Wills and Estate Resources

 

Estate Admin­is­tra­tion Basics

Fol­low­ing a death of an indi­vid­ual, cer­tain assets can­not be dealt with until a per­sonal rep­re­sen­ta­tive is appointed and a grant has been issued.

If a will exists, the per­son appointed as the rep­re­sen­ta­tive (i.e. execu­tor) applies to the court for a grant of pro­bate. A pro­bated will means that the court has reviewed the orig­i­nal will and deemed it to be a valid will. With­out pro­bate, most finan­cial insti­tu­tions will not release the deceased’s assets.

If there is a will, but there is not an effec­tive execu­tor appointed, then an admin­is­ter will apply for a grant of let­ters of admin­is­tra­tion with will annexed.

If no will exists, a grant of let­ters of admin­is­tra­tion must be obtained and the court appoints an admin­is­tra­tor as the deceased’s per­sonal rep­re­sen­ta­tive. Gen­er­ally, where a per­son dies with­out a will, the fam­ily mem­bers will deter­mine who should make the appli­ca­tion to the court for a grant of let­ters of admin­is­tra­tion. The per­son who applies for the grant must obtain a for­mal con­sent from any­body who has an equal or greater right to make an appli­ca­tion for a grant. The process of deter­min­ing who will be the admin­is­tra­tor and obtain­ing a grant of let­ters of admin­is­tra­tion is often more costly than obtain­ing a grant of pro­bate. The prob­lem of who to appoint as admin­is­tra­tor may lead to dis­putes which fur­ther dimin­ishes the estate assets.

If there is nobody else pre­pared to admin­is­ter the estate, the Pub­lic Guardian and Trustee is the Offi­cial Admin­is­tra­tor for British Colum­bia and may be appointed to administer.

Duties of the Per­sonal Representative

The respon­si­bil­ity of a per­sonal rep­re­sen­ta­tive is often pre­scribed by the will, but the duties invari­ably include:

(1) tak­ing pos­ses­sion and con­trol of the deceased’s assets;

(2) pay­ing debts and mak­ing pro­vi­sion for other liabilities;

(3) noti­fy­ing beneficiaries;

(4) act­ing per­son­ally, although des­ig­na­tion may be allowed in cer­tain circumstances;

(5) insur­ing against perils;

(6) con­tin­u­ing or main­tain­ing actions brought by or against the estate;

(7) ensur­ing invest­ments are authorized;

(8) keep­ing proper accounts;

(9) arrange for income tax mat­ters to be com­pleted; and

(10) dis­trib­ut­ing the estate accord­ing to the deceased wishes.

Some of the fac­tors one may wish to con­sider prior to decid­ing to act are as follows:

(1) the poten­tial for per­sonal lia­bil­ity aris­ing from a breach of trust in the course of admin­is­ter­ing an estate;

(2) the terms of the will i.e. if there are ongo­ing trusts to admin­is­ter and if the execu­tor is a beneficiary;

(3) the nature of the assets and deter­mine whether you have the req­ui­site exper­tise to deal with the assets i.e. insol­vent estate;

(4) con­flict of interest;

(5) the per­sonal rela­tion­ship with the ben­e­fi­cia­ries of intes­tate suc­ces­sors; and

(6) the time involved and remu­ner­a­tion payable.

If you are appointed as an execu­tor and don’t or can’t carry out the respon­si­bil­i­ties, you may wish to appoint a trust com­pany to admin­is­ter part or all of the estate. A trust com­pany may agree to carry out the duties in admin­is­ter­ing the estate depend­ing on the size of the estate and the com­plex­ity of the admin­is­tra­tion. You may also for­mally renounce your appoint­ment pro­vided that there has not been any inter­med­dling with the estate assets. A renun­ci­a­tion must be uncon­di­tional, in writ­ing, and should be wit­nessed by some­one who does not have an inter­est in the estate.

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Pro­tect­ing Estate Assets

Once a per­sonal rep­re­sen­ta­tive has decided to act, the fol­low­ing steps should be taken to pro­tect the estate assets:

(1) Search for cash, insur­ance poli­cies, secu­ri­ties, jew­ellery, and other valu­ables, and arrange for their safe­keep­ing. Can­cel the deceased’s credit cards.

(2) Lock up the deceased’s res­i­dence if it is not occu­pied. Advise the police if it is not under proper supervision.

(3) Arrange for an imme­di­ate inven­tory of all per­sonal assets.

(4) Check the insur­ance on the deceased’s assets (e.g., house, fur­ni­ture, motor vehi­cle). Check the expiry dates and check the vacancy pro­vi­sions to ensure that the cov­er­age con­tin­ues (a 30 day vacancy limit applies in most poli­cies insur­ing res­i­den­tial prop­erty). Notify the insur­ers of the death.

