Your Estate - What has to be Done?

Acting as an Executor

 

These articles first appeared in Englehart Press, Englehart, ON.

Note to Readers: The information provided in this article is a brief summary for information purposes
only and is applicable only for the Province of Ontario. It is not intended to be legal advice. Full and complete
advice can only be given by a lawyer who has detailed information about your individual circumstances.

Want to Learn More?

Canada Pension Plan Automobiles Joint Bank Accounts Other Bank Accounts
Payment of Funeral Old Age Pension and CPP Cheques Safety Deposit Boxes Life Insurance
Joint Real Estate Certificate of Appointment of Estate Trustee If There is no Will Notice of Application for Appointment of Estate Trustee
Handwritten Wills Advertisement for Creditors Income Tax Surviving Spouse's Will
  Succession Duties and Estate taxes Legal Fees Duties of an Executor Pamphlet

 

YOUR ESTATE - WHAT HAS TO BE DONE?

It would be nice to think that if your will is in order and your assets are held most advantageously, nothing more needs to be done when you die. Too bad, but this is not so.

Before the assets can be given to your beneficiaries, the will has to be proved. Too many frauds could happen otherwise. Just think what unscrupulous people could do with a will - even if you are not yet dead - and that in fact has happened. Proving the will is done by an application to the court, filing affidavits and the original will. Your executor and beneficiaries do not have to appear in court - it is done by the court's administrative staff.

Formerly the court gave the executor a document called letters probate; the term probate coming from the Latin word for prove. Along with the other constant changes of life, the government has changed this to Certificate of Appointment of Estate Trustee. Whatever it is called, it still costs the same. The government charges a probate fee starting at 1/2% of the estate and going to a maximum of 1.5%. Once the Certificate of Appointment has been obtained, it is filed together with applications and other affidavits with the Land Registry Office, banks, trust companies etc. so that the assets can be transferred to the beneficiaries. The cost can run from a few hundred to several thousand dollars.

The necessity to obtain a Certificate of Appointment can be avoided by holding assets such as the house, bank accounts and investments jointly and by designating beneficiaries on life insurance, RRSP's and RRIF's. Ramsay Law Office recommends this a proper estate planning when assets are held jointly with the spouse who is to inherit the asset. Even with this, there can still be applications and affidavits to be filed to change the asset or property to the survivor, but at far less cost.

Many people think it would follow sensibly that if this works well between spouses, it should work well with their children too. BUT CONSIDER:

  • transferring the assets to joint names with children is a taxable disposition. The capital gains inadvertently caused can be far greater than the probate fee saving;
  • the tax free status of your home as a principal residence can be lost;
  • you lose control of the asset;
  • divorces and creditors can cause claims against the asset because it was in the name of a child.

    Having a proper will and wise estate planning make estate administration work well and go much easier for your survivor. There is still work to be done when you die.

 

ACTING AS AN EXECUTOR

Congratulations! You have just been told that you are an executor of the will for someone who has died. What will you have to do?

An executor (female = executrix) is now politically correctly called an estate trustee. Both terms are now used synonymously. The estate trustee has duties and responsibilities. Failure to carry them out can result in personal liability. The deceased person trusted you, and now it is time to prove him right.

The responsibility starts with the funeral. Burial decisions and costs of the funeral are your legal responsibility. You can take advice from the family, but the final decisions are yours. Add to that the funeral home will probably make you sign for payment, just in case there is not enough money in the estate.

You need to identify, list and preserve the assets. How can you be sure the terms of the will are carried out if the assets disappeared when everyone was home for the funeral!

And be sure you have located the last will, and where the original is kept. Recently an elderly lady prepared her will at one law office. A couple of years later she went to another office and changed her will by preparing a new one. The executors did not know about the new will, and administered the estate using the old, revoked will. I don't know how that one worked out.

Your responsibilities (and therefor personal liabilities) are: 1. Funeral; 2.Income Tax; 3. Debts; 4. Beneficiaries, in that order. Don't do it right and any one of them can sue you. If it sounds like a lot of responsibility, it is. No doubt that is why executors can charge the estate up to 5% of the estate value for their work. In fact, that is more than the lawyer will charge.

