Estates

The death of someone close to you is traumatic. Administering a deceased's estate can be confusing and complicated. When both happen at once, it is doubly difficult. We are here to help.

In the hope that it may answer some of your questions, we set out below some of the steps required and procedures involved in administering an estate. The following contemplates that there is a valid Will which will not be contested. Note that if this is not the case, although the administration of the estate will require similar steps, additional steps will be required (for example, where there is no Will, an administrator, rather than an executor or executrix, must be appointed by the Court); we would be pleased to advise you concerning those additional steps - please contact us. It is also assumed that the executrix (see below) is not the sole beneficiary of the estate - if she were, there may be certain short cuts.

Probate Procedures

The person (or persons) appointed by the deceased's Will to administer the deceased's estate is called the "executor" if the person appointed is a man, "executrix" if the person appointed is a woman and "executors" if more than one. (They are also sometimes referred to as "trustee" because of the nature of their obligations in administering the deceased's estate.) For ease of reference, we will assume that there is one executrix appointed under the Will. In order for the executrix to have the authority to act on the estate's behalf, the Will must be "probated" or, essentially, proven to be the the deceased's last valid Will. To do so, the Will must be submitted to the Court along with various other affidavits and documents.

In order to prepare the documents which must be submitted to the Court, the following is required:

(1)   List all the assets and liabilities of the deceased’s estate, including descriptions and approximate values as at the date of death. 

(2)   List each beneficiary under the Will, giving full name, address, social insurance number, and that person’s relationship to the deceased. 

(3)   List anyone to whom the deceased was or had ever been married or with whom the deceased ever had a common law relationship. For each, provide the full legal name, the address, and details about the date of marriage, date of divorce, date of death of the person, and so on. 

(4)   List all the deceased’s children, whether they were born inside or outside of marriage, including their full legal name and the address. If any child is under 19 years of age, list his or her birth date and the name of his or her guardian.

 (5)   List each person (other than people already listed) to whom the estate would pass if the deceased had not made a will (e.g. a spouse, children).

 (5)   Wills Search with the Department of Vital Statistics to determine whether they have any record of a later Will or amendment to the Will by the deceased.

Once this information is gathered, the probate application documents may be prepared and filed with the Probate Registry in the closest Supreme Court. When the documents are filed, a probate filing fee must be paid to the Supreme Court of British Columbia. This fee is made up of a $208 charge to start the Court proceeding, plus $6 for every $1,000 or part of $1,000 of the gross value of the estate assets in excess of $25,000 up to $50,000, plus $14 for every $1,000 or part of $1,000 of the gross value of the estate assets in excess of $50,000, that were located in British Columbia when the deceased died. For example, if the gross value of an estate is $125,000, the court filing fee will be $1,408.

In addition to the above, the executrix is required by law to mail or deliver a notice of her intention to apply for the grant of probate, together with a copy of the Will, to each beneficiary in the Will, each person who is entitled to apply under the Wills Variation Act to vary the Will (see below), and each person who would have been entitled to share in the estate if the deceased had not left a Will (e.g. spouse, children).

The time it will take to receive the grant of probate will depend upon the work load of the Court's Probate Registry, however, it will usually take at least several weeks to obtain after the documents are filed in the Registry.

Administration

The duties and responsibilities of the executrix in administering the deceased's estate begin when the deceased dies. The executrix should take whatever steps she is able to safeguard the estate assets, including taking possession of assets and papers that might otherwise go missing.  

The executrix should keep a diary of all the steps she takes and decisions she makes with respect to the administration of the estate, starting at the date of the deceased’s death. For each item, record the date, what was done and any expenses incurred personally. The executrix must keep a complete record of all expenditures and receipts because she must be able to provide a complete accounting for her administration of the estate before the estate is finally distributed.

