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EXECUTOR DUTIES ONTARIO: OUR COMPLETE GUIDE TO MAKE A 1ST TIME EXECUTOR LOOK LIKE A PRO

executor duties ontario
executor duties ontario

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.

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

Executor duties Ontario: What is an executor or estate trustee?

Executors, or Estate Trustees as they are now called in Ontario, are people named in a Will to become the personal representatives of the deceased. Executor duties Ontario is a complicated process.

The Estate Trustee accepts the role, authorizes the liquidation of the estate assets and the payment of money. The Executor directs and administers the deceased estate both in accordance with provincial and federal laws while abiding by the declared wishes of the deceased.

Executors are people who are legally responsible for the estate of someone who has died. They are required to manage the estate according to the wishes of the deceased person. To be an executor, you must meet certain minimum legal requirements. You should:

  • have already turned 18;
  • be financially stable;
  • reside in Ontario;
  • have good organizational skills;
  • be able to keep complete records of all the estate’s transactions;
  • have a good knowledge of financial matters; and
  • be able to make effective decisions about the estate.

Suppose there were no Will? What happens? Without a Will, a court can appoint an Estate Trustee Without A Will.

Through our other business, Smith Estate Trustee Ontario, my Firm acts as a Court-appointed Executor/Estate Trustee. Far too often, the person who ends up with the responsibility of settling the estate of a deceased family member or friend is unprepared to do so. This commonly leads to emotional stress, confusion, and financial hardship.

From this Brandon Blog, you’ll learn everything you need to know about effectively fulfilling your duties as an Estate Trustee in Ontario. You will learn how to handle the estate settlement process in Ontario and properly fulfill the duties using our Executor duties Ontario checklist.

Executor duties Ontario: What does an Executor/Estate Trustee Do Right Away?

Executors are people who are appointed to carry out the Will or trust of a person who has died. They are given the authority to make decisions on behalf of the deceased, as long as those decisions are consistent with the wishes expressed in the deceased’s Will or trust. There can be as many Estate Trustees as are indicated in the Will or trust document. When there is a Will, in Ontario, the role is one of Estate Trustee Under A Will.

Once you are notified that you are named as the Executor or one of the Estate Trustees, the first thing you need to do is to decide if you wish to act. Are you capable of doing the job and are you free from any conflict of interest? It is possible to recuse yourself before taking any steps to act as the Executor. However, once you start acting as the Executor, it is very difficult to resign.

An Executor will obtain a copy of the Will as one of the first things they do. As a result, the person’s most recent Will automatically becomes the last Will of the deceased. Some people are unaware that a Will is only as good as its Executors and how they perform their Executor duties Ontario.

Executor duties Ontario: Follow this guide to look like a professional Estate Trustee

Action #1 – Funeral Arrangements and other Day 1 action

If the family is not taking care of this themselves, then you must arrange for the funeral immediately after death. Religious observance of the family and the wishes of the deceased should be your guide. Other things Executor duties Ontario include are:

  • Arrange for organ donation if applicable.
  • Find the Will.
  • Coordinate with family members to notify friends and family of the passing.
  • Request multiple copies of the Proof of Death Certificate from the funeral director.
  • Apply for a provincial Death Certificate.
  • Make necessary arrangements for the ongoing care for dependents/minor children and pets.
  • Contact the deceased’s bank to ensure that all amounts on deposit are safeguarded, access to any safety deposit box is secured and change signing authorities to Executor(s) so that necessary payments can be made.
  • Confirm payment to the funeral home.

Action #2 – Submit official paperwork on behalf of the Estate

There are many other notifications that should be made within say, 1 to 2 weeks after the funeral. These Executor duties Ontario consist of:

  • File the CPP death benefit claim.
  • Transfer the pension to the spouse by applying for CPP Survivor’s Benefits.
  • Canada Revenue Agency Notification to Update Record.
  • Submit OAS/CPP/GIS notifications.
  • Send the Notice of Death to Equifax and TransUnion, the two Canadian credit bureaus.

    executor duties ontario
    executor duties ontario

Action #3 – Protect the hard assets

Concerning any hard assets, as soon as possible after the funeral, Executor duties Ontario include:

  • Identify and secure all assets: the home, the contents of the home, and other real estate assets.
  • Direct the post office to forward the mail care of the Estate Trustee.
  • Inform utilities, landlords, and other service providers.
  • Review all documents associated with asset ownership, business, investment, including insurance, mortgages, and leases.
  • Analyze all financial documents, including contracts, divorce papers, or separation agreements, court orders.
  • Secure personal property, business, vehicles, perishable goods, and safety deposit boxes.
  • To keep the insurance coverage active, find out what action you need to take if there is a vacant property.
  • Have all the hard assets appraised.

Action #4 – Protecting financial assets

I already mentioned that I would contact any known financial institution. Other Executor duties Ontario to protect financial assets as soon as possible after the funeral, include:

  • Gather information about debts and expenses.
  • Cut off all unnecessary expenses. People rarely think about memberships or subscriptions until the bill or publication arrives in the mail.
  • The other banks or credit unions, investment advisors, and life insurance companies should be notified.
  • All credit cards and debit cards should be cancelled.

    executor duties ontario
    executor duties ontario

Action #5 – Contacting beneficiaries

Other Executor duties Ontario include:

  • Completing the inventory of assets and their values on the date of death.
  • Contacting each of the beneficiaries of Estate individually.
  • Explaining the Estate administration process to them.
  • Estate beneficiaries need to know they only receive distributions upon the probate of the Will, completion and filing of all final tax returns, and full payment of the estate’s debts and debts of the deceased. How the estate is handled will also depend on its size and nature.
  • Depending on the circumstances, the Executor of the estate can make interim distributions.

It is important to keep in mind that Estate Trustees are personally liable. This means if you pay out too much on an interim basis and don’t have enough to cover all the debts, you will be in trouble if you can’t claw back any money.

Action #6 – The probate process

Generally, probate involves completing the necessary Ontario government forms for the confirmation and appointment of the Executor(s), who will manage the estate distribution. The Executor duties Ontario for probate include, say within 30 days after death:

  • Speak to the estate administration lawyer for assistance.
  • Calculate the estate administration tax for the Ontario estate.
  • With the help of the estate administration lawyer, prepare the probate application.
  • The probate application, along with all relevant documents, should be filed with the deceased’s local probate court. The required documents, including the original Will and payment of the estate administration tax.

    executor duties ontario
    executor duties ontario

Action #7 – While you are waiting for the Certificate of Appointment of Estate Trustee With A Will

The court can take many months to respond to your probate application, especially in Toronto. In the meantime, there are things that Executor duties Ontario allow you to do without the need to show the Certificate of Appointment. You can use a copy of the Will. These include:

  • The deceased’s passport, driver’s license, and Ontario health card can be cancelled.
  • Meeting with the investment advisor, banker, and insurance agent to gain a better understanding of the estate’s assets.
  • Finalize the list of assets.
  • Developing a strategy to liquidate the assets of the estate.
  • Choose a real estate broker, negotiate the rate and prepare the listing for posting after the grant of probate is received. Be sure you obtain a professional appraisal first to determine the current market value. You don’t want to rely on just the broker’s estimate of market value.
  • Organize an estate sale to dispose of personal belongings that have not been claimed by the family. When appropriate, arrange donations.
  • Prepare the property for sale. In almost all cases, minor repairs, painting, cleaning, and staging are necessary.
  • Prepare life insurance forms (to be submitted once you have your Certificate evidencing the appointment of the Estate Trustee(s)).
  • Stay in constant contact with the beneficiaries to inform them that you are still waiting for the grant of probate and that things are proceeding normally.

