Tag: estate assets

Categories
Brandon Blog Post

WHAT HAPPENS TO CREDIT CARD DEBT WHEN YOU DIE? A WIDOW’S HUGE VICTORY

Picture of widow being hugged by a daughter
what happens to credit card debt when you die

What Happens to Credit Card Debt When You Die? Introduction

What happens to credit card debt when you die? Credit card debt can’t follow you to the grave but it does live on. It is paid off from estate assets. But if there are no or insufficient assets in the Estate, what then? The traditional thinking and what the bank’s documents say is, that it becomes the responsibility of a joint account holder. That is certainly the advice we gave in our 2019 Brandon’s Blog titled: CREDIT CARD DEBT AFTER DEATH IN CANADA: WHO IS RESPONSIBLE?

Remember that classic hit “I Fought the Law” with the epic line, “I fought the law and the law won”? This tune, penned by Sonny Curtis of the Crickets, got a killer cover by the Bobby Fuller Four, hitting the top ten charts back in 1966. Their rendition even snagged a spot at No. 175 on Rolling Stone’s list of The 500 Greatest Songs of All Time in 2004. And to top it off, the Rock and Roll Hall of Fame dubbed it one of the 500 “Songs that Shaped Rock” that same year. Talk about a rock ‘n’ roll anthem! This Brandon’s Blog is about a widow who fought the law and the widow won!

In a recent legal case at the Supreme Court of British Columbia, the Royal Bank of Canada faced off against Carol Smith (no relation to us) in a debt dispute over a Royal Bank Visa credit card balance. The case delves into intricate details, including the primary issue of Mrs. Smith’s liability for the debt accumulated on the credit card. Let’s dissect the facts, arguments, and final judgment in this high-stakes legal showdown.

What Happens to Credit Card Debt When You Die? Credit Card Debt and Death

How Credit Card Debt Is Handled After Death

Two weeks ago, I wrote the Brandon’s Blog: HOW TO PAY OFF CREDIT CARD: CANADIANS NAVIGATING TO HUGE CREDIT CARD DEBT CRISIS. That blog dealt with issues facing credit card holders when they are alive and their unpaid debt, not about a deceased person.

When someone passes away with outstanding credit card debt, the responsibility for repayment typically falls to the deceased’s estate. The Estate Trustee is responsible for notifying creditors of the death, as well as determining the total amount of debt owed and using the assets of the estate to settle the debts.

If the deceased’s estate is unable to cover the full amount of debt, or even before the bank makes that determination, it will make a demand on any joint account holder or supplementary credit card holder. Individuals need to plan and consider the impact of their credit card debt on their estate to ensure a smooth and orderly resolution of their financial affairs after their passing.

Impact of Credit Card Debt on the Estate

Credit card debt can have a substantial effect on an individual’s estate. Creditors possess the legal entitlement to assert claims against the estate to have their outstanding debts paid from its assets. The Estate Trustee is required to adhere to a specific protocol ensuring all estate debts are properly identified, resulting in a delay before beneficiaries can anticipate receiving their allocated shares from the estate. Settlement of estate debts consequently diminishes the total amount distributed to each beneficiary.

If estate debts exceed the value of the estate, the Estate Trustee is well advised to put the estate into bankruptcy and allow whatever assets there are to pay for the bankruptcy process. This will protect the Estate Trustee given his or her liability taken on by being the Estate Trustee. It will also allow the estate assets to be administered according to the law by a licensed insolvency trustee to treat all creditors fairly.

Picture of widow being hugged by a daughter
what happens to credit card debt when you die

What Happens to Credit Card Debt When You Die? Dealing with Credit Card Debt After Death

Checking for Life Insurance Coverage

The appointed Estate Trustee is advised to promptly inform creditors of the deceased person’s passing and explore any potential insurance coverage that may apply. It is recommended to engage the services of a financial advisor or legal expert to effectively navigate the intricacies involved in settling credit card debt post-mortem. By conducting a comprehensive review of insurance policies and seeking professional assistance, individuals can adeptly handle and resolve any outstanding debt obligations left by the deceased individual.

It is important to first check if the deceased had any insurance coverage that may help cover outstanding debts. This includes checking for credit card balance insurance, mortgage insurance, or any other relevant life insurance policy that may provide coverage. It is advisable to contact the relevant credit card companies, the bank that holds the mortgage and any insurance providers to whom the deceased’s records show payments were made.

