper form and have them approved by the relevant court; a passing of the accounts.

In most jurisdictions, the courts do not track who, of the trustees that they have appointed, have produced proper accounts and it the requirement is substantially self-policed. If no beneficiary comes forward with a demand that accounts be passed, the Court file, in probate or otherwise, simply lies dormant.

However, where a beneficiary is a minor or otherwise incapable, or in situations where the trustee anticipates controversy, the trustee will voluntarily submit his/her accounts to audit before the court, a application for the passing of his/her accounts.

REFERENCES:

• duhaime.org, Elderlaw, Wills and Estates Law
• Greenan, J. and others, editors, Canadian Estate Administration Guide (Toronto: CCH Canadian Limited, 2006), page 19,003.
• MacKenzie, J., "Wills and Estates", Halsbury's Laws of Canada, 1st Edition (Toronto: LexisNexis, 2007), page 521.