Administration of Estates

Probate is a Court Order that confirms the authenticity of a Will and the appointment of the Executor.  It is not always necessary.

At its simplest, Estate Administration is transferring assets from the deceased to the beneficiaries.  Often there is someone called a “stakeholder” who must be satisfied that the transfer is legitimate.  The written Will of a deceased person “speaks for itself”; meaning it has its own authority. For some items, a stakeholder may be satisfied by a notarized copy of the will, a death certificate, and a sworn statement from the Executor.  However, for items of greater value, the stakeholder demands the authority of a Court document:   a Certificate of Appointment of Estate Trustee with a Will (commonly called “letters probate”) or a Certificate of Appointment of Estate Trustee without a Will (commonly called “letters of administration”).

Examples of stakeholders:   In Ottawa, if a person dies owning real estate and there is no surviving joint tenant, the Land Registrar insists in most cases upon a Certificate of Appointment of Estate Trustee (there are exceptions for property of very little value or for property that has been held for many years by the same owner).    Another example:     every chartered bank has its own money threshold below which it will waive probate and above which it will insist on probate.    Publicly traded shares?   Often the transfer agent will require probate.

Probate triggers a nuisance tax, the Estate Administration Tax (“EAT”).  It is a nuisance tax because it is a relatively low rate $15 per thousand after $50,000.00) and because it is arbitrary:  if one asset requires probate, then the tax is payable on the entire estate. Fortunately, the estate does not include jointly owned property passing by survivorship or life insurance paid to a named beneficiary.

Because of recent amendments to the Estate Administration Tax Act, the Ontario Minister of Finance has the right to audit an estate for assets not properly disclosed in the application to appoint an Estate Trustee, and to extract from the Executor any taxes owing even four years after the application was made. Therefore, it is more important than ever that Estate Trustees keep accurate and complete records of the value of assets in an estate.

Protect the property by keeping meticulous records–you need to satisfy the beneficiaries, Canada Revenue Agency, and, if the estate is probated, the Ontario Minister of Finance.

Executors are expected to sort out their disagreements between themselves, because they, and not the Court, are responsible for making decisions about the management of an estate. To resolve a dispute, the Executors may need the help of a professional mediator, accountant, or an estates lawyer. As a last resort, the Executors could apply to the Court to appoint a different Executor, such as a trust company.

The decisions of an Executor can be challenged in Court.    Both the Executor and the beneficiaries need to know that if they behave unreasonably, they (and not the estate) may have to pay Court Costs arising from Estate Litigation.