What Is A Passing Of Accounts in New Brunswick? admin, February 28, 2024April 10, 2024 Demystifying the Passing of Accounts Understanding the term ‘Passing of Accounts’ and its role in estate management What is a “passing of accounts”? Passing of accounts is a legal process that occurs in the context of probate, which is the legal process of administering a deceased person’s estate. When a person passes away, their assets and liabilities need to be properly accounted for and distributed according to their will or the laws of intestacy if there is no will. The passing of accounts involves the executor or administrator of the estate submitting a detailed account of all financial transactions related to the estate to the court for review and approval. This account includes all income received, expenses paid and distributions made from the estate. The purpose of the passing of accounts is to ensure transparency and accountability in the administration of the estate, and to protect the interests of beneficiaries and creditors. The court will review the accounts to ensure that they are accurate and complete and that the executor or administrator has acted in accordance with their fiduciary duties. Once the court approves the accounts, the estate can be settled and the assets distributed to the beneficiaries. Passing of accounts can be a complex and time-consuming process, but it is an important step in ensuring that the deceased person’s wishes are carried out and that their estate is properly managed. Brief overview of who may require a Passing of Accounts – executors, trustees, beneficiaries This process is typically required in situations where there are concerns about the management of an estate or trust or when beneficiaries have doubts about the actions taken by the person in charge of administering the estate or trust. Executors, who are responsible for carrying out the instructions outlined in a will, may require a Passing of Accounts if beneficiaries believe they are not fulfilling their duties properly or if there are suspicions of mismanagement or misconduct. Similarly, trustees, who manage assets held in a trust for the benefit of others, may also need to undergo a Passing of Accounts if beneficiaries raise concerns about their actions or if there are questions about the handling of trust funds. Beneficiaries, on the other hand, may request a Passing of Accounts to ensure transparency and accountability in the administration of an estate or trust especially if they have reason to believe that their interests are not being properly protected. A Passing of Accounts serves as a safeguard to protect the interests of beneficiaries and ensure that fiduciaries are fulfilling their obligations in a responsible and ethical manner. The Process of Passing of Accounts Detailed step-by-step procedure of the Passing of Accounts process The Passing of Accounts process is an important step in estate administration that involves the formal approval of the accounts of an executor or trustee by a court. This process is typically required when beneficiaries or interested parties have concerns about the handling of estate assets or expenses by the executor or trustee. The procedure can vary depending on the jurisdiction but generally involves several key steps. First, the executor, trustee or a beneficiary must file an application with the court requesting approval of the accounts. The material in support of the application must set out all material facts and the reasons that necessitate a passing of the accounts . Next, notice of the application must be provided to all interested parties, such as beneficiaries, creditors, and other potential claimants. This notice gives these parties an opportunity to review the application and the accounts that are eventually served on all parties and filed with the court and to raise any objections they may have. A hearing will be scheduled before a judge or master to review the accounts. At the hearing, the executor or trustee will present evidence supporting the accuracy and propriety of the accounts, while any objecting parties will have the opportunity to present their concerns. After considering all the evidence, the court will make a decision on whether to approve the accounts as presented, require modifications, or reject them entirely. If the accounts are approved, the executor or trustee will be discharged from their duties and the estate or trust will be considered settled. The Passing of Accounts process is designed to provide transparency and accountability in estate administration, ensuring that the interests of all parties involved are protected. It is important for executors and trustees to follow the proper procedures and to provide accurate and complete financial information to avoid delays or complications in the approval process. The roles of beneficiaries and the court in reviewing accounts Beneficiaries are individuals who are entitled to receive a share of the assets held in the estate or trust. They have the right to review the accounts and financial records of the estate or trust to ensure that the assets have been properly managed and distributed according to the terms of the will or trust document. Beneficiaries can request additional information or clarification from the executor or trustee if they have any concerns or questions about the administration of the estate or trust. The court also plays a significant role in overseeing the Passing of Accounts process. The court reviews the accounts and financial records submitted by the executor or trustee to ensure that they are accurate and complete. The court may also hold a hearing to allow beneficiaries to raise any objections or concerns they may have regarding the administration of the estate or trust. Ultimately, the court has the authority to approve or reject the accounts and distribution of assets, ensuring that the interests of the beneficiaries are protected. If the accounts are rejected by the court, it may mean that the executors or trustees, as the case may be, can be personally liable for any losses suffered by the estate because of mismanagement. Common reasons for disputes during Passing of Accounts and how to address them During the Passing of Accounts process, disputes can arise for a variety of reasons. One common reason is discrepancies in the financial records being presented. Beneficiaries or other interested parties may question the accuracy or completeness of the accounting, leading to disagreements and potential legal challenges. Another common reason for disputes is disagreements over the fees being charged by the estate trustee or executor for their services. Beneficiaries may feel that the fees are excessive or unreasonable, leading to conflicts that can delay the passing of accounts. Disputes can also arise due to misunderstandings or miscommunications between the parties involved. To address these disputes, it is important for all parties to communicate openly and honestly, seeking to understand each other’s perspectives and working towards finding a mutually acceptable resolution. Expert tips for executors to facilitate a smooth Passing of Accounts process Being an executor of an estate can be a challenging and overwhelming responsibility, especially when it comes to the Passing of Accounts process. This is the formal process where the executor presents a detailed account of all the assets, liabilities, and distributions made during the administration of the estate to the beneficiaries and the court for approval. To facilitate a smooth Passing of Accounts process, there are several tips that can help executors navigate this complex procedure. First and foremost, it is essential for executors to keep detailed records of all financial transactions related to the estate, including receipts, invoices, bank statements and correspondence. This will not only ensure accuracy and transparency in the accounting process but also demonstrate diligence and accountability to the beneficiaries and the court. It is also important for executors to seek professional guidance from accountants or lawyers who specialize in estate administration to ensure compliance with legal requirements and avoid any potential pitfalls. Executors should also communicate openly and regularly with beneficiaries to keep them informed of the progress and address any concerns or questions they may have. By following this advice, executors can streamline the Passing of Accounts process and fulfill their duties effectively and efficiently. Legal Considerations and Preventative Measures Understanding the legal framework surrounding Passing of Accounts The purpose of passing of accounts is to allow beneficiaries and interested parties to review and verify the trustee or executor’s actions and ensure that their interests are being protected. Failure to comply with the legal requirements surrounding passing of accounts can result in legal consequences, including removal of the trustee or executor, fines or personal liability on the part of the executor or trustee for any losses suffered by the estate. It is important for trustees and executors to understand the legal framework surrounding passing of accounts in order to fulfill their fiduciary duties and avoid potential legal issues. Consulting with a legal professional experienced in estate and trust law can help executors and trustees ensure compliance with the relevant laws and regulations. I hope you have found this content useful. If you have questions please ask in the ‘Leave a Reply’ section below. Grant Rayner* *Grant is a member of the Law Society of Ontario. He has permission from the Law Society of New Brunswick to practice as a visiting lawyer with the firm Langdon Law pending the transfer of his membership with the Law Society in Ontario to the Law Society of New Brunswick. If you need help with the probate of an estate in the Upper St. John River Valley, call Grant at Langdon Law: 506.497.2560. Offices in Woodstock, Hartland and Florenceville-Bristol to serve you. Grant has been in practice for more than 39 years and has the experience, sensitivity and maturity to guide you through this often challenging process. passing of accounts estate planning