Selling Assets to Pay Off Debt

The obvious option in dealing with the debts of the estate when there are sufficient assets, is selling enough of them to pay off the debt. This process involves identifying any valuable assets left behind by the deceased, such as real estate, vehicles, or investments, and liquidating them to generate funds to settle the outstanding debts.

It is essential to collaborate closely with qualified professionals to ensure the legal and ethical execution of this process. By liquidating assets to settle credit card debt and other secured debt or unsecured debt posthumously, one can effectively manage the financial matters of the deceased and facilitate the distribution of remaining assets per the decedent’s directives.

Things become more involved if the deceased wishes specific assets to go to certain beneficiaries, rather than just the cash generated from the sale of all the assets.

The above information is standard for any Estate Trustee to follow, including when we act as an Estate Trustee. But what is the credit card issuer’s position if there is a joint credit card holder? That is what the case of Royal Bank of Canada v. Smith, 2024 BCSC 963 from the Supreme Court of British Columbia is all about.

What Happens to Credit Card Debt When You Die? Introduction to the Case

Let’s dive into the intriguing case between the Royal Bank of Canada (RBC) and a widow, Carol Smith. This legal battle has caught my attention not so much due to the complexities surrounding the debt dispute, but because of the parties involved. Let me walk you through the overview, disputes, and RBC’s application for summary judgment in this case.

Parties Involved

Firstly, we have RBC, the largest financial institution in Canada with a wide reach and unlimited resources. On the other side, we have the widow Carol Smith, the defendant in this case. The contrast between a gargantuan bank and an individual defendant adds an interesting dynamic to this legal conflict.

Debt Dispute and Amount

The crux of the matter lies in a debt dispute over a substantial amount. RBC claimed that Carol Smith owes a total of $51,764.09, including the principal amount and accrued interest on a credit card debt. This significant sum raises questions about the circumstances leading to this debt and the responsibilities of the parties involved.

The bank said the defendant applied for the credit card on February 14, 2001. The deceased Mr. Smith incurred the vast majority of charges on the credit card, and Mrs. Smith made her first charge on June 1, 2015. Over time, the credit limit on the credit card increased, and as of August 25, 2016, the credit limit was $24,000.

The Smiths paid off their monthly credit card balance in full for the first few years, but in late 2016 the balance slowly began to rise. By late 2017 the balance was over the credit limit, and in January 2018 the credit limit was increased to $28,000. Page 7 The last new charges on the card were made in May 2018, and the last automatic payment was made on October 19, 2018.

Picture of widow being hugged by a daughter
what happens to credit card debt when you die

Purpose of Plaintiff’s Application

The RBC as plaintiff filed for summary judgment under Rule 9-7 of the Supreme Court Civil Rules. This application seeks a swift resolution to the dispute, considering the substantial sum at stake and the nature of the issues involved.

Carol Smith acknowledged the suitability of a summary trial, paving the way for a focused legal process to determine the outcome. Her position was that she rarely used her RBC Visa Credit Card, but when she did, she believed she was an authorized user on her husband’s credit card and he was solely responsible for all balances.

Obviously, like every other court case, it comes down to the evidence.

What Happens to Credit Card Debt When You Die? Facts and Evidence Presented

As I delve into the details presented before the court, which involved the Royal Bank of Canada and the defendant, Carol Smith, a clear picture emerges regarding the credit card dispute at hand. The key elements of the case are:

  1. Details of the primary cardholder and the credit card application: The primary cardholder of the credit card in question was Mrs. Smith’s late husband, Alfred Smith. Upon his passing, the focus shifted to determining Mrs. Smith’s liability for the debt accumulated on the card.
  2. Analysis of the Cardholder Agreement terms and obligations: A meticulous review of the Cardholder’s Agreement terms revealed the responsibilities associated with being a co-applicant or an authorized user. The bank relied upon what it stated were the standard definitions and clauses within the credit card agreement.
  3. Examination of the evidence presented by both parties: The court meticulously examined the evidence put forth by both the plaintiff and the defendant. This included witness testimonies, documentation, and arguments presented to ascertain the facts surrounding the case.

From the application process to the complexities of the Cardholder’s Agreement, each element was meticulously scrutinized to determine the liability of the defendant in the outstanding debt matter. Evaluating evidence and legal arguments provided a comprehensive view of the case, offering insights into the intricacies of credit card disputes and contractual obligations.

Picture of widow being hugged by a daughter
what happens to credit card debt when you die

What Happens to Credit Card Debt When You Die? Legal Analysis and Arguments

The courtroom environment, characterized by its atmosphere of anticipation and adherence to procedural rules, provides a structured platform for a thorough analysis and scrutiny of the pertinent facts in question.