For most estates the will must be proven. This prevents fraud and other unscrupulous dealings. It is proven by filing an "Application for Certificate of Appointment as Estate Trustee", and the original will with an affidavit by one of the witnesses with the local court, and paying the probate fee - from ½ to 1 ½ % of the value of the estate. This used to be called "probating the will". Joint assets and assets such as life insurance, RRSP's and RRIF's with designated beneficiaries are not included in the value, and usually do not need probate.

Once you have the Certificate of Appointment from the court, you can sell or distribute assets, pay bills, etc. To avoid the liabilities mentioned above:

  • pay the funeral first thing - the bank will give you the money for this without probating the will;
  • advertise for creditors and pay the bills;
  • file the necessary income tax returns and obtain a clearance certificate;
  • account to the beneficiaries and get a release before distributing the estate.

Of course if you are executor and beneficiary both, and knew the deceased's affairs intimately, much of this won't be necessary.

The executor's best friend is probably the lawyer and tax accountant. They can provide expert advice and guidance and prepare the documents and guide you through the procedures. They get paid from the estate.


WANT TO LEARN MORE?

 

CANADA PENSION PLAN

Canada Pension Plan provides:
• for a maximum death benefit of $2500.00;
• a surviving spouse pension of 60% of the deceased's pension, maximum $446.87 per month;
• up to $171.33 to dependent children in full-time attendance at school.

These are based on the maximum contributions having been made; otherwise, the benefits may be less.

Complete the yellow and green forms supplied by the funeral director (some directors do this for you). Follow the instructions as to what you must send. If you do not want to send your original marriage certificate or other documents, have Ramsay Law Office make a notarized or certified copy.

More information is available at 1 800 277 9914 or http://www.hrdc-drhc.gc.ca/isp/cpp/surviv_e.shmtl

 

AUTOMOBILES

Motor vehicles registered in the name of the deceased can be transferred at the Driver & Vehicle License Office. Sign the ownership certificate as estate trustee. Take a new insurance certificate in your own name. This can be obtained from your insurance agent.

If the vehicle is being sold or transferred to anybody other than the surviving spouse, a certificate of mechanical fitness is also required.

No Retail Sales Tax is payable if the vehicle is given to a beneficiary under the will. The Licence Office will need to view the part of the will giving the vehicle (or giving the whole of the estate) to the beneficiary.. Otherwise Sales Tax is payable on the book value of the vehicle even if it is not being sold.

IMPORTANT: If you are selling the vehicle, be sure to obtain cash or a certified cheque and attend at the Licence Office with the ownership and the purchaser so that you can be sure the ownership is changed and sales tax is paid. THE ESTATE IS RESPONSIBLE FOR DAMAGES CAUSED WHILE IT IS REGISTERED IN THE DECEASED'S NAME.

 

JOINT BANK ACCOUNTS

The surviving joint bank account holder should attend at the bank and have the bank accounts changed over into his or her name alone. The bank will have a new signature card and other forms to be signed but no other documents are required.

 

OTHER BANK ACCOUNTS

Bank accounts in the name of the deceased alone will usually not be released by the bank until the Certificate of Appointment has been obtained. All banks will permit payment of funeral expenses and the probate fee, and some banks will permit other expenses to be paid before the Certificate of Appointment has been obtained.

If there are no other assets of the estate for which a Certificate of Appointment of Estate Trustee is required and the bank account does not exceed the bank's set value, the bank will waive this requirement. We would be pleased to make the application for you and prepare the documents.

 

PAYMENT OF FUNERAL

The funeral account may be paid from the deceased's bank account. Take a copy of the funeral account to the bank.

 

OLD AGE PENSION AND CANADA PENSION PLAN CHEQUES

The estate is entitled to the Old Age Pension, Canada Pension Plan, and G A I N S cheques for the month in which the deceased died. If the cheques arrive after the date of death, deposit them into the deceased's bank account or the estate account if one has been opened. Ramsay Law Office will be pleased to assist you.