(5) Arrange for interim man­age­ment of the deceased’s business.

(6) Col­lect and deposit any out­stand­ing cheques (e.g., pen­sions, div­i­dends, inter­est, salary).

(7) Redi­rect mail if necessary.

(8) Check for mort­gages (and deter­mine if they are life-insured) and agree­ments for sale and make the pay­ments to keep them up to date.

(9) Check leases and ten­an­cies. Give ten­ants notice about where to send rent pay­ments and give notice of ter­mi­na­tion if necessary.

(10) Review the last cheques writ­ten by the deceased to ensure that there were no irregularities.

(11) Apply for Canada Pen­sion Plan Death Ben­e­fits. If you need any infor­ma­tion, you should con­tact them at 1–800-277‑9914. If you are mail­ing any doc­u­ments to Canada Pen­sion, the address is: PO Box 1177, Fed­eral Build­ing, Vic­to­ria, BC, V7W 2V2.

Please note that these sug­ges­tions apply to many estates, but they may not all apply to the estate that you are admin­is­ter­ing. This is not a com­plete list of assets; there may also be other assets that require pro­tec­tion and that aren’t dealt with above.

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Pre-Application Steps prior to obtain­ing Grant

Prior to apply­ing for a grant of pro­bate the orig­i­nal will and Cer­tifi­cate of Wills Notice search must be deposited in the reg­istry. The rea­son for this is that the courts need to be sat­is­fied that the will has not been revoked.

All par­ties ben­e­fi­cially inter­ested in the estate must be sent notice of the appli­ca­tion for the grant. The rea­son for hav­ing to send notices is because the Wills Vari­a­tion Act, pro­vides that a child or spouse of the deceased may seek redis­tri­b­u­tion of the estate if it can be estab­lished that “ ade­quate pro­vi­sion” had not been made for the “proper main­te­nance and sup­port” of the claimant.

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What are the  Estate’s Assets

If there is a will appoint­ing the execu­tor, the per­sonal prop­erty devolves at the moment of death, sub­ject to the execu­tors right to renounce. The execu­tor has one year from the testator’s death to gather all assets and set­tle the estate affairs.

If there is no will, the estate vests into the court until an admin­is­tra­tor is appointed.

The per­sonal rep­re­sen­ta­tive will require an inven­tory of the deceased’s assets at the date of death.

Gen­er­ally there are two asset cat­e­gories. Firstly, those assets that were prop­erty of the deceased that pass by will or intes­tancy to the per­sonal rep­re­sen­ta­tive. Sec­ondly, assets that may or may not have been prop­erty of the deceased that passes by oper­a­tion of law. Assets that do not pass as part of the estate include the following:

(1) assets held in joint ten­ancy, which passes by law, to the sur­viv­ing joint tenant;

(2) bank accounts that are held jointly pass to the sur­viv­ing account holder;

(3) prop­erty that although appeared to belong to the deceased was sub­ject to a trig­ger­ing event under the Fam­ily Rela­tions Act or com­mu­nity prop­erty regime;

(4) prop­erty that by con­tract or will passes directly to the ben­e­fi­ciary i.e. pen­sion, insur­ance poli­cies, RRSP or RRIF payable to direct ben­e­fi­ciary; and

(5) Inter vivos trusts: this a trust set up dur­ing a tes­ta­tors life­time, all assets in the trust pass out­side the will and in accor­dance with the trust.

All assets need to be val­ued. Gen­er­ally, the val­u­a­tion date is the date of death although there may be other dates for tax pur­poses. Val­u­a­tion can be a com­plex process and it may be pru­dent to retain a pro­fes­sional appraiser.

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Who is Respon­si­ble for the Deceased’s Debts?

The per­sonal rep­re­sen­ta­tive may face per­sonal lia­bil­ity for the debts of the deceased to the extent of the assets of the estate. It is crit­i­cal that debts are prop­erly listed and valued.

Debts include not only those imme­di­ately payable but also deferred debts. The per­sonal rep­re­sen­ta­tive should check all due dates of debts and make arrange­ments for the pay­ment or release.

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What are Pro­bate Fees?

Although in Canada there is no inher­i­tance tax per se, pro­bate fil­ing fees are required to be paid before the grant will be issued. The fees are deter­mined by the value of the estate. If the deceased was ordi­nar­ily a res­i­dent of B.C. imme­di­ately prior to death, all of the deceased’s assets, except of real and per­sonal prop­erty located out­side B.C. will be sub­ject to pro­bate fees.

