What is an estate?
An estate is the the combination of all assets, rights, titles or interests in any property as well as associated liabilities at the time of death. An estate is a legal entity much the same as a corporation is. Your estate continues to exist until all debts are paid and all assets are distributed.
Do I need to hire a lawyer to settle an estate?
As long as no organization demands that a lawyer assist with the transfer of an asset or settlement of an account and as long as no beneficiary or creditor contests their entitlement, then you should not need a lawyer. Often this depends on whether or not there was a Will in place and how the deceased’s assets were owned. If there was a Will and the assets were jointly owned with the right of survivorship, then in many cases a lawyer may not be required. However, if there was not a Will or if any assets were solely owned by the deceased, then it is likely that legal assistance will be required. Note that you are not obliged to work with the lawyer who prepared the Will. You may select whomever you are most comfortable working with, is less costly etc.
Do I need to apply for probate?
If there is a Will: If no asset holder, such as a bank, insurance company, investment brokerage and land titles office, requires that you probate the Will in order to release the asset, then you may not have to probate the Will. Probate is essentially the court’s acknowledgment that the Will is valid and that the co/executor(s) named in the Will have the authority to carry out its terms. Without probate, the asset holder has no proof that the Will is valid or that the executor is entitled to deal with the assets.
Probate also protects the asset holder in the event that the Will is challenged or a later Will is discovered, thus revoking the initial Will. Once a Will is probated, the asset holder cannot be held liable for releasing the asset to the executor.
If there is no Will: If there isn’t a Will, then someone (generally the spouse or deceased’s adult child) will have to apply to the probate court to be appointed administrator and granted the authority to settle the estate. In this case, the estate must be settled according to the Provincial Intestate Succession laws.
Generally, jointly held assets with the right of survivorship do not require probate as they transfer directly to the surviving joint owner and do not form part of the estate and are not under the executor’s control.
If the deceased resided on a reserve, you must contact Aboriginal Affairs and Northern Development Canada at 800-567-9604 to provide notice of the death and secure a Ministerial Order appointing the executor under the provisions of the Indian Act.
Am I or any of the beneficiaries personally responsible for paying the deceased’s debts or taxes?
You are responsible to ensure that the estate assets and funds are applied to the repayment of the deceased’s taxes and debt obligations prior to distributing the remaining estate assets to beneficiaries. If there are insufficient estate funds to meet these liabilities, you should meet with a lawyer to determine the order of priority repayment, so that you do not become personally liable for the shortfall. If you distribute estate assets to beneficiaries without satisfying the deceased’s taxes and debt obligations, you may be personally liable.
How can I access the deceased’s funds if the bank account is frozen?
Although the account may be frozen, most financial institutions will release funds to pay certain expenses such as funeral expenses, probate/property/income taxes, utility bills and property/vehicle insurance premiums when presented with a copy of the bill, proof of death and proof of the executor or administrator’s identity and a copy of the Will (if it exists).
How long should it take to receive life insurance proceeds?
If the deceased designated a named beneficiary, the proceeds are generally paid directly to the named beneficiary within 30 days of the claim application and all supporting documents being submitted. If the deceased named the estate, a minor child or a disabled individual as the beneficiary, or if the policy is within the contestation period, it may take much longer to receive the proceeds.
Can I hire a professional to help me settle the estate?
Yes. The most common professionals that executors and administrators turn to for assistance are lawyers, accountants and trust companies. The fees for these services are usually paid for by the estate.
How long do I have to settle the estate?
You have ‘as long as it takes’ to settle the estate as long as you are working judiciously at moving the process along. If the estate is not settled by the end of the first year, the beneficiaries are entitled to request an accounting of the progress to date and challenge your performance. It is not uncommon for it to take 18 – 24 months or longer to settle an estate. Each year the estate is in force, requires the submission of an estate tax return.
Do I have to agree to be an executor or administrator?
No, you can renounce your appointment as executor or decline to be appointed administrator. However, you should do so before you initiate any estate settlement activities and depending on your situation, you may need legal assistance to do so.
How much am I entitled to as an executor/administrator fee?
If the Will states the executor fee, then that is the amount that you are entitled to take. However, most Wills do not stipulate the executor fee and leave it up to the provincial law. In Canada, an executor or administrator is generally entitled to a maximum of 5% of the gross estate value, but this is always subject to final approval by the court, and can be adjusted upwards and downwards. Note that if you have taken compensation prior to obtaining court approval and the court decides that you have taken too much, you must pay back the excess, with interest. If there are co-executors or co-administrators, the fee must be split among them and the fee must be claimed as taxable income.
How can I get the Will, insurance policy(ies) or cemetery arrangement deeds if they are in the safety deposit box?
Go to the bank and speak with the bank manager. Identify yourself as the executor or administrator and provide proof of your identification and proof of the death. Request access to the safety deposit box to secure the necessary documents. Although the bank may require probate and written authorization to release the other contents of the box, they should grant you accompanied access to secure the Will, insurance policy(ies) or cemetery arrangement deeds.