Estates and Taxes – The Estate Trustee is Responsible
In a previous blog, we reviewed some key changes in Ontario legislation concerning estates and estate trustees. Perhaps the one with the most far reaching consequences is that estates now fall under the jurisdiction of the Minister of Finance. Since it is the Ministry taxed with collecting taxes (pun most definitely intended) and since Ontario is currently running an annual deficit estimated at anywhere from $11 to $16 billion dollars, estates can’t help but look like a revenue source to them, with strong potential beyond their current level.
Prior to the new legislation, there was a certain amount of give and take concerning the requirement for the trustees to establish values for an estate’s inventory. Now, however, the trustee will be responsible for obtaining and filing an accurate assessment of literally anything of value in the estate.
No Statue of Limitations for the Government
Under this new regulation, estate documents and findings can be challenged at any time, not just by beneficiaries, but by the government as well. Even more worrisome for the trustee is that there is no limitation period: the government can re-open the file at any time it wishes, meaning that several years after the trustee has done his duty (or her duty) and has moved on, the Finance Ministry can revisit the entire proceedings, a major incursion into the trustee’s life, one likely fraught with worry, even though the trustee has acted intelligently, fairly and in good faith. Why should you be worried? That’s easy: as the trustee, you will be held directly accountable.
Enter ERAssure (Estate Risk Assurance)
As with most financial concerns of major consequences, there is a solution, and similarly to the home, medical and vehicle areas, the way out comes in the form of insurance. Remember the name ERAssure, a clever sort of acronym. The ERA stands for Estate Risk Insurance, and the combination of the abbreviation and the ‘ssure’ sounds like erasure doesn’t it? And indeed, the idea of the insurance is to do exactly that: to erase the financial devastation that could result to a trustee who is challenged by the government or by an unhappy beneficiary. While there still might be anxiety and additional work involved should the estate’s resolution be challenged, the insurance will protect you from financial considerations. Here is the explanation from the promotional introduction on their website:
ERAssure® executor liability insurance is now available for the estate and your executor, estate trustee, or estate administrator clients. It insures them for personal liability and defense costs should they face litigation regarding decisions they make in the course of administering the estate, which concurrently exposes the estate to potential legal expense.
The fee for this service, naturally, is paid by the estate, and, all things considered, is a reasonable investment. For you the trustee, the key words are, “It insures them [you] for personal liability and defense costs should they face litigation…”
Especially in a time of uncertainty and while the exact determining of the regulations is in a state of flux, this insurance will allow trustees to do their work to the very best of their abilities, safe from calamity and the fear of calamity.