Evaluation of Mrs. Smith’s Liability and Contractual Obligations

The crux of the matter lies in determining whether Mrs. Smith, as the widow of the primary cardholder, is indeed liable for the substantial debt accumulated on the credit card. The legal framework, as outlined in the Cardholder’s Agreement, forms the basis for defining the extent of her obligations.

The Bank contended that Mrs. Smith, by accepting and using the credit card, implicitly agreed to be bound by the terms and conditions outlined in the Cardholder’s Agreement. However, Mrs. Smith vehemently denies ever applying for the credit card or consenting to its terms, raising crucial questions regarding the validity of her liability.

Comparison with Similar Cases and Legal Precedents

In legal matters as complex as this, precedent plays a significant role in shaping the outcome. Drawing parallels with previous cases, such as Royal Bank of Canada v. Klassen, 2013 BCSC 631 (CanLII), sheds light on the importance of clarity in determining co-applicant status and consent to credit limit increases.

Through a comparative analysis of these cases, it becomes evident that the burden lies on the bank to substantiate Mrs. Smith’s status as a co-applicant and prove explicit consent to credit limit enhancements. Failure to meet this burden could sway the decision in favour of the defendant.

Interpretation of the Cardholder’s Agreement and Consent to Credit Limit Increases

The interpretation of the Cardholder’s Agreement, particularly concerning credit limits and consent to increases, emerges as a focal point in the legal discourse. The agreement’s language regarding express consent to credit limit enhancements becomes a pivotal factor in determining liability.

As I navigate through the nuances of contractual interpretation, the obligation to review monthly statements and identify errors within a specified timeframe adds a layer of complexity to the case. Mrs. Smith’s adamant denial of ever applying for the credit card underscores the need for concrete evidence to establish her contractual obligations.

In the intricate web of legal analysis and arguments, every detail matters. The meticulous examination of Mrs. Smith’s liability, comparison with legal precedents, and interpretation of the Cardholder’s Agreement paint a vivid picture of the intricate tapestry of the legal system.

What Happens to Credit Card Debt When You Die? Comparison with Previous Cases

As I delve into the details of the current case at hand, I can’t help but draw parallels to a significant legal precedent – the Royal Bank of Canada v. Klassen case. This previous case holds valuable insights and implications that can greatly impact the current judgment.

RBC claimed that its normal practice in the credit card application process was to send a copy of the Cardholder’s Agreement to the cardholders together with the credit cards. RBC further stated that Mrs. Smith breached her agreement with it and that Mr. and Mrs. Smith are jointly and severally liable for the amount owing.

Mrs. Smith denies being a co-applicant and submits that she never expressly consented to any increases to the credit limit. Mrs. Smith denies ever applying for a Bank credit card and further denies ever agreeing to the terms of the Cardholder’s Agreement. If she were a co-applicant, Mrs. Smith or Mr. Smith would need to have given express consent to the credit limit increases.

Reference to the Royal Bank of Canada v. Klassen Case and Its Implications

Looking back at the Royal Bank of Canada v. Klassen case, it becomes evident that there are striking similarities in the issues raised. In that case, the Bank sought judgment against Mr. Klassen for a credit card issued to Ms. Faa. Mr. Klassen’s defence rested on the premise that he was only an additional user on Ms. Faa’s account, not a co-applicant.

The Court’s ruling in the Klassen case highlighted the importance of clear documentation and evidence. As Mr. Klassen denied signing the Co-Applicant Form, the Bank’s failure to produce this crucial document cast doubt on the entire case. The Court ultimately sided with Mr. Klassen due to the lack of concrete evidence supporting the Bank’s claims.

Analysis of the Similarities and Differences in the Two Cases

Now, shifting the focus to the current case, the Court grappled with similar contentious points. Just like in the Klassen case, the issue of co-applicant status and liability comes to the forefront. The bank’s assertions regarding Carol Smith’s involvement with the credit card and the associated liabilities raise key questions that need to be addressed.

One notable similarity between the two cases lies in the burden of proof placed on the bank. In both instances, RBC is tasked with substantiating the claims against the defendants. However, the nuances in each case, particularly regarding the application process and consent to terms, present distinct differences that warrant careful examination.

Picture of widow being hugged by a daughter
what happens to credit card debt when you die

What Happens to Credit Card Debt When You Die? The Final Judgment

Reflecting on the case of Royal Bank of Canada v. Smith, it is essential to delve into the intricate details that led to the final judgment and conclusion, which holds immense significance for all parties involved.