Old Age Pension and Canada Pension cheques or direct deposits received for months after the month of death must be returned. The addresses for this are:

for Old Age Pension and Canada Pension Plan: for G A I N S
Income Security Programs Ministry of Revenue
70 Cedar Street South, Ground Floor Queen's Park
TIMMINS, Ontario TORONTO, Ontario
P4N 8C8 M7A 2B3

 

SAFETY DEPOSIT BOXES


Jointly held Safety Deposit Boxes can be transferred into the joint holder's name and any of the contents removed at any time. Stocks, Wills, deeds, etc., should be removed and delivered to your lawyer to be dealt with by him.

For safety deposit boxes in the name of the deceased alone, the bank may not permit anyone to enter the box, other than the executor to remove the original Will, until the Certificate of Appointment has been obtained. Most banks will allow the executor to enter the box by producing a copy of the Will, if any, and to copy the contents. Ramsay Law Office will require a copy of the contents, and will be pleased to help you.

 

LIFE INSURANCE

Life insurance proceeds payable to a beneficiary can be paid to the beneficiary without waiting for the Certificate of Appointment of Estate Trustee. The insurance company will usually require the policy, an application form completed by the beneficiary and a statement completed by the doctor who attended at the time of death or a funeral death certificate.

The local agent of the insurance company is most helpful in this regard and you should contact him as soon as possible. If there is no agent, our office will be pleased to assist.

If life insurance was payable to the estate or to a beneficiary who has died the money will only be paid to the estate after the Certificate of Appointment has been produced to the insurance company. Our office will be pleased to assist you with this.

 

JOINT REAL ESTATE

For a house or other real estate held in joint ownership our office will prepare a Survivorship Application to be submitted to the Land Registry Office in order to have the title placed in the name of the survivor. We will require particulars of the title and a copy of the funeral director's or Provincial death certificate.

 

CERTIFICATE OF APPOINTMENT OF ESTATE TRUSTEE
(formerly called Probating the Will)

An application is made to the Ontario Court - General Division proving to the satisfaction of that Court that the Will was in fact the deceased's last Will and that it was validly made. At the same time, the estate trustee undertakes that he will faithfully administer the property of the deceased and if his administration is ever questioned, he will provide his accounts to the Judge. The Court officials will ensure that the documents and the Will are in order and that no other application is being made. They then issue a Court document called "Certificate of Appointment of Estate Trustee With a Will".

The Court charges a fee, commonly known as "probate fees", calculated on the basis of $5.00 for each $1,000.00 of the first $50,000.00 of the value of the assets shown on the application and $15.00 for each $1,000.00 of the value of the assets in excess of $50,000.00. For example, if the value of the estate was $100,000 the probate fee would be $750. The Court requires this to be paid in advance by certified cheque payable to the Minister of Finance.

It normally takes several weeks to obtain the information to prepare the application and the Court takes from two to five weeks to issue the Certificate of Appointment of Estate Trustee.

Preparing these documents and obtaining the Certificate of Appointment of Estate Trustee is looked after by Ramsay Law Office.

 

IF THERE IS NO WILL

An application is made by one of the next of kin to the Court to be appointed as Estate Trustee Without a Will. This person must be nominated in writing on the proper forms by at least a majority of the next of kin who are over eighteen years of age. A "probate fee" calculated on the same basis as set out above is charged by the Court. It may take several weeks to obtain the information, and it is often difficult to obtain the signed nomination forms from the next of kin. The Court takes two to five weeks to issue a Court Order appointing the applicant as Estate Trustee Without a Will.

The applicant may have to be bonded by an insurance company or by two (2) individuals. Ramsay Law Office will advise you in this regard.

Preparing the documents and obtaining the bond and the Certificate of Appointment of Estate Trustee Without a Will are looked after by Ramsay Law Office.

