If you’re an estate trustee then you should advertise for creditors to protect yourself from personal liability.
Why it's important
The debts of the deceased need to be paid before the assets of the estate are distributed to the beneficiaries. One of the jobs of an estate trustee is to identify and pay these debts. This isn’t always easy to do, particularly if the deceased lived and worked in multiple cities or did business online, as is increasingly common today.
If an estate trustee distributes the assets of an estate to the beneficiaries without checking for outstanding creditors, that trustee can be held personally liable for the full amount of an outstanding debt if a creditor later comes forward. This means that you yourself must pay this debt. Not the estate. And this is unlimited liability, i.e. there is no cap or limit on how much a trustee can be liable for.
How to protect yourself
The law protects trustees from liability if they publish a public notice to creditors. This is also called advertising for creditors. These notices inform creditors that an estate is being administered. They specify a deadline by which any creditors must come forward with their outstanding claims. After this deadline, the executor can distribute the assets of the estate to the beneficiaries without risking personal liability.
Advertise for creditors online
The exact rules vary by province. In Ontario, this is governed by Section 53 of the Trustee Act. The practice in Ontario is now to advertise for creditors online with NoticeConnect. Courts in Ontario have expressly approved advertising for creditors online with NoticeConnect.
NoticeConnect allows lawyers and estate trustees to advertise for creditors online for $130 plus HST. Posting takes less than five minutes. It is a major improvement over the former convention of publishing expensive print newspaper ads.
Not advertising for creditors is an unnecessary risk. You don’t want to have to pay debts of the deceased out of your own pocket.