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Why don’t Corporate Trustees have to Post a Bond?

Section 35 of the Estates Act R. S. O. 1990, c. e.21 provides that:

Except where otherwise provided by law, every person to whom a grant of administration, including administration with the will annexed, is committed shall give a bond to the judge of the court by which the grant is made…1

The bond described by s. 35 of the Estates Act is meant to secure the protection of both the beneficiaries and creditors of the estate.2 This is why Henderson Estate, Re limits the Court’s discretion to dispense with the bond under s. 37(2) to circumstances where the protection afforded by a bond to those parties will be met in some other way.3 Further, these circumstances must be demonstrated with evidence. An affidavit that simply states that “all debts of the estate will be fully paid and satisfied out of the estate assets” will be insufficient.4

Among the exemptions alluded to in the above section are registered trust corporations. Specifically, s. 175(4) of the Loans and Trust Corporations Act, R. S. O. 1990, c. L.25 allows for a registered trust corporation that has been approved by the Lieutenant Governor in Council to perform its duty as executor, administrator, trustee, receiver, liquidator, assignee, guardian or committee without providing a bond as security to the court. The reasoning behind this exemption can be inferred from the purpose of the bond requirement itself, as well as the nature of exemptions by way of the court’s discretion under s. 37(2) of the Estates Act.

It can therefore be inferred that registered trust corporations are exempt under s. 175(4) because they, by their nature, effectively protect the interests of beneficiaries and creditors of an estate that they are administering. Registered trust corporations’ size and liquidity help ensure that, under their administration of the estate, beneficiaries will receive their share of the assets and creditors will be paid off in full.

Footnotes
  1.   S. 35 of the Estates Act
     
  2.   Furik Estate, Re at para 8; Henderson Estate, Re at para 10
     
  3.   Henderson Estate, Re at para 10
     
  4.   Henderson Estate, Re at para 16-17
     

Charles Wagner and Adin Wagner

The authors of this blog are Charles Wagner and Adin Wagner. Charles is a Certified Specialist in Estates and Trusts and partner at Wagner Sidlofsky LLP, and Adin was a summer student at the firm.

This Toronto office is a boutique litigation law firm whose practice is focused on estate and commercial litigation.

This blog is not intended to serve as a comprehensive treatment of the topic. It is not meant to be legal advice. Every case turns on its specific facts and it would be a mistake for the reader of this blog to conclude how it might impact on the reader’s case. Nothing replaces retaining a qualified, competent lawyer, well versed in this niche area of practice and getting some good legal advice.
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