Summary of the Court’s Decision and Reasoning

Having closely examined the evidence presented before the court, it became evident that RBC sought a substantial sum from Mrs. Smith, following the debt accumulated on a credit card. However, after a thorough analysis, it was concluded that the bank failed to produce the actual documentation to establish Mrs. Smith’s liability for the outstanding balance and accrued interest on the card. The court meticulously considered the Cardholder’s Agreement terms, the lack of concrete evidence, and the nuances of Mrs. Smith’s involvement in the credit card application.

Implications of the Judgment on the Parties Involved

The judgment in this case carries profound implications for both the Royal Bank of Canada and Mrs. Smith. It underscores the importance of clear documentation, individual liabilities, and the burden of proof in financial disputes. The Bank’s evidence was what the normal practice of the bank is and what the Cardholder’s Agreement says. However, there was one big problem. RBC was unable to provide a cogent explanation for the Bank’s failure to produce the actual application for Mrs. Smith’s credit card.

For the bank, it serves as a reminder of the necessity to adequately substantiate claims and prove liabilities. On the other hand, for Mrs. Smith, it signifies a just outcome that vindicates her in the face of financial allegations.

What Happens to Credit Card Debt When You Die FAQs

The answers below of course must be considered with the above case in mind.

  1. What happens to credit card debt after death in Canada?
  • The treatment of credit card debt upon death remains consistent in Canada. It is typically settled using funds from the deceased individual’s estate. In cases where a co-signer is present on the credit card account, they may assume responsibility for the full amount owed.
  1. What happens to debt if someone dies with no estate?
  • In the circumstance where an individual passes away with outstanding debts and lacks sufficient assets to settle them, typically, those debts will remain unpaid. An exception to this would be if the deceased had jointly signed for the debt with another party, in which case the co-signer would assume responsibility for repayment of the remaining balance.
  1. Do not pay back a creditor if it’s not a requirement. Is this true for credit card debt after death?
  • Creditors have the legal right to pursue the assets of the deceased individual’s estate to settle outstanding credit card debts post-mortem. It is important to note that the obligation to settle these debts generally does not extend to other family members unless they have specifically co-signed on the credit account in question.
  1. Can credit card debt be transferred to another party after death?
  • Credit card debt is not transferable to another party unless that party was a co-signer on the account or as part of a joint account. Following the passing of the account holder, the responsibility for settling the credit card debt lies with the deceased’s estate, which must address this obligation before distributing assets to beneficiaries.

    Picture of widow being hugged by a daughter
    what happens to credit card debt when you die

What Happens to Credit Card Debt When You Die Conclusion

One of the pivotal takeaways from this case is the significance of contractual obligations and the need for explicit consent in financial agreements. More importantly, it shows the need to be able to produce the actual documents you are relying upon. It underscores the critical role of evidence and clarity in establishing liabilities. Additionally, it highlights the importance of due diligence in legal proceedings and the weight of proof in matters of debt and financial responsibility.

I hope you enjoyed this what happens to credit card debt when you die Brandon’s Blog. Do you or your company have too much debt? Are you or your company in need of financial restructuring? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. However, more importantly, we understand the needs of the entrepreneur or the person who has too much personal debt.

You are worried because you are facing significant financial challenges. It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

The stress placed upon you is huge. We understand your pain points. We look at your entire situation and devise a strategy that is as unique as you and your problems; financial and emotional. The way we take the load off of your shoulders and devise a plan, we know that we can help you.

We know that people facing financial problems need a realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team.

That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious about finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.

Call us now for a free consultation. We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

The information provided in this Brandon’s Blog is intended for educational purposes only. It is not intended to constitute legal, financial, or professional advice. Readers are encouraged to seek professional advice regarding their specific situations. The content of this Brandon’s Blog should not be relied upon as a substitute for professional guidance or consultation. The author, Ira Smith Trustee & Receiver Inc. as well as any contributors to this Brandon’s Blog, do not assume any liability for any loss or damage resulting from reliance on the information provided herein.

Picture of widow being hugged by a daughter
what happens to credit card debt when you die
Categories
Brandon Blog Post

ESTATE TRUSTEE DURING LITIGATION: THE GOOD AND PRACTICAL WAY TO SAFEGUARD ASSETS DURING ESTATE LITIGAT1ON

estate trustee during litigationWe hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to the audio version of this Brandon Blog, please scroll to the very bottom and click play on the podcast.

Estate Trustee During Litigation: What is it?