Action #8 – Selling the assets in Estate

Some of the following Executor duties Ontario could be done only with a certified copy of the Will. Some will require a Certificate from the court appointing the Estate Trustee:

  • Open an estate bank account with your preferred financial institution if you have not already done so.
  • Merge all bank accounts into the estate account.
  • List any real property for sale.
  • Request that all mutual funds, stocks, bonds be liquidated and the funds transferred to the estate
    account.
  • Incorporate all estate sale proceeds and any other cash assets into the estate trust account.

    executor duties ontario
    executor duties ontario

Action #9 – Pay all debts and calculate and pay all taxes

To make the final distribution, the creditors and amounts owing to Canada Revenue Agency must be settled in full. In this phase, Executor duties Ontario include:

  • Clear debts.
  • Make sure that tax documents are in order.
  • Prepare all necessary income tax returns, including the estate tax return, with the help of an accountant or other tax specialist.
  • If your Notice of Assessment has been received and the CRA has been paid all amounts owed, you can request a Tax Clearance Certificate from them.

Action #10 – Final distribution to estate beneficiaries and completion of Estate records

Now it is time to make the distribution to beneficiaries and close your file. These Executor duties Ontario are:

  • If you are charging a fee, including a care and management fee for having administered the estate, calculate it and pay yourself.
  • Prepare and issue the distribution to beneficiaries of the remainder of the estate.
  • Prepare a final accounting and issue it to all beneficiaries.
  • Get releases from beneficiaries.
  • Closing the estate bank account.
  • Terminate the deceased’s social insurance number.

    executor duties ontario
    executor duties ontario

Executor duties Ontario: Compensation for estate trustees

The Ontario estate laws and associated regulations provide a framework for the management of a deceased person’s estate and for the distribution of the property. The laws and regulations also deal with the duties and responsibilities of the Executor and compensation for the Estate Trustee.

All Estate Trustees are legally permitted to charge fees. A fee that isn’t in the Will must be an amount that is considered fair and reasonable. The amount depends on the value of your estate and the amount of work your Estate Trustee has to do.

Even though the fee calculation is more complicated than this, for our purposes, you should use as a benchmark 5% of the estate’s value. Additionally, an additional care and management fee of 2/5 of 1% of the average annual value of the assets is sometimes charged.

Executor duties Ontario summary

I hope you found Executor duties Ontario Brandon Blog 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.

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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.

 

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WHY CHOOSING THE EXECUTOR OF THE WILL CAN BE SO INTENSE: NECESSARY INGREDIENTS FOR CHOOSING THE RIGHT EXECUTOR

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

Smith Estate Trustee Ontario and 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.

Choice of an executor of the Will: Choosing the right executor for your estate

When a person dies, that is not the time to begin preparing for who will carry out the wishes of the dead person in connection with their assets. Without a properly drafted Will, your family could be in for a long and uncomfortable legal battle. This is why it is so essential to obtain the right advice early on and naming the appropriate person or persons as the executor of the Will.

Whether you’re single, married, or have a blended family, there’s a good chance that you will certainly need to select an executor of the Will of your estate. This is the person who will supervise accomplishing your desires after you die. The executor will make certain your wishes are accomplished in such a way that is fair to your heirs under Ontario laws. However, without proper paperwork, this may not go as efficiently as you may really hope. To avoid this, you need to carefully think about and then pick who or whom should be your executor(s).

Who can be an executor of the Will in Ontario?

Have you ever heard of the term “executor”? You will come across it when you or a loved one create a Will. In Ontario, the executor is now called an Estate Trustee. However, in this Brandon Blog, I will continue to use the old name. It is normal that one of your closest friends or family members will be named in your Will as an executor, meaning they’re responsible for carrying out the instructions in your Will.

There are really no requirements in Ontario for someone to be an executor of the Will. To be an executor of someone’s Will, you must be at least 18 years old and have the ability to comprehend what is expected of you in that role. Hopefully, the person or people selected also have no record of fraud!

The executor is essentially the person holding the purse strings when it comes to your estate. They’re to see the will through from beginning to end: paying off bills, selling off any excess belongings, and distributing the rest to your beneficiaries.

The role of executor is an extremely important fiduciary role. Performing the duties of an executor of the Will incorrectly can have a profoundly serious effect on the beneficiaries and families involved for generations to come. So by now, it should be obvious to you that not everyone who can be an executor should be chosen to be THE executor. Having the right executor best suited for your estate should be the cornerstone of estate planning.

Choosing the ideal executor of the Will for your estate

The best estate trustee for your estate will depend upon the complexity of your estate, your specific wishes and needs. You and your lawyer ought to think about several elements when choosing an executor, consisting of:

  • Given your assets and beneficiaries, what skills should the executor possess and how active will their involvement be in the estate?
  • Whether they will need to make financial decisions.
  • Do they have the necessary skill set and financial acumen to properly administer your estate?
  • Whether they have a good and trusted relationship with your heir and with various other relatives.
  • Do they have good conflict-resolution skills?

You also must be mindful as to how normal life events may have changed your needs when considering an executor of the Will. The person or people you chose under your first Will when your family was young and your biggest asset might have been the proceeds under your life insurance policy may no longer be the right choice years later when your children have their own families and your estate assets look much different. Complex estates also require executors to have different skill sets than what is needed to administer simpler estates.

executor of the will
the executor of the Will

The executor of the Will: Consider people in good financial standing

Becoming a good executor of the will requires time and effort. To act as executor means you will have legal responsibilities and you’ll be making crucial choices regarding the deceased’s properties, including:

  • Paying off debts.
  • Taking the estate through probate and calculating and paying the Ontario probate fees called the Estate Administration Tax.
  • Completing one or more income tax returns that the deceased may have not filed and paying the taxes.
  • Managing and perhaps selling assets such as real estate.
  • Distributing assets to beneficiaries.
  • Filing the estate tax returns and paying the necessary tax.

You will want to make sure that whoever you pick as executor under the Will, will be able to properly administer your estate through the entire estate administration process.

