ESTATE ADMINISTRATION IS FINALLY MOVING INTO THE 21ST CENTURY

WHY DO ESTATES ADVERTISE?

An Executor needs to ensure that all creditors and taxes are paid to CRA prior to the distribution of the assets in the Estate.

An Executor (known in Ontario as Estate Trustee) may be personally liable to reimburse creditors of the deceased for the amounts owing to them. In the past, there have been several cases, where the Executor distributed the assets without advertising in local newspapers – in order to save time and money. The Court ordered the Executor to pay the creditors’ owing plus their legal costs.

Prior to July 7, 2017 – Executors were expected to run newspaper ads to inform the creditors about the Estates and hoped that all creditors would make their relevant claims. Executors were expected to make run newspaper advertisements in all the provinces where they thought the creditors would be located.

Since fewer creditors read newspaper ads – being an outdated option – Ontario Superior Court Ruling effective July 7, 2017 now allow Executors to publish online notices instead of newspaper advertisements.

If the Executor provides appropriate notice to creditors, Ontario Trustee Act says the Executor will not be held personally liable.

NEWSPAPER VERSUS ONLINE

Some provinces, such as British Columbia, require executors to publish creditor advertisements in print newspapers. Ontario’s legislation is silent on the method of advertising. Executors must know the provincial laws and act accordingly.

Read: Protect clients’ digital estates

Advertising for creditors in newspapers can be quite expensive. Fewer people read print newspapers. And, creditors are likely to search for the name of a debtor on the Internet.

The decision of July 7, 2017, came in to existence because an Executor had advertised for creditors on a relevant website. The website advertisement cost less than advertising in newspapers, and he also applied to the courts for express permission to do so.

He also provided the opinions of several leading estate practitioners as evidence. The Court was convinced and ruled in the Executor’s favour, saying he satisfied his duty to advertise for creditors and he was therefore entitled to liability protection.

Read: Can you really protect executors from liability?

It’s unclear whether the ruling applies to other online services, since the relevant website was explicitly mentioned in the ruling. Other services may have to obtain their own rulings.

Nonetheless, the court has confirmed that online notice to creditors is an effective method for service that entitles an executor to the liability protection provided by the Trustee Act in Ontario and Executors’ can now consider online notices to creditors, in future.