The pro­bate fil­ing fees are $6 for each $1000 or part thereof of estate value in excess of $25, 000, up to $50,000, plus $14 for each $1000 or part thereof of estate value in excess of $50,000 together with a $208 fee payable to com­mence the application.

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What is a will?

A will is a legal doc­u­ment made by you to take effect upon your death. It gives instruc­tions on how your assets are to be divided and how your affairs are to be handled.

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Why do you need a will?

A will serves a vari­ety of functions:

1. Appoint­ing a per­sonal rep­re­sen­ta­tive to han­dle affairs after your death;

2. Appoint­ing a guardian for chil­dren under the age of 19;

3. Select­ing family/friends/ charities/or other orga­ni­za­tions to inherit you assets;

4. Ensur­ing that your ben­e­fi­cia­ries receive inher­i­tance in a man­ner and age that you feel is suitable;

5. Poten­tial tax planning;

6. Reduc­ing the cost of admin­is­ter­ing your estate.

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When do you need to revise your will?

When there is a mate­r­ial change in your cir­cum­stances which may include, birth, death, mar­riage, mar­riage break­down or divorce, change in cir­cum­stances of guardian or executor-trustee named in your will, or a sub­stan­tial change in assets or lia­bil­i­ties or tax laws.

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What hap­pens if you die with­out a Will?

Where a per­son dies in British Colum­bia with­out a will, a per­son is said to have died intes­tate. The admin­is­tra­tion of your estate will be dis­trib­uted in accor­dance with the laws of British Columbia.

The Estate Admin­is­tra­tion Act sets out the scheme for dis­tri­b­u­tion of the estate of a deceased per­son. Dying with­out a will can cause a great deal of stress and expense to the sur­viv­ing fam­ily mem­bers. Some of the prob­lems include the following:

(1) There is no execu­tor appointed and the estate can­not be dealt with until the court appoints some­one to admin­is­ter the estate;

(2) Dis­putes are far more likely to arise amongst fam­ily mem­bers as the per­son apply­ing to be the admin­is­tra­tor needs to get the con­sent of all per­sons with an equal or greater right to apply;

(3) Where chil­dren are involved a guardian is court appointed;

(4) Lack of estate plan­ning can lead to increased taxes.

(5) Some ben­e­fi­cia­ries will not be ade­quately pro­vided for. Where there is a spouse and two or more chil­dren the spouse is enti­tled to the first $65,000 and a life inter­est in the fam­ily home and one third of the bal­ance of the estate. This may sim­ply not be suf­fi­cient for the spouse;

(6) Chil­dren receive the inher­i­tance at the age of 19. Many peo­ple use trusts to defer the dis­tri­b­u­tion until an older age when they feel a child is bet­ter able to han­dle the money;

(7) If a ben­e­fi­ciary is receiv­ing dis­abil­ity assis­tance the dis­tri­b­u­tion of assets may ren­der them inel­i­gi­ble for dis­abil­ity assis­tance; and

(8)There will be no gifts to friends or charities

The above is by no means an exhaus­tive list of the prob­lems from dying with­out a will. Ulti­mately, the delay and expense of admin­is­ter­ing an estate can be avoided by plan­ning your estate dur­ing your life­time. It is highly rec­om­mended that you con­sult a lawyer to avoid some of the prob­lems listed above.

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What is a Power of Attorney

A Power of Attor­ney is a method of giv­ing some­one the power to con­duct your finan­cial affairs. This doc­u­ment is often granted when a person’s mental

capac­ity is weak­en­ing because of age or ill­ness or other fac­tors and a per­son no longer feels capa­ble to ade­quately man­age their affairs. By hav­ing a Power of

Attor­ney it allows you to appoint s ome­one you trust to make finan­cial deci­sions on your behalf. In order to grant some­one a Power of Attor­ney you must be mentally

com­pe­tent. Unless your Power of Attor­ney specif­i­cally pro­vides to it is to con­tinue to be effec­tive notwith­stand­ing your men­tal inca­pac­ity the doc­u­ment will cease to be effec­tive. There­fore if plan­ning for inca­pac­ity an “endur­ing” clause is highly recommended.

The Power of Attor­ney can be can­celled at any time by the per­son who granted it assum­ing that he or she is still men­tally sound. Like a Will, a Power of Attor­ney is an essen­tial part of an estate plan.

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What is a Rep­re­sen­ta­tion Agreement

A Rep­re­sen­ta­tion Agree­ment is a method of giv­ing some­one else the power to make health care and per­sonal care deci­sions. The Rep­re­sen­ta­tion Agree­ment can either take effect imme­di­ately or in the hap­pen­ing of an event such as incapacity.

The law also allows you to appoint a mon­i­tor to make sure that the

rep­re­sen­ta­tive com­plies with his or her duties.