Administration Bonds: Security for Inheritance

An estate executor must act in the best interests of the beneficiaries as part of their responsibilities. Executors have a fiduciary duty to act in the best interest of beneficiaries, regardless of their personal relationship. Sometimes, the executor and beneficiaries don’t have a good relationship. This situation leaves beneficiaries worried about the executor’s handling of the estate. This can be more stressful if the executor takes minimal care in the work because it doesn’t impact them. In situations like this, a beneficiary might consider applying for an administration bond.

If the administration is in BC, any interested person can apply for an administration bond, providing security for the process. With an administration bond, the executor must deposit money with the Courts to ensure they fulfil their fiduciary responsibility as executor. This is similar to making a safety deposit when renting an apartment, as it’s meant to ensure you handle others’ property carefully. If the executor doesn’t act appropriately, they risk losing the administration bond. In the case of an easy administration with no concerns, the executor receives their deposit back quickly.

When Administration Bonds Can Be Issued

Any interested party can apply for an administration bond, but the courts decide whether to allow it or not. In some cases, the will writer includes a provision in the will outlining whether an administration bond is mandatory. If the will requests the creation of an administration bond, the applicant typically finds it easy to succeed with their claim. When the will is silent on the matter, it can become much more complex. It’s when the will is silent on that matter that it can be more complex.

When there is no clause relating to an administration bond in the will, the applicant must have evidence suggesting that the executor is not going to act reasonably. The Courts don’t normally issue administration bonds in BC when the will doesn’t include a clause requesting one. An interested party should have strong evidence that shows the executor is likely going to act against their fiduciary duty. For example, evidence of the executor having a history of poor estate administration. When there isn’t a strong case to impose an administration bond, there are alternative measures that interested parties can take.

Alternative Options to the Administration Bond

Sometimes, an administration bond is not the most viable option in your circumstances, however, you still feel concerned about the named executor handling the estate. There are other measures you can take to ensure that the estate is administered correctly. Before any beneficiary receives their inheritance, the executor must provide a detailed account of all of the estate assets. If you believe an asset has gone missing or is smaller than it should be, you can issue a request for a passing of accounts. This is a court hearing where the executor must prove the validity of the estate accounts. For more information, read our blog on passing of accounts.

As a last resort effort, interested parties are able to apply to have an executor completely removed from their duties. The courts will only allow this when they cannot see any other alternatives to fix the issue. Typically, this will only be allowed after the executor has made a significant mistake in the estate administration. Unlike an administration bond, executor removal is not a precautionary measure. For more information, read our blog on removing an executor and the legal grounds for doing so. In some less extreme scenarios, a co-executor can be appointed to help with the administration.

If you’re a beneficiary who feels uneasy about the executor of a loved one’s estate, contact an experienced estate lawyer today. We can ensure that the estate is handled appropriately whether that means applying for an administration bond, a passing of account or the executor being removed.

Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.