All of us with business or family assets and/or debts can be subject to litigation or worry about it. Whatever the reason, the reality is that no one can remove themselves from the litigation process…not at the beginning, not at the end, and not even in death. Perhaps it is an employee or partner, a spouse or ex-spouse, your children or grandchildren, or even your parents.

Many times a person’s death creates Estate litigation between family members; either over a Will or because there is no Will! Sometimes it is necessary for the appointment of a neutral, independent court officer to control the Estate assets and deal with Estate issues while the beneficiaries and other potential stakeholders are involved in Estate litigation.

In our sister business, Smith Estate Trustee Ontario, we accept the appointment of Estate Trustee and we can also act as the independent court officer Estate Trustee During Litigation. This Brandon Blog is about why it may be necessary for the court to appoint an Estate Trustee During Litigation and why it may turn out to be a necessity.

The role of an Estate Trustee During Litigation

An Estate Trustee During Litigation is tasked with protecting the Estate while the litigation is ongoing and gathering information and, sometimes, helping to resolve the litigation.

The duties include, in particular:

  • Calculating the fair market value of the estate’s assets and liabilities.
  • Keeping its assets safe and secure.
  • Retaining and, if necessary, tracing anything discovered to be missing.
  • Keeping separate trust accounts.
  • Reviewing and handling protective and other expenditures.
  • Establishing, defending, settling and paying any debts.
  • The filing of income tax returns and if the situation allows for it, whatever tax planning to reduce income taxes can take place.
  • Investing estate funds to maximize yields until the Estate Trustee During Litigation is discharged of its obligations and funds.

Because of their experience, resources, objectivity, and integrity are sometimes viewed as the best option. As a matter of common law, responsibilities of the Estate Trustee During Litigation cease upon the termination of the litigation, and they are required to transfer assets without having to be ordered to do so separately.estate trustee during litigation

Appointing an Estate Trustee During Litigation

A court appoints an Estate Trustee During Litigation to handle the deceased estate. Section 28 of the Ontario Estates Act, R.S.O. 1990, c. E.21 provides the statutory authority. The Ontario Superior Court of Justice grants administration in the case of either intestacy (when there is no Will) or pending a valid challenge to the validity of the Will, or some other action involving the Will and the deceased estate.

While the ongoing litigation continues, the Estate Trustee During Litigation has all the powers and rights of a general administrator, except for the right to distribute the residue of the property. Administrators of such estates are subject to the immediate control and direction of the court, and the court may order that the administrator receive reasonable remuneration from the estate of the decedent.

Court Appoints Estate Trustee During Litigation

The court appoints the Estate Trustee During Litigation and can set its remuneration. Therefore, the court must have some guiding principles it follows to determine when it is appropriate to make such an appointment. Well, it does. It comes from a situation I previously wrote about in my July 24, 2019, Brandon Blog DYING WITHOUT A WILL IN ONTARIO: DISTRIBUTION TO HEIRS NOT EASY. In that Brandon Blog, I wrote about Toller James Montague Cranston, deceased.

Toller Cranston was a popular Canadian figure skater and artist. He passed away on January 23, 2015, in Mexico where he lived for some 23 years. He passed away without leaving a Will. His sister, Phillipa Baran, was appointed Estate Trustee of the Estate of Toller Cranston by the Mexican court on September 3, 2015, on the consent of Phillipa and her two brothers, Guy Francis Cranston and Hugh Goldie Cranston. These three siblings were the only beneficiaries. In December 2016, her appointment as Estate Trustee of the Estate of Toller Cranston was confirmed by the Ontario court, also on consent. Phillipa Baran, therefore, had sole authority for Estate administration.

Estate litigation ensued and the court-appointed an Estate Trustee During Litigation. A rift between the three beneficiaries developed. The brothers filed a motion to remove their sister as Estate Trustee. One of the points of contention between the siblings was the manner ins which Phillippa Baran was handling the sale of Estate Assets, namely, the artwork of Toller Cranston. While that Estate litigation was pending, in 2019, the Master in the Estates court appointed an Estate Trustee During Litigation to take charge of trust property remaining in the meantime until the issue could be resolved.

During the litigation involving the Estate of Toller James Montague Cranston, the Master ordered the Estate Trustee During Litigation to act without posting an Administration Bond. The Master also ordered that all assets of the Estate shall be immediately turned over to the Estate Trustee Under Litigation who shall also file a Consent with the court. Phillipa Baran was ordered to fully cooperate in the transfer of the Estate assets and the production of records, including all financial records.estate trustee during litigation

Philipa Baran appeals the appointment of the Estate Trustee During Litigation

Philippa Baran sought to set aside the Master’s decision and order appointing an Estate Trustee During Litigation. Her appeal was heard by the Divisional Court. According to the court, the Ontario Superior Court of Justice has statutory authority to appoint an Estate Trustee During Litigation.