Once the executrix is granted probate, there are various things she can or must do. She can arrange for the transmission of the estate assets into her name. She must settle the deceased’s debts and any expenses that she has paid as the executrix in administering the deceased's estate. Depending upon the terms of the Will, the executrix may be required to convert assets into cash. If the executrix does so, any money she receives from the sale of estate assets should be reinvested in the her name as “Executor of the Will of the [deceased's name], deceased”. The executrix will have to ensure that any such investments, as well as the deceased’s own investments, are permitted under the Trustee Act or the Will.

Income Tax

As the deceased’s executrix, she must file certain income tax returns for the deceased and the estate. The basic filing obligations are as follows (of course the executrix will rely upon advice from her accountant and tax advisors in this regard):

 (1)   the executrix must file a T1 (General) return for any year before the year of death, if the deceased had not filed a return for that year and if tax is payable. The return must be filed within six months of the deceased’s death;

 (2)  the executrix must file a T1 (General) return for the year of death (January 1 to the date of death), in most circumstances. The return must be filed either six months from the date of death or on April 30 (or June 15 if the deceased taxpayer carried on business as a proprietor or a partner in the year of death) of the year following the year of death, whichever date is later. The executrix should arrange for this return to be filed as early as possible, in order to obtain a Clearance Certificate (see below) from the Canada Revenue Agency (the “CRA”).

 (3)   the executrix must file a T3 return within 90 days of each fiscal period of the estate. The first fiscal period begins with the date of death. The executrix may choose the date on which the first fiscal period ends, but that date must be no later than 365 days after the deceased’s death.

Depending on the nature of the deceased’s income, the estate may be allowed to file other income tax returns, and it may be desirable for the executrix to do so.

Executor’s Fees

As executrix of the deceased’s will, the executrix are entitled to recover from the estate for any out-of-pocket expenses she incurs in the proper administration of the estate.

The executrix is also entitled to fees from the estate for the her time and effort in the administration of the estate. The maximum fee the executrix can receive for the her time and effort is 5% of the aggregate realized value of the deceased’s assets, 5% of the income earned on the estate assets during the her administration, and an annual 0.4% “care and management” fee based on the average market value of the estate the executrix are administering. The “care and management” fee is traditionally sought only when there is an ongoing trust for the executrix to administer according to the terms of the Will. The fees of the executrix may be subject to G.S.T. and will be considered as income for tax purposes.

Distribution of the Estate

There are various factors which affect when the executrix might be in a position to distribute the estate to the beneficiaries, and when the deceased's estate might be finally wound up. It is difficult to forecast these dates with any degree of certainty. Various factors may influence the speed with which matters can be resolved, some of which are outlined below.

Wills Variation Act

This Act says that, when a person dies leaving a will, any spouse or child of that person can bring proceedings to vary the Will if that spouse or child believes that the deceased person did not adequately provide for him or her.

A spouse or child who wants to bring such an action must begin the proceedings within six months of the grant of probate of the Will. This means that the executrix should not make any distribution of estate assets until at least six months after she receives the grant of probate.

Executor’s Year

The executrix will have what is called an “executor’s year” (which is a year from the date of the deceased’s death) before she must distribute the deceased’s estate to the beneficiaries. The reason for this executor’s year is that it gives the executrix an opportunity to identify and gather in all the estate assets and to pay all debts.

Clearance Certificate

The Income Tax Act requires that an executor obtain a Clearance Certificate from the CRA before distributing property to a beneficiary.

Advertising for Creditors

You may have seen in the legal advertisement part of your newspaper, a section called “Notices to Creditors and Others”. An executrix advertises in this section, in accordance with the Trustee Act, as a way to avoid becoming personally liable for any of a deceased’s debts that come to the executor’s attention after the estate has been distributed to the beneficiaries. Advertising in the prescribed form does not mean that the beneficiaries can avoid valid claims by creditors, but it does help the executrix to distribute the estate once he has settled all the claims against the estate of which she is aware.

Accounting

Before the executrix distributes the estate among the beneficiaries, the executrix should (and in some cases, must) give them an accounting of the her administration of the estate for their approval.

As you will note from the above, probating a Will (or if there is not a valid Will, applying for administration) can be complicated. We would be pleased to assist you.