So as a starting point, you will want to make sure that the estate trustee that you pick as your personal representative who will be dealing with your personal finances, should be someone trustworthy who has both the necessary skills to handle the financial matters and has a good financial standing. In Ontario, an undischarged bankrupt cannot be an estate trustee.

How much power does an executor of the Will have over the estate?

An executor of the Will is a person who has been named to administer an estate when someone dies, but what does that involve? The executor’s responsibilities include:

  • making sure that funeral arrangements have been properly made and funeral costs are paid;
  • gathering up important documents;
  • getting official copies of the death certificate;
  • paying off any debts;
  • wrapping up any loose ends like liaising with government agencies;
  • gathering up the funds and then closing out the deceased’s bank accounts; and
  • figuring out how to handle any property.

In other words, an executor has a lot of responsibility and a lot of power. So much power that an executor may be required to post a bond with the province of Ontario to cover any potential losses.

It’s a common misconception that the executor of an estate has complete control over the assets and can freely distribute them to whomever they choose. In reality, that’s not the case. When someone passes away, their estate becomes a separate legal entity, and once the executor has finished settling the estate’s affairs, the estate’s assets must pass to the designated beneficiaries. However, the executor has many powers that can help them better manage the estate.

The powers of an executor of the Will, come from the wording of the Will. If the executor finds that they do not have sufficient powers to properly carry out their duties, then the executor would have to retain a lawyer, get legal advice and then make an application to the court to get those additional powers. Since an executor has personal liability, they should not overstep their authority by taking actions they do not have the power to under the Will.

How do I make sure an executor of the Will is honest?

Succession preparation includes the estate planning documents. As part of that process, there needs to be a properly thought out procedure of picking a proficient, responsible, and trustworthy individual to handle an estate, trust, or business, upon the death of the creator of that wealth.

It is extremely essential to have a detailed succession plan in your estate and to make certain that your executor recognizes his/her duty, has the necessary skills and is willing to carry out what they will be called upon to do.

A well-known saying is “you get what you pay for” which is more often true when it involves choosing your executor. The executor is the person responsible to execute the terms of a Will or Trust. If they are not up to the task, your estate can get involved in a great deal of trouble.

At the end of the day, you have hopefully chosen someone to be the executor of the Will that not only has the ability to perform all necessary tasks but also someone who out of respect for their relationship with you and your wishes will carry them out honestly and efficiently.

executor of the will
the executor of the Will

Can there be 2 executors of a Will?

There are numerous concerns that emerge when a loved one passes away. One that is usually asked is can there can be more than one executor of the Will? In short, yes, there can be more than one executor, but there are some instances when that may not be the very best course of action.

So what are the realistic options? There can be a sole executor, an alternate executor or co-executors. Each one has its pluses and minuses. As the name suggests, a sole executor is 1 person only who has full responsibility to take all the necessary actions involved in settling the estate and then turn the money or specifically designated property over to the beneficiaries.

What is and why have an alternate executor? Just because someone is named as an executor of the Will, it may be the case that when the time comes, the person named is either unwilling or unable to act. Perhaps the Will was drawn up one or two decades ago and now the circumstances of the named executor have changed. So just in case, an alternate executor can be named in case the primary executor cannot act.

The Ontario Trustee Act contemplated such a situation. Examples of reasons why the primary executor may be unwilling or unable to act are because they are now:

  • Having a change of heart and is now unwilling to act. An executor can recuse themselves before they start to take any action as executor. Once they start acting though, the only way they can be removed is through a court order.
  • Is now is unfit to act.
  • Predeceased the one who just died.
  • Have been convicted of an indictable offence.
  • An undischarged bankrupt or insolvent and trying to settle their debts under the Proposal provisions of the Bankruptcy and Insolvency Act (Canada).

Our sister business, Smith Estate Trustee Ontario, acts as a substitute executor when an executor of the Will needs to be replaced by the court.

In any of these situations, the alternate executor hopefully can and is still willing to act. The alternate executor would have the estate’s lawyer make an application to the court, provide proof for the reason why the named executor cannot act and the court can appoint the alternate executor (or any other party the beneficiaries may wish to nominate if proven that the alternate is unfit to act).

As the name implies, co-executors means that two or more people have been appointed to act together as an executor of the Will. This can help ensure that your estate is divided up as you intended and the co-executors can both split the work between them and also be a check on each other’s work.

They have someone they can confer with when unsure about something, rather than putting the estate to expense by consulting first with one of the professional advisors. The main disadvantage of having co-executors is that if you have an even number of executors and there is a major disagreement right down the middle, it will probably take the intervention of the court to have the decision made. This creates otherwise unnecessary cost and delay.

It is probably one of the most serious decisions in estate planning. Yu do not want to pick the wrong executor.

Choice of the executor of the Will: Using a trust company

Should you consider naming an estates professional as your executor? A trust company is such a professional executor. If you named an estate professional to oversee the distribution of your estate as executor, this approach typically results in less conflict and fewer disagreements between family members than naming a family member to be executor.

However, you should know that in naming an estate professional trust company, you are naming a corporate executor with well-established and unwavering policies and procedures to handle the estate administration process. The person at the trust company handling your relative’s estate is not going to care about the relationship issues between the beneficiaries and other family members.

They also are not going to worry about hurting someone’s feelings. The cost of using a trust company is cut and dry where a close friend or family member may waive any fee they may be entitled to as executor.

In some situations choosing a trust company as your corporate executor of the Will can be a smart option. A trust company is a company authorized to act as a trustee for a trust. The trust company is not the creator of the trust, nor is it the owner of the trust property.

The trust company is an independent third party, which is chosen by the now-deceased person to act as the executor of the Will. A trust company is an excellent choice as executor when the estate is very large and complex.

Whether one or more people or a trust company is a better choice to be the executor really depends on the size and complexity of the estate and the relationships of all the family members involved.

The executor of the Will summary

I hope you enjoyed the executor of the Will Brandon Blog post. If you are concerned because it is now time to act under the Will, but the named executor is unwilling or incapable of acting, that is where Smith Estate Trustee Ontario can be of assistance. We act as substitute trustees appointed by the court in such situations.

Have you been administering an estate and now you have determined that it is an insolvent estate? Are you worried because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option? Call me. 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.

Smith Estate Trustee Ontario and 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.

executor of the will
the executor of the Will
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Brandon Blog Post

RRSP BENEFICIARY: OUR REMARKABLE PLAN ON HOW THE INCOME TAX BILL ON DEATH FROM AN RRSP CAN BE REDUCED

rrsp beneficiary
rrsp beneficiary

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

Ira Smith Trustee & Receiver Inc. and Smith Estate Trustee Ontario are 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.

RRSP beneficiary: Death of an RRSP annuitant

As I have written before, in addition to insolvency work, we also act as an independent Estate Trustee through our business Smith Estate Trustee Ontario. In our work as Estate Trustee of a deceased estate, we have come across an interesting topic when it comes to the will of the deceased and the inheritance of an RRSP beneficiary.

