Défis administratifs d’une succession insolvable
juillet 1, 2017 Par: Erin Kelley Read Time: 4 minutes

This article is only available in its original language: English

What should an estate trustee do? Can the estate trustee be liable for the debts of the estate?

You have recently been appointed to the position of trustee, and every one of you has been appointed to administer these estates.

While ascertaining and settling all debts on behalf of the general public, the task becomes more difficult and more difficult.

If this is the case, you are dealing with an insolvent estate.

Challenge 1: Should you administer the estate?

The first thing to know is that an insolvent estate is not necessarily a bankrupt estate. An estate is only registered under the Bankruptcy and Insolvency Act . This can be done at the petition of the estate’s creditors, or at the estate trustee’s own prompting.

There are a few reasons why an estate trustee may want to place an estate into bankruptcy, including:

  • Avoiding personal liability : By placing the estate in a bankruptcy, a trustee-in-bankruptcy with specialized knowledge in credentials issues, covering the estate of personal liability and allegations of overpayments to creditors;
  • Increasing time and expense administering the estate : An insolvent estate is typically more costly to a solvent than one, because of the increased efforts to ensure adequate payment and priority to creditors; and
  • To change the priority of the debts : Some debts are treated differently under the bankruptcy regime. For example, spousal and child support arrears are given higher priority when they are in an insolvent estate, where they share with other unsecured creditors.

The other hand, if the insolvency is relatively small and the debts are straightforward, an estate trustee may want to administer the estate themselves. Administrating the estate, rather than assigning it to the bankruptcy, enables the business owner to retain control of the property.

Challenge 2: What is free from forced seizure and sale?

If the estate trustee is a spouse, dependent, or family member of the deceased, he or she may be a member of the family. for the benefit of the family.

Pursuant to section 2 of the Execution Act , certain personal items of the deceased can be exempted from seizure and sale. The deceased has the ability to select which personal items to exempt otherwise, the decision is made by a surviving spouse, dependent or family member (in that order).

The following personal items can be exempt:

  • Necessary clothing of the deceased and his or her dependents;
  • Household furnishings and appliances not exceeding the prescribed amount (currently $ 13,150);
  • $ 11,300 for most occupations, but the limit is higher. and
  • A motor vehicle not exceeding the prescribed amount (currently $ 6,600).

The prescribing maximum amounts are set in a regulation and adjust periodically to agreement with the increased cost of living.

Challenge 3: What should you pay first?

When administering an insolvent estate, an estate trustee must be cognizant about the order in which he or she country creditors. Since there are insufficient assets in the field of credit, it can not be paid for in the past.

The general rule mandated under section 50 of the Trustee Act is that of the debtors who are in debt, under the Act .

Despite this general rule, the courts have historically recognized a few exceptions. Debts in an insolvent estate should be paid in the following order:

  1. Reasonable and necessary funeral expenses, which form a first charge on the estate;
  2. Testamentary expenses and costs to administer the estate (including compensation for the estate trustee’s care and time; and
  3. All other debts proportionately, including debts due to the Crown.

In paying debts proportionately, an estate trustee is obligated to pay a full share of the total assets that is proportionate to their share of the total debt. For example, if they are credited with 15 percent of the estate’s total debt, they should receive 15 percent of the estate’s assets, whatever that may total. The idea behind this rule is that each one will get a portion of their outstanding debt.

While the Trustee Act makes it clear that provincial Crown debts, including federal income taxes, receive priority over other creditors in an insolvent estate. The case law suggests that federal taxes should be given priority over other unsecured debts, so it would be prudent to obtain the court’s opinion.

Challenge 4: How can you work with and satisfy the creditors?

Satisfying unhappy creditors is always a challenge in insolvent estates since they will not receive the full value of their debt. One option is to call a creditors meeting and work with representatives of the creditors, called inspectors.

Section 59 of the Trustee Act sets out a procedure for the trusteeship of property management. This process can not be helped by a person who has the chance to be an inspector and participates in the process. However, inspectors do not have to pay, and work with them can complicate the administration process.

Challenge 5: How can you avoid personal liability?

As mentioned, they can not be credited with the credibility of one another. Therefore, while not required, it is often prudent to advertise for business creditors in the area where the company is known to reside and / or have business dealings. The following statement can be used to claim a claim after the estate has been administered.

Further, if you are unsure about your obligations, you may apply to the Court under section 60 of the Trustee Act for its opinion, advice or direction on any question respecting the management or administration of the assets.


Administering an insolvent estate can be very difficult to comply with. If you want to administer an insolvent estate, you need to go to the bank.


This article originally appeared in the July 2017 edition of Fifty-Five Plus Magazine .

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2021 Nelligan O’Brien Payne LLP.

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