On this appeal, the Divisional Court Judge felt the appeal boiled down to two points. Specifically, whether the decision of the Master should be set aside and whether the order issued exceeded the Master’s jurisdiction.

The Divisional Court determined that the Master did not err in either law or fact based on its review of the relevant statutory provisions and jurisprudence. The Judge found nothing wrong with the Master’s Order.

To be fair to Ms. Baran, the Judge noted that there is evidence that she has worked very hard to manage the estate’s assets and debts since Toller Cranston died. It has been a challenging task. It appears, however, that the parties have reached a deadlock.

The Judge also thought Ms. Baran’s handling of the remaining artwork, including either selling the art over her brothers’ objections or planning future rights to the artwork without consulting Guy Cranston or Goldie Cranston, was unreasonable and contrary to her obligations as Estate Trustee.

Ms. Baran was, in the court’s view, in a conflict of interest in this litigation. Ms. Baran’s appeal was therefore dismissed, the appointment of the Estate Trustee During Litigation stands and Ms. Baran must temporarily return her Certificate of Appointment to the court.

Estate Trustee During Litigation: A Primer for Accountants and Lawyers

In addition, the Divisional Court noted some of the factors that will be considered by the court in determining whether or not it should exercise its discretion to appoint an Estate Trustee During Litigation. Accounting firms, lawyers, and anyone advising in the Estates area should be aware of these factors.

In terms of the court’s jurisdiction to appoint an Estate Trustee During Litigation, the following points were confirmed:

  • When necessary, the court can draw upon its inherent jurisdiction to protect parties and ensure justice in the proceeding by supervising the management of estates and controlling its own processes.
  • It is in the court’s inherent jurisdiction to appoint an officer to preserve and protect the assets of an Estate that may be at risk during litigation.
  • A level playing field must be ensured and the assets of the estate protected from the tactics used by litigating parties. No one should be able to use their control over the Estate to benefit themselves or to hurt the other beneficiaries.
  • It is crucial to administer an Estate’s assets to the maximum advantage of its beneficiaries. When an Estate Trustee faces an adversarial position towards his/her co-trustees or beneficiary, it is prudent to replace that trustee temporarily;’simple prudence demands it.
  • A court should only refuse the appointment of an Estate Trustee During Litigation in the clearest of cases since it is not an extraordinary measure. In most conflicts between the trustee and beneficiaries, the court will favour the appointment, unless it is not one of those very challenging Estates thereby making the estate administration straightforward.

According to the Divisional Court:

Whether an Estate Trustee During Litigation should be appointed is a discretionary decision. In determining whether the discretion to appoint an Estate Trustee During Litigation should be exercised, the following factors should be considered:

  • An Estate Trustee may be a witness in litigation.
  • Conflicts of interest are possible.
  • Conflict of interests between the Estate Trustee and/or beneficiaries.
  • There is hostility between the Estate Trustee and/or beneficiaries.
  • There is a lack of communication between the parties.
  • There is evidence that some parties were excluded from settlement discussions.estate trustee during litigation

Estate Trustee During Litigation summary

I hope you have found this Estate Trustee During Litigation Brandon Blog informative. The death of a loved one is probably the most traumatic life event you will encounter. It is doubly so if your loved one dies intestate and family members tie up the Estate with costly litigation.

Are you a stakeholder in Estate litigation where the appointment of an independent, neutral court officer can at least unlock the jamming up of assets so that the assets can be preserved and their value maximized for the beneficiaries? If so, Smith Estate Trustee Ontario can help you. Contact us so that we can provide a no-cost consultation to see how we can help you and the other beneficiaries.

Do you have way too much financial debt? Prior to you getting to the phase where you can’t make ends meet reach out to me. I am a licensed insolvency trustee (previously called a bankruptcy trustee). In fact, if you understand that you can’t pay your financial debts heading into or in your retired life, contact us.

We understand the pain and stress excessive financial debt can trigger. We can aid you to get rid of that discomfort as well as address your financial problems by offering prompt action and the ideal plan.