Understanding the tax implications of a beneficiary entitled to an RRSP inheritance can save or cost you thousands of dollars depending on how the RRSP is administered. The Canada Revenue Agency (CRA) has specific rules regarding what happens to an RRSP when its owner dies. Did you know that there are a number of tax implications that come with inheriting RRSPs? This is especially true when you are inheriting from distant relatives like grandparents, aunts, uncles, or cousins. As an assignee of a Registered Retirement Savings Plan (RRSP), you are entitled to all of the funds in the plan, but it is possible that the account balance could be taxable.

In this Brandon Blog, I discuss the income tax ramifications on an RRSP beneficiary. By definition, since it is an RRSP available to be inherited, rather than a Registered Retirement Income Fund (RRIF) or an annuity, I am talking about:

  • someone who died before turning 72 years old; and
  • never had the opportunity to enjoy retirement.

I remind you that I am not an income tax practitioner, but rather, I am a licensed insolvency trustee. So this Brandon Blog is not meant as income tax advice and should not replace the advice of your qualified income tax advisor.

RRSP beneficiary designation: Designating your estate or other beneficiaries

Setting up an RRSP is a great way to save for retirement. You contributed to your plan each year and got a tax break from the government. This is a fantastic deal, so many people take advantage of it. If you only name the heir or heiress in your will, that should be sufficient. However, a will can be challenged. If you don’t name one at all for your plan, or if you are not a special type of grantee, there can be some serious tax implications.

The inheritor you name for your RRSP during your lifetime is the person who will receive the asset after your death. You can appoint a recipient directly in your RRSP plan document much in the way that you name one for your life insurance policy. I recommend that you do this. Do not just name your estate and then maybe name the real RRSP beneficiary in your will.

The CRA has adopted a special policy regarding the tax treatment of RRSPs. This policy is referred to as the deemed disposition rule. The deemed disposition rule applies to RRSPs. When the holder of an unmatured RRSP passes away, CRA deems that the RRSP was disposed of and the funds received, right before their death.

The calculation of the funds received is an amount equal to the reasonable market price of all the property kept in the RRSP at the time of death. This amount and any other balances the deceased got from the RRSP in the year of death need to be reported on the deceased’s year of death income tax return.

rrsp beneficiary
rrsp beneficiary

RRSP beneficiary tax implications: How can the income tax bill on death be reduced?

Understanding the tax implications of an RRSP beneficiary entitled to an RRSP inheritance can save or cost you thousands of dollars depending on how the RRSP is administered. The CRA has specific rules regarding what happens to an RRSP when its owner dies.

When a person passes away and leaves an RRSP, their estate has to pay the income tax liability on the RRSP when it’s paid to the RRSP beneficiary. However, you should first ask who is a qualified beneficiary? Eligible individuals who can qualify for such beneficiary designations are a spouse, a common-law partner, or a financially dependent (infirm) child or grandchild, they can utilize the “qualified beneficiary” RRSP exemption to reduce or remove the tax obligation. If there is no qualified beneficiary, the Estate Trustee will have to pay income tax calculated based on the entire amount of the RRSP.

So the challenges for beneficiaries, in general, are twofold: 1. Are you a qualified beneficiary? 2. Can a qualified beneficiary reduce their income tax bill?

If you inherit an RRSP, is that someone will face a tax bill from CRA on the deemed disposition on death. The RRSP value will be taxed as income. Now, there are some situations in which you can reduce or eliminate the taxes. If the RRSP beneficiary is a qualified beneficiary, then the value of the RRSP can be taxed in the hands of the RRSP beneficiary, not the deceased’s estate.

RRSP beneficiary tax: Reduce the tax by rolling over

This first step of the rollover procedure is described as a “refund of premiums”. The second step is the tax-deferral portion. Where a qualified beneficiary adds the number of assets from the deceased’s RRSP in the year received (or within the first 60 days of the next year), the qualified beneficiary can declare a tax deduction under section 60(l) of the Income Tax Act (Canada) to eliminate the RRSP amount added to their income. This manoeuvre does not require the RRSP beneficiary to have sufficient RRSP contribution room. The result? This heir or heiress becomes a successor annuitant and gets a tax-deferred rollover.

To eliminate the tax on receipt of the RRSP funds, the RRSP assets are directly moved to the qualified beneficiary‘s RRSP. At tax time, the qualified beneficiary gets a T4RSP tax slip. The qualified RRSP beneficiary then includes the date-of-death RRSP amount in their taxable income but offsets it with a section 60(l) tax reduction.

The above rollover is typically seen when a qualified beneficiary is marked as the RRSP recipient. When this happens, the RRSP proceeds generally bypass the deceased’s estate, lowering probate fees (where applicable) and side-stepping the estate creditors as well as the need for complicated estate settlements.

rrsp beneficiary
rrsp beneficiary

CRA RRSP beneficiary rules: Who pays tax on inherited RRSP if the beneficiary is not a spouse, common-law partner or financially dependent children or grandchild – but is the Estate?

One of the most common errors made when determining the recipient for the RRSP is to assign the estate itself. This requires the RRSP asset to go through probate. The estate receives the tax-deferred growth that has actually been earned by the RRSP up to the date of death. However, it would additionally mean that the estate would be responsible for shouldering the tax burden on the distribution of the RRSP. This is not necessarily wrong, but from an estate planning perspective, it is the most expensive route to choose. Estate planners certainly would not choose this way unless for some reason there was no other choice.

The RRSP beneficiary problem we are dealing with or how to destroy an inheritance

The issue we are dealing with on a particular deceased estate file blends insolvency work with the work of an Estate Trustee. The deceased did not file income tax returns for the last few years of her life. We now have a pretty good handle on her income taxes and what her liability is for the years of unfiled tax returns, as well as the tax liability that will arise from the Estate trust tax return.

Based on what I have already told you about the taxation possibilities for an RRSP beneficiary, and what I am about to tell you, there is a huge problem for an RRSP beneficiary.

For confidentiality reasons, I cannot provide names and amounts, but I will explain the problem. The deceased maintained a self-directed RRSP contract through Royal Bank of Canada at Royal Bank Dominion Securities. The named beneficiary in the Registered Retirement Savings Plan document was a relative. This relative does not meet the definition of a qualified beneficiary.

So in the normal course, the Estate Trustee would work with the RRSP beneficiary to understand if there was going to be no taxable income inclusion because an RRSP rollover was taking place. If not, the estate should pay the tax, but the beneficiary obtains 100% of the value of the RRSP.

Another option is that the Estate Trustee would get the tax payable on the registered retirement income from the RRSP beneficiary and pay the income tax. The beneficiary would be left with the net amount and the tax would be paid. So everyone is square.

Which option is picked depends on if there are more assets and more beneficiaries or not.