If there is no will the estate is distributed in accordance with the Succession Law Reform Act which distributes the assets in accordance with a government formula.

Assets of which a surviving person was a joint holder with the right of survivorship or which have a named beneficiary, such as life insurance policies, go to that person automatically, whether or not there is a will.

 

NOTICE OF APPLICATION FOR APPOINTMENT OF ESTATE TRUSTEE

Before the Application can be made to the Court for the Certificate of Appointment a Notice of Application for Appointment of the Estate Trustee must be mailed to each beneficiary under the will, together with a copy of the will. If there are beneficiaries under 18 years of age a copy is sent to the Children's Lawyer (formerly called the Official Guardian). Preparation of this Notice and the mailing are looked after by Ramsay Law Office.

 

HANDWRITTEN WILLS

Ontario law recognizes holograph Wills which are entirely in the handwriting of the deceased and signed by him. If you are aware of the existence of any handwritten Will or Memorandum of the deceased, you should deliver it to Ramsay Law Office to be checked for you.

 

ADVERTISEMENT FOR CREDITORS

A notice to creditors advising that all claims must be submitted prior to a fixed date often appears in local newspapers. This notice is recommended in any case where the executor or administrator is not aware of the deceased's affairs and wishes to find out what debts may be owing so that the executor or administrator will not be personally responsible for any debts.

If the executor or administrator is also the sole beneficiary then he or she is still responsible for the debts of the deceased and it may not be advisable to publish the notice.

Ramsay Law Office will advise you as to whether the notice is required. Our office customarily prepares and submits it to the newspaper on your behalf.

 

INCOME TAX

A final income tax return must be prepared for the last year the deceased was alive. This can be prepared and submitted to Revenue Canada at any time after the deceased's death and up to April 30th in the following year. Included in the final return is the normal income that would have been declared by the deceased in that year together with any accrued interest or income on bonds or investments and capital gains.

Unless the property is passing to the deceased's spouse it is all deemed to have been sold at the date of death and capital gains tax is payable. If the property passes to the surviving spouse then no capital gains tax is payable until the spouse sells the property or dies. A principal residence is not included in property on which capital gains tax is charged.

Tax returns for years prior to the year of death must be prepared and filed, where required, within six months of the deceased's death.

If, after the date of death, any significant amount of income is earned by the estate, an estate and trust return must be prepared and filed with Revenue Canada, Taxation. T-3 slips are given to the beneficiaries to be included with their income tax returns showing the income to which they were entitled and upon which they are taxable.

Our office or your accountant will be pleased to help with these tax matters.

 

THE SURVIVING SPOUSE'S WILL

The surviving spouse should have his or her will reviewed by Ramsay Law Office and updated if necessary. A new executor may have to be appointed. Provisions should be made for dividing your estate as you wish amongst your children or other beneficiaries. You should also consider what should be done if any of your children predecease you.

 

SUCCESSION DUTY AND ESTATE TAXES

There are no longer any Succession Duties, Estate Taxes or other death duties payable in Ontario. The only taxes on death are Income Tax and the Probate fees.

 

LEGAL FEES

For estates of average complexity, our office charges for obtaining the Certificate of Appointment and transferring the assets as follows:

Obtaining Certificate of Appointment:
with a will                                                                                   $2,500
without a will                                                                              $3,000
Real estate transmissions *                                                          $750
Family Transfers *                                                                        $450
Survivorship application *                                                              $750
Stocks, bonds, etc. $250 - 500 per transmission.
Estate Information Return                                                           $500
 
* Does not include associated real estate searches or registration costs

For complex estates and for large estates, our fee may be based upon the amount of time spent by our office or a percentage of the value.

Other charges may be made for assistance in connection with other matters. The amount will depend upon the amount of time spent on them. There will be other costs eg,, H.S.T. , the notice for creditors, registering documents at the Land Registry Office, title searches, etc.

We will be pleased to give you an estimate, at any time, of the total costs.

 

Pamphlet

Please click on the link for a detailed pamphlet on the duties you may expect to have as an Executor of a Will.

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