Call Ira Smith Trustee & Receiver Inc. today. Make an appointment with one of the Ira Smith Team for a free, no-obligation consultation and you can be on your way to enjoying a carefree retirement Starting Over, Starting Now. Give us a call today so that we can help you get back to stress and pain-free life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

 

Categories
Brandon Blog Post

HOW LONG DOES PROBATE TAKE IN ONTARIO? 7 QUESTIONS NEWBIE ONTARIO ESTATE TRUSTEES ARE EMBARRASSED TO ASK

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

How long does probate take in Ontario introduction

If you are handling property that was left by the deceased, either in a will or without a will, the legal procedure to deal with it is called probate. There is even more to the procedure of probate than simply doling out what the person wanted his or her beneficiaries to have.

There are regulations on:

  • Who can fulfill the role of Estate Trustee?
  • The process of the court of probate.
  • The rules determining how estate assets to be separated between property that must be probated and property that does not need to go through probate.
  • How to deal with property and claims after probate has been granted.
  • Dealing with claims against the Estate, especially competing claims.
  • Completing the necessary final personal income tax return and any other outstanding returns, the Estate tax return and dealing with Canada Revenue Agency (CRA) on various personal income tax and estate tax issues.
  • Understanding the terms of any life insurance policy or policies on the life of the deceased, advising the insurer of the death and determining who the life insurance proceeds should be paid to depending on the beneficiary designations.
  • The overall duties of the Estate Trustee.
  • Knowing how long does probate take in Ontario?

There are many questions about probate applications and more about the whole probate process that arise when someone dies and their financial situation needs to be understood, dealt with and their property distributed in accordance with their wishes as laid out in their will. It becomes even more of a challenge when the person dies without a will, which is called dying intestate.

Many times the named Estate Trustee is a close relative or trusted friend. They may have zero experience in acting as an Ontario Estate Trustee. They take on the role out of a sense of love for and obligation to the deceased. Many times they are either embarrassed to ask the estate lawyer questions because they believe they are too rudimentary and they should already know the answer. Sometimes they don’t ask the questions because they do not wish to incur the legal fees each time.

The purpose of this Brandon Blog is to answer the question, how long does probate take in Ontario and the 6 other most frequently asked questions we find people ask us in our role as Estate Trustee in our Smith Estate Trustee Ontario business.

how long does probate take in ontario
how long does probate take in ontario

What is probate in Ontario?

This is a very common question. It is actually the first question; the second one is how long does probate take in Ontario? Probate in Ontario is a legal process asking the court to:

  • give an individual or company the authority to work as the Estate Trustee of an estate.
  • Verify the authority of a person or company identified in the deceased’s will as the Estate Trustee.
  • Formally approve that the deceased’s will is their valid last will.

How long does probate take in Ontario: What you will need to apply

To make probate applications to the court for probate you will require to submit documents needed as set by the Estates court regulations. It includes:

  • A certified true copy of the deceased’s original will if any.
  • If it exists, any addition or supplement that describes modifies or withdraws a will in whole or in part
  • Proof of Death by a copy of the Death Certificate.
  • the fully completed court forms which amongst other things, provide details regarding the nature, extent and valuation of the assets of the deceased at the date of death and calculates the probate fees, otherwise known in Ontario as Estate Administration Taxes. You have probably heard names like death tax or probate fees. In Ontario, the proper name is Estate Administration Tax.

This is the beginning of the probate process.

how long does probate take in ontario
how long does probate take in ontario

What is a Probate Certificate? Is a Probate Certificate Required?

Here are two probate Ontario FAQs in one! A person could make an application to the Estates court for a Probate Certificate if the:

  • Deceased individual passed away without a will.
  • Deceased’s will does not name an Estate Trustee.
  • Financial institutions or other 3rd party wants evidence of a person’s legal authority to deal with the financial assets of the deceased which does not automatically pass to one more person by right of survivorship. Joint bank accounts, as long as the other name(s) on the accounts were not minors, would automatically pass to the other joint owners without having to through the application for probate through the Estates Court, otherwise known as the Probate Court.
  • List of assets includes real estate where the real property does not automatically pass to one or more individuals because of joint ownership.
  • Stakeholders disagree concerning the appointment of the Estate Trustee or any claim that the named Estate Trustee has a conflict or is otherwise not capable or qualified to act.
  • Parties disagree or there may very well be a prospective disagreement regarding the legitimacy of the deceased person‘s will or some beneficiaries called in the will are not able to supply lawful authorization.

May times just being able to comb through the documents of the deceased to get the necessary information extends how long does probate take in Ontario.

How long does probate take in Ontario? Is a probate certificate always required?

Many people do not realize that a probate certificate is not always required in the Province of Ontario. For example, it is not required if all Estate assets are being transferred to another person through the right of survivorship because they were owned jointly or the beneficiary was a designated beneficiary under an insurance policy. In this case, probate is not required.

