In Ontario, it is common for individuals to arrange their affairs so that certain assets pass outside of probate. These can include jointly held property, insurance policies, RRSPs, TFSAs, and other assets with named beneficiaries. While these tools can simplify estate administration and reduce probate fees, they can also create confusion – and conflict – when it comes to transparency.
A key question we often hear is: Do estate trustees need to account for assets that do not technically form part of the probate estate?
The short answer: Yes – full disclosure is crucial.
The Importance of Full Disclosure
An estate trustee has a fiduciary duty to act in good faith and in the best interests of the beneficiaries. This includes providing a clear and accurate picture of the deceased’s overall asset structure — even if certain assets pass directly to others outside of probate.
Why? Because these non-probate assets can influence the fairness of distributions, impact potential dependant support claims, and raise questions about the deceased’s intentions. Beneficiaries cannot make informed decisions (such as signing releases) if they are unaware of the full scope of the deceased’s holdings.
Examples of Non-Probate Assets
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Jointly held real estate or bank accounts (with rights of survivorship)
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Life insurance policies with named beneficiaries
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Registered accounts (RRSPs, RRIFs, TFSAs) with designated beneficiaries
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Pension plan death benefits
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Certain trust-held assets
These assets generally transfer directly to the named individual and do not fall into the estate subject to probate. However, they are still relevant when understanding the deceased’s financial circumstances and ensuring all legal obligations are met.
The Presumption of Resulting Trust
Where assets are held jointly or transferred by designation to a close family member, the presumption of resulting trustmay apply. This means the asset might be presumed to belong to the estate unless there is clear evidence showing an intention to gift it outright.
A trustee must assess these questions carefully and disclose all relevant details to avoid breaching their fiduciary duties.
Risks of Failing to Disclose
Trustees who fail to disclose non-probate assets may face serious consequences:
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Personal liability for losses or mismanagement
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Removal as estate trustee
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Invalidation of releases signed by beneficiaries without full information
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Court orders for formal passing of accounts
Even if a trustee believes certain assets do not technically belong to the estate, non-disclosure can lead to costly disputes and undermine confidence in the administration process.
Best Practices for Estate Trustees
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Provide a comprehensive asset overview to all beneficiaries
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Document all designations and joint arrangements clearly
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Seek legal advice when there is any doubt about the status of an asset
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Be transparent from the outset, even if it feels uncomfortable
Guidance for Beneficiaries
If you suspect that not all assets have been disclosed — including those outside of probate — you can request an accounting and, if necessary, seek court intervention. Knowing the full picture is essential before waiving rights or accepting distributions.
At Kimel Law Group, we help estate trustees navigate disclosure obligations and assist beneficiaries in ensuring estates are managed transparently and fairly. Contact us today to learn more.