In the situation I am acting in, the Estate is insolvent. There will not be enough money in the Estate to pay all the income tax owing, regardless of the source of the taxable income. The RRSP beneficiary also as I understand it, did not elect an RRSP rollover.

So now, in this case, where the Estate has insufficient funds to pay the taxes payable in full and the RRSP beneficiary:

  • is not a qualified beneficiary; and
  • did not do an RRSP rollover

the RRSP beneficiary will be liable for the income tax payable from the RRSP plan assets received. The real problem is that the year death, and therefore the year the RRSP beneficiary received their inheritance was 2018. We were appointed late in 2019 and we just now have been able to quantify the income tax payable.

So it will be 2021 or later that CRA may go to the RRSP beneficiary with their hand out. I don’t know if the RRSP beneficiary invested it all, spent it all, or a combination of the two. This my readers is how to destroy an inheritance.

RRSP beneficiary summary

I hope you enjoyed the RRSP beneficiary Brandon Blog post. If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me. 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. and Smith Estate Trustee Ontario are absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

 

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Brandon Blog Post

PROBATE ONTARIO: Properties, Debts, Estate Trustee Rules and more

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.

probate ontario

Afer reading this blog, also check out our Brandon Blog

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

What is Probate Ontario?

Yes, you just found a blog site on the topic of wills and probate Ontario. It is a complex legal treatment that is typically not totally comprehended by lots of people. It is usually a requirement of the passing away of an individual. It is the start of certain actions to ensure the deceased’s wishes are performed.

In July 2019, we set up a companion business to our insolvency Firm. This new business is acting as an Estate Trustee. It is called Smith Estate Trustee Ontario. As we are asked many times about the intersection of death and debts and have acted as the licensed insolvency trustee in the bankruptcy of an insolvent deceased estate, I thought it would be a chance to write about deceased estate matters, including probate Ontario.

It is important to understand that the choice of and the actions of the Estate Trustee (previously known as the executor or executrix) will certainly make all the difference in exactly how the probate process will go. An excellent Estate Trustee will be able to help you comprehend the entire process. The Estate Trustee is the person in charge of seeing to it that whatever needs to be done pertaining to the estate, its property, and the distribution to the estate beneficiaries are all done properly.

Probate is a legal process that comes after the death of an individual that has left a legitimate will. It is used to accomplish the directions laid out in the will. It starts with the death of the testator and finishes when the Estate Trustee of the will certainly disperse the estate to the beneficiaries as stipulated in the will. If there is no will, various rules apply. If a person dies without a will, it is said that they have died “intestate“.

In this Brandon Blog, I go over many of the matters involved in taking the estate to probate Ontario.

What assets are subject to probate Ontario?

Property that is bequeathed to people in a will may have to go through the application for probate Ontario. It normally includes cash, land, as well as other physical possessions. The probate process involves the Estate Trustee named in the will, seeking the court to:

  • give that person (or group of individuals) the authority to act as the Estate Trustee of an estate; or
  • validate the authority of an individual named as the Estate Trustee in the deceased’s will;
  • officially authorize that the deceased’s will is their legitimate last will.

This individual, or group of people if greater than one is named in the will, is accountable for administering the estate as well as ensuring that the wishes and directions that are written in the will are accomplished as the dead person meant them to be.

Probate Ontario: What is a Certificate of Appointment of Estate Trustee?

If you’ve ever read the official documents of a deceased’s estate, you’ve probably heard the phrase “Certificate of Appointment of Estate Trustee“. As well if you’re like most people, the term may have appeared a little mystical and confusing. However, for those of us who are managing an estate as an executor or administrator, a Certificate of Appointment of Estate Trustee is a necessary part of the probate process.

A Certificate of Appointment of Estate Trustee is a paper that is issued by the Government of Ontario and provided to the assigned Estate Trustee to prove that the individual has actually been selected to the function of the Estate Trustee. It shows that he or she has the legal authority to deal on behalf of the estate.

The certificate is not a legal necessity in the province; it’s simply a document provided by the government that verifies that the individual called the Estate Trustee has actually been assigned. It makes things a great deal easier when verifying to financial institutions and also other third parties that you have the authority to act concerning the estate property. To acquire the certificate, you need to provide the provincial government with a certified copy of the death certificate as well as a duplicate copy of the will.

If there is no will, the court will issue an order upon the probate application of an interested party approving the choice of Estate Trustee. This would certainly be in addition to any other death court forms the province needs the Estate Trustee to submit for probate Ontario.

Probate Ontario: What does an estate trustee have to disclose to beneficiaries?

A well-written will is the cornerstone of proper estate administration. The Estate Trustee is the one who oversees the distribution of the estate. In his/her function, the person in charge of the estate must manage a number of legal and financial issues. The Estate Trustee should be neutral and act in an impartial way to all stakeholders, especially the beneficiaries.

The Estate Trustee is well advised to report on a regular basis, preferably in writing, to the beneficiaries to ensure that they will be up to date on all issues of significance. For instance, beneficiaries need to understand the extent of the estate’s debts. They also must be told of any kind of litigation the estate is or might about to be associated with. This is specifically so if that implies a loss of value of the assets to reduce the estate’s worth. Nothing good will come from surprising the beneficiaries. Especially if it is bad news about a reduction of value in what they expected from the estate.

probate ontario
probate ontario

Probate Ontario: What is this Estate Information Return?

Typically, any individual who gets a Certificate of Appointment of Estate Trustee (likewise referred to as an Estate Certificate or Probate) after January 1, 2015, is required to file an estate information return.

This return is to be completed in addition to an application for a Certificate of Appointment of Estate Trustee submitted to the Courthouse (Ministry of the Attorney General). It will be used by the Ministry of Finance to impose compliance with the Ontario Estate Administration Tax Act, 1998. This return should be filed with the Ministry of Finance within 180 calendar days after the appointment certificate is issued to deal with the provincial estate tax owing.

If not all the estate tax issues are solved within the 180 day period, an amended return can always be filed later. The estate trustee would either pay any additional tax owing or request a refund of any overpayment. The estate administration tax estate administration matters must be taken care of in the administration of any estate.

What are the ways to avoid probate Ontario for an estate?

To avoid probate Ontario, you need to ensure for your assets that can avoid probate, are either owned jointly with the person or individuals you wish to inherit them, or are named as a designated beneficiary.

The most reliable preparation strategy to employ prior to death to minimize probate tax is making use of “twin wills“. This is where assets that require probate pass under one will, and other property that regularly do not call for probate (such as the shares of a family-owned private company) pass under a separate will.

Properties that can be omitted from probate Ontario are:

  • Jointly held assets with a right of survivorship.
  • RRSPs, RRIFs, TFSAs with a named beneficiary apart from ‘Estate’.
  • The life insurance policy proceeds paid to a named recipient besides ‘Estate’.
  • Real property owned outside of Ontario.
  • Gifts to people made throughout your life.

How long does probate take in Ontario?

How long probate will take for probate Ontario varies depending on where in the province the departed person lived and exactly how complex the will and the estate is. In Ontario, and specifically in the Toronto area as a result of how backed up the courts are, it can take numerous months just to obtain the Certificate of Appointment. The procedure starts after the Estate Trustee files the request for probate with the court in Ontario.

Probate Ontario: How does my estate (assets) get transferred after I die?

As you age it’s essential to prepare for what will certainly take place in your estate after you die. When you have children and grandchildren, it is specifically important to set up a will or living trust. Without one, your assets (residence, automobile, and also financial savings) will require to pass through the court system, which might be costly and also take a long time. The court system is likewise raging with possible issues, such as opposed wills, family arguments, and unintentional disinheritance.

If you have a will, your assets will get distributed to your beneficiaries by the Estate Trustee according to your wishes, barring any type of court challenge.

probate ontario
probate ontario

What happens if someone dies without a will in Ontario

When an individual dies without a legitimate will, it is called intestate. Ontario’s Succession Law Reform Act (the Act) lays out exactly how the estate assets are distributed.

According to the Act, unless a person that is financially dependent on the dead individual makes a claim, the first $200,000 of value is given to the departed individual’s spouse if she or he has chosen to claim his/her entitlement. This is called the preferential share. The other possibility is to claim half of the net family assets under the Family Law Act (Ontario). Lawyers will be really handy in helping the spouse choose which is the better selection.

Anything over $200,000 is shared between the spouse and the offspring (e.g. children, grandchildren) according to particular policies. If there is no partner, the departed individual’s children will certainly acquire the estate. If any among them has actually died, that youngster’s offspring (e.g. the dead individual’s grandchildren) will inherit their share.

Assuming there are no lawful challenges to rights to the property, this is what occurs if you pass away without a will in Ontario. Where there are a spouse, children, and grandchildren, this is not a good place to leave them in.

Probate Ontario: Do I have to file taxes for the deceased?

We are often asked the question, “Do I have to file taxes for the deceased?” Your loved one has passed away and now you are trying to settle their estate, and you wonder about the taxes. Let’s start with the basics of what taxes you may owe for the estate of your loved one.

When a person dies, the estate has to pay several types of taxes. The first is the amount of estate administration taxes calculated on the Estate Information Return. The Estate Administration Tax is billed on the value of the estate of a departed person if an estate certificate is requested and is provided. The estate tax obligation is paid as a deposit when looking for an estate certificate from the Ontario Superior Court of Justice. Once the estate certificate is released, that deposit comes to be the estate administration tax.

The estate administration tax is paid on the value of the assets in the estate. The return provides for an estate administration tax calculator on the form. So, it is a pretty easy thing to calculate. If an estate certificate is neither gotten nor issued, no Estate Administration Tax applies.

The second is income taxes. If the deceased has any years for which an income tax return was not filed, the Estate Trustee must gather up the pertinent information and file those returns from prior years. Then, there is the income tax return for the year of death. That is called the terminal return. Finally, the Estate Trustee has to make sure that any tax arising out of the sale of assets of the estate are also accounted for and any income tax paid.

The Estate Trustee must make sure that all outstanding amounts, be it to the Province of Ontario or to Canada Revenue Agency are fully paid. Ideally, the Estate Trustee should also request and receive from Canada Revenue Agency a clearance certificate. This certificate shows that all amounts owing have been paid. It is important for both the personal liability of the Estate Trustee and for the estate to have this clearance.

In Ontario, there is no such thing as a death tax.

Probate Ontario: If your parents die with debt who pays it in Canada?

Generally, nobody can inherit debt. But there are exceptions.

In general, what happens to debt when you die in Canada is that the Estate Trustee needs to understand all of the deceased’s assets and liabilities. The Estate Trustee needs to make sure that all debts are paid off before making any distribution to the beneficiaries. Unless you have co-signed for or guaranteed someone else’s loan, you are not responsible for your spouse’s or parent’s debts upon their death. There are generally three exceptions.

The first is credit card debt where usually a spouse has a supplementary credit card on the same account. In that case, you need to look at the credit card agreement because the supplementary cardholder might be responsible for the debt. So if there are insufficient assets in the estate to pay off the credit card debt, the supplementary cardholder is liable.

The second way is through being entitled to inherit an asset, such as real property or a vehicle. That asset may have financing registered against it; a mortgage or a vehicle financing loan. If you accept the asset, then you must also be responsible to make the payments for interest and principal. If the secured loan is not kept current, the lender has the ability to seize the asset and sell it as part of their enforcement rights.

The third example is Canada Revenue Agency for unpaid income tax. Section 160(1) of the Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.)) (Income Tax Act), and its equivalent, S. 325 of the Excise Tax Act (Canada), can be utilized by Canada Revenue Agency to assess a tax obligation liability to those who received a transfer of property from persons with tax obligations at the time of the transfer.

This deals with if a person offers you something of value (virtually anything), while they have a tax debt, Canada Revenue Agency can and will certainly pursue you. Their view is that the original tax obligation debtor ought to have sold whatever was transferred, and the funds used to pay off the tax debt.

This section of the Income Tax Act (or Excise Tax Act) especially comes into play during the administration of a deceased Estate or in an insolvency filing. As a matter of fact, if a deceased estate is insolvent, the Estate Trustee has the ability to get an order from the court allowing the Estate Trustee to place the deceased estate into bankruptcy. Then the licensed insolvency trustee will deal with selling assets and distributing the funds in priority of ranking, as established under the Bankruptcy and Insolvency Act (Canada).

My other probate Ontario blogs you might find interesting

I have written on a variety of matters regarding a deceased estate, debt and probate that you may find interesting. They are:

WILLS AND ESTATES: SELLING DECEASED ESTATE PROPERTY

FREE E-BOOK – TRUSTEE OF DECEASED ESTATE – WHAT A TORONTO BANKRUPTCY TRUSTEE KNOWS

TRUSTEE OF DECEASED ESTATE: WHAT A TORONTO BANKRUPTCY TRUSTEE KNOWS

WHAT HAPPENS IF YOU DIE WITHOUT A WILL IN ONTARIO? READ OUR INTENSE ANALYSIS

WHAT HAPPENS TO MORTGAGE WHEN YOU DIE CANADA: DEBT PHILOSOPHY EXPLAINED

WHAT HAPPENS TO DEBT WHEN YOU DIE CANADA: ARE YOU FREE OF DEBT

CREDIT CARD DEBT AFTER DEATH IN CANADA: WHO IS RESPONSIBLE?

DO YOU INHERIT DEBT IN CANADA: CRA SAYS YES TO PROPERTY TRANSFERS

TRUSTEE OF PARENTS ESTATE: DO I REALLY HAVE TO?

Probate Ontario summary

I hope you enjoyed the probate Ontario Brandon Blog post. If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me. 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.

probate ontario
probate ontario
Categories
Brandon Blog Post

WHAT HAPPENS IF YOU DIE WITHOUT A WILL IN ONTARIO? READ OUR INTENSE ANALYSIS

We hope that you and your family remain safe and healthy during this COVID-19 pandemic. The Ira Smith Team is fully operational. Both Ira and Brandon Smith are available to answer any questions you may have, for consultations or meetings. We are available by telephone, email or video meeting. Feel free to contact us.

what happens if you die without a will in ontario

What happens if you die without a will in Ontario introduction

I have been speaking to many lawyers to see what is happening in their marketplace since the onset of the COVID-19 pandemic. What they tell me is that many areas of their practice are quiet:

  1. Litigation and family law has slowed down because of the closure of the courts (other than for emergency matters).
  2. Both the courts being closed and people and companies obtaining government financial support through Canada’s COVID-19 Economic Response Plan have slowed insolvency matters right down.
  3. They also have said that there are not many large commercial real estate deals being done either, perhaps other than many lease amendments for mall landlords!

The one area though they say is very busy, due to the coronavirus pandemic, are the wills and estates lawyers. People are scared and this pandemic has made all of us face our own mortality. Therefore the wills and estate planning areas are quite busy.

Based on that discussion, I thought it would be timely to write Brandon’s Blog about what happens if you die in the province of Ontario without a will?

Composing will is commonly put-off because it is either expensive or troublesome. For sure it is not the most pleasant discussion to have.

The purpose of this Brandon’s Blog is to offer general details about what happens if you die without a will in Ontario. I am not a lawyer so this Brandon’s Blog is general in nature. It definitely is not meant to and must not be used as or to replace appropriate legal recommendations. So if you do not have a will or your will is terribly out of date, please consult with a wills and estates lawyer.

What happens if you die without a will in Ontario?

If you pass away without a will, the law states that you have passed away intestate. This means that you left no guidelines as to exactly how your property is to be divided and dispersed. In these circumstances, the Ontario Succession Law Reform Act regulates how your property will be dispersed to your surviving loved ones. Even if you desire your assets split according to Ontario legislation, you need to still have a will because it will certainly minimize hold-ups and the costs involved in dealing with your affairs.

So the Succession Law Reform Act, R.S.O. 1990, c. S.26 will dictate things and that is what happens if you die without a will in Ontario.

Dying intestate…who does that?

“Intestate” is a legal term that means “without a will.” According to the National Association of Estate Planners, approximately 1 in 50 people in the USA die without a will. And many of those people are famous, including modern movie stars and other famous people. The following list includes some famous people who died intestate:

  • Jimi Hendrix
  • Bob Marley
  • Sonny Bono
  • Stieg Larson
  • Pablo Picasso
  • Adam Goldstein aka DJ AM (who?)
  • Michael Jackson
  • Steve McNair
  • Howard Hughes
  • Abraham Lincoln

    what happens if you die without a will in ontario
    what happens if you die without a will in ontario

How is an estate is distributed If you die without a will in Ontario?

When an individual passes away without a valid will, it is called intestate. Ontario’s Succession Law Reform Act (the Act) lays out how the estate is dispersed.

According to the Act, unless someone who is financially dependent on the dead person makes a claim, the initial $200,000 of value is given to the departed individual’s spouse if she or he has chosen to claim his/her privilege. This is called the preferential share. The other possibility is to declare half of the net family property under the Family Law Act (Ontario). A lawyer will be very helpful in helping the spouse decide which is the better choice.

Anything over $200,000 is shared between the spouse and the descendants (e.g. children, grandchildren) according to specific policies. If there is no partner, the departed person’s kids will acquire the estate. If any one of them has died, that child’s descendants (e.g. the dead individual’s grandchildren) will inherit their share.

Assuming there are no legal challenges to rights to the property, this is what happens if you die without a will in Ontario. Where a spouse, children and grandchildren are involved, this is not a good place to leave them in.

What is a wife entitled to if her husband dies without a will?

Adding to what I just described, the Family Law Act defines a spouse as a married individual, and the term spouse in this family law legislation does not mean co-habiting parties or common-law spouses. Under this Act, a married spouse is entitled to get one-half of the amount through which the deceased person‘s net family assets exceed the net family assets of the surviving spouse.

This equalization payment makes certain that the spouse who is alive has the opportunity to share equally in any in the value of the assets that the couple made over their marriage. As I previously stated, the surviving spouse should elect to accept this payment OR to take what they are entitled to under the Act.

Under Ontario family law, assuming the surviving spouse does not own the matrimonial home outright or as a joint tenant with the deceased spouse, the family law statute in Ontario gives the surviving spouse certain rights. In that case, that spouse also has the right to continue to be in the matrimonial home for a period of 60 days following the death of their spouse, on a rent-free basis.

So as you can tell, there will be a lot of pain and uncertainty to the surviving spouse and that is what happens if you die without a will in Ontario.

Who will be in charge of my Estate?

Someone, such as a close loved one, will need to apply the court to be designated as the estate trustee without a will (Estate Trustee). The Estate Trustee has the exact same tasks as an executor, the only difference is that the Estate Trustee can’t start to act until the court gives permission. This can take a while, such as a busy court in the city of Toronto. As well as if nobody steps up, then the court will certainly have to designate a public trustee.

Once the Estate Trustee is appointed, they can then apply for probate in Ontario. Probate is a process to ask the court to:

  1. Provide a person with the authority to serve as the Estate Trustee of an estate.
  2. Or validate the authority of a person called the Estate Trustee in the deceased’s will.
  3. Formally accept that the deceased’s will as their legitimate last will

The court then issues a Certificate of Appointment of Estate Trustee With A Will when there is a will. As I mentioned above, if the person dies intestate, then the court issues the Certificate of Appointment of Estate Trustee Without A Will.

Here is a picture of what a Certificate looks like. It is redacted from one of our Estate Trustee files where the original Estate Trustees named in the will renounced their role:

what happens if you die without a will in ontario
what happens if you die without a will in ontario

With the Certificate, the Estate Trustee can prove to anyone of his or her authority. This is especially important because that is the document all banks look for before handing over money from the deceased’s bank accounts to the Estate Trustee. In the case of someone dying intestate, the appointing court order will serve as proof until the court then issues the Certificate.

Ira Smith Trustee & Receiver Inc. accepts assignments in acting as an Estate Trustee. The skills needed are very similar to ones we already have in acting as a licensed insolvency trustee. We do our Estate Trustee assignments under the name Smith Estate Trustee Ontario.

Having a will certainly enables a person to start acting on your behalf instantly after you pass away. If not, this is what happens when you die without a will in Ontario.

what happens if you die without a will in ontario
what happens if you die without a will in ontario

Duties of the Estate Trustee

As Estate Trustee we determine and locate all of the assets of the deceased. We must also identify all of his or her liabilities also. We need to make sure that funeral arrangements have been made and that the funeral costs and any other funeral expenses have been paid. We must understand the true nature of the assets and their market value. The administration of wills and estates (unless otherwise directed in a will) dictates that we must then sell them.

The Estate Trustee also needs to prepare all necessary income tax returns, pay all taxes owing as well as other debts. If there need to be any investigations, or if the estate is involved in litigation, the Estate Trustee must complete and manage those processes also.

The balance of funds left over after settlement of the liabilities and payment of all expenses, including those of the Estate Trustee and its legal counsel, creates the assets readily available for distribution from the estate. The Estate Trustee is a fiduciary and must perform the duties impartially. The Estate Trustee is also personally liable if any mistakes are made which causes one or more parties to suffer damages.

The duties and responsibilities of the Estate Trustee do not change whether or not there is a will. Without a will, what happens if you die without a will in Ontario is that you have lost the choice to appoint who you think will do the best job for your estate.

What happens to your property if you die without a will in Ontario?

Lots of people erroneously believe that the government takes the property from the deceased’s estate if you die without a will. Relax, that is not what happens if you die without a will in Ontario.

While of course, it is always better to have a will to direct what ought to take place to your assets after death, the law attempts to equitably distribute the assets of the deceased amongst the deceased’s spouse, children or grandchildren, as I have already described and further described below.

Who will get my Estate?

Without a will, you cannot pick who you’d like to receive the benefit of your estate. You can’t leave money to a charity you appreciate, you cannot leave any gifts to close friends and also you cannot allot money to cover the expense of taking care of your furry relative. Your estate will be dispersed using the provincial regulations that I already described. They have really little versatility and this is exactly what happens when you die without a will in Ontario.

what happens if you die without a will in ontario
what happens if you die without a will in ontario

What do children get when a parent dies without a will?

As already gone over, the Act sets up a scheme to divide the estate of a person who passes away without a will. If the deceased had assets worth less than $200,000 at the time of their death, their spouse will be entitled to the entire estate.

If the assets of the deceased are worth more than $200,000, after that preferred share amount (and the payment of all expenses of the estate), the remainder of the estate will be split as shown in the following examples:

  1. The deceased had a spouse and an only child. They each will get 50% of the rest of the estate.
  2. If the deceased had a spouse and more than one child, then you need to add up the total number of people. So, if there were three children, then, including the spouse, there are 4 people. The spouse and each child will get a 1/4 equal share of the remainder of the estate.

Under an intestacy, children have rights to both property and if applicable, support under the Act. However what occurs if an estate is worth $200,000.00 or much less and the children are entitled to support? The legislation of intestacy recommends that all the money goes to the spouse of the deceased to go towards the preferential share.

If required, the minor children, or their guardian, can bring a court application against the estate for assistance due to the fact that the children are specified as dependants under the Act. The child or children are primarily claiming, my deceased mom or dad had a legal commitment to support me at the time of his/her fatality. I still require to be supported. The court under those instances may access the assets of the estate, and various other assets such as insurance coverage or assets owned jointly with the deceased’s spouse, to fund an order for the support of those dependent children.

As you can see, what happens if you die without a will in Ontario can be very troubling for your loved ones, especially dependent children who do not deserve those problems. This alone should be a great reason for you to not hold of any longer in having an up to date will.

Who will take care of your dependent children?

If the dependent children don’t have another parent, the court will select a guardian for them. The guardian acquires all of the legal rights as well as the responsibilities of a mom or dad. There is no guarantee that the guardian will be the individual you think will certainly do it the best. The kids’ inheritance will be kept in trust until they reach the age of majority. This is what happens if you die without a will in Ontario.

What About Other Relatives?

If the deceased that died intestate leaves no spouse or kids living at the date of their death, then their estate is split between their parents. If they have no parents, it is then split among their brothers and sisters. If they have no brothers or sisters surviving them, it is shared amongst their nieces and nephews who are blood-related. If they have no blood-related nieces or nephews, after that it is dispersed amongst their next closest blood relative.

When an individual dies having no will and no blood relatives surviving them, only then will their net property end up being the property of the government. This is what happens if you die without a will in Ontario.

what happens if you die without a will in ontario
what happens if you die without a will in ontario

What happens to debt if you die?

I am regularly asked what happens to debt if you die, in addition to what happens if you die without a will in Ontario. I have written several blogs on the topic.

They are:

  1. WHAT HAPPENS TO DEBT WHEN YOU DIE CANADA: ARE YOU FREE OF DEBT
  2. WHAT HAPPENS TO MORTGAGE WHEN YOU DIE CANADA: DEBT PHILOSOPHY EXPLAINED
  3. CREDIT CARD DEBT AFTER DEATH IN CANADA: WHO IS RESPONSIBLE?

What happens if you die without a will in Ontario summary

I don’t know if the word “enjoyed” is appropriate for this topic. So, I will say that I hope you found this what happens if you die without a will in Ontario Brandon’s blog informative.

Our mix of empathy, experience and impartiality provides us with a distinct viewpoint and the capability to appropriately administer the estate, minimize problems and accomplish outcomes for all stakeholders in an economical way.

Professional and impartial Officer of the Court

  • Acting as estate trustee
  • Obtain probate in Ontario
  • Asset management
  • Investigation and valuation
  • Monetization of assets
  • Trust accounting
  • Beneficiary reporting and distribution
  • Taking care of what happens if you die without a will in Ontario

Estate Trustee Under Litigation

  • Professional and impartial Officer of the Court
  • Asset investigation, valuation and safeguarding
  • Trust accounting
  • Reporting to the Court and all stakeholders

Conflict resolution

  • Protecting assets
  • Experienced as Officer of the Court if estate trustee has conflict – perceived or real
  • Minimize costs
  • Stakeholder strategies

Insolvency

  • Planning and strategy to safeguard assets
  • Restructuring and Turnaround
  • Acting as Trustee of an insolvent estate

We provide a full range of services to provide solutions for the complex Estate issues to end the pain and frustration the stakeholders are experiencing. We apply our expertise and creative thinking to take care of all details to end your pain and achieve the goals of the beneficiaries and other stakeholders. Contact Smith Estate Trustee Ontario today for your free consultation.

Get our free full-scale analysis of your issues and our recommended options to solve your problems allowing you to move forward confidently. Check out our website by clicking here. All our details are there.

We hope that you and your family remain safe and healthy during this COVID-19 pandemic. The Ira Smith Team is fully operational. Both Ira and Brandon Smith are available to answer any questions you may have, for consultations or meetings. We are available by telephone, email or video meeting. Feel free to contact us.

what happens if you die without a will in ontario
what happens if you die without a will in ontario
Categories
Brandon Blog Post

WILLS AND ESTATES: SELLING DECEASED ESTATE PROPERTY

wills and estates

If you would like to hear the audio version of this wills and estates Brandon’s Blog, please scroll to the bottom and click on the podcast

Introduction

Earlier