Examples of when probate is required, even if the deceased has a valid will are:

  • It does not name an Estate Trustee (formerly called an Executor or Executrix) and a personal representative cannot be found.
  • An Estate Trustee is named but that person has recused themselves and refuses to act.
  • There is Estate property that will not automatically flow to another person due to the right of survivorship or being named as the designated beneficiary in a life insurance policy.
  • It will be necessary to gain control over financial assets or real property and be able to convey them.
  • A vesting order from the Court may be required to transfer ownership upon the sale of Estate assets.

What Happens After Probate is Granted?

After the grant of probate is when the fun really starts. That is when most of the activities of the Estate Trustee really happen like:

  • Putting parties on notice regarding estate assets, property before probate that the Estate Trustee identified.
  • Collection of the property or making sure that jointly owned property is properly transferred.
  • Identifying and paying all rightful claims against the Estate before making any distribution to the beneficiaries.
  • Making sure that no beneficiary or 3rd party is contesting the will or the actions of the Estate Trustee.
  • Final tax return preparation and filing.
  • Dealing with insurance companies.
  • Making sure the correct probate fees have been paid.
  • Understanding the Estate law issues or going to the Estate lawyer for advice when unsure.
  • Handling the entire Estate administration process properly.
  • Estate tax return preparation and filing and all the other activities I have already mentioned above.

All of this is before coming up with a scheme of distribution to the beneficiaries and getting either their unanimous approval or if opposed, an Order from the court approving the proposed distribution. It is important for an Estate Trustee to make sure that they have the proper authority to take the actions they need to and that nobody is opposing the Estate Trustee’s actions.

If an Estate Trustee oversteps their powers or is challenged and found to have been in the wrong, they have a personal liability to the Estate and the stakeholders. As you can see, it helps to have experience in the administration of estates.

So the Estate Trustee better get it right! In smaller Estates, this can be done relatively quickly. In larger Estates, especially if there are many contentious issues, how long does probate take in Ontario can be very elongated.

how long does probate take in ontario
how long does probate take in ontario

How long does probate take in Ontario for a large estate vs a small estate?

How long does it take to prepare a probate application? Once all of the facts are properly collected, it is a matter of hours to prepare and finalize all of the necessary documentation. The probate application can all be submitted online.

How long does it take to grant probate? The delay between filing the application and grant of probate varies greatly from Court registry to Court registry. In smaller regions, it does not take long at all. Historically in the Toronto region, without a court order requesting the court to expedite the issuance of the Certificate of Appointment of Estate Trustee, it could take many long months.

The probate process in Ontario can be either a larger or smaller legal process experience, depending on each unique situation. Estates in Canada that are valued at over $150,000 are covered by the larger probate process. The larger process is really the one that historically was in place in Ontario.

Since April 1, 2021, the province of Ontario has a new estate designation, a “small estate“. A small estate is for the probate legal process when it is valued at $150,000 or less. You can use a streamlined procedure if you are requesting probate of an estate that fits this definition.

If your application meets the requirements, is properly completed and all necessary documents are attached, the court will provide a probate certificate for a small estate. This certificate is referred to as a Small Estate Certificate. The certificate will provide you with the authority to take care of the estate assets that are listed in the certificate.

As this provision just went into place, I don’t have any statistics yet to report on whether or not this will positively affect how long does probate take in Ontario. If the deceased owned a house in their name only in the Greater Toronto Area with equity of at least $150,001, it will not speed things up.

How long does probate take in Ontario? Ontario allows probate applications by e-mail

What is the modification? The court has chosen to permit electronic submissions which are suggested to address the relentless stockpile issues. It also is part of a bigger campaign by the government to update the probate process in Ontario.

As I have stated above, the application for a Certificate of Appointment of Estate Trustee is part of the wider probate process. Allowing applications via email, which started in October 2020, is a reaction to both the backlog and the new truths forced upon the Ontario Superior Court of Justice Estates List section due to the new realities on how the court must adapt to operate in the COVID-19 pandemic era.

With any luck, this will quicken how long does probate take in Ontario.

How long does probate take in Ontario summary

I hope you found how long does probate take in Ontario Brandon Blog post helpful. If you are concerned because there is an Estate that needs a professional Estate Trustee, Smith Estate Trustee Ontario can help you. Since we are also a licensed insolvency trustee firm, we can also help if the deceased Estate is insolvent. We can also help if you or your business have debt problems.

It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

how long does probate take in ontario
how long does probate take in ontario
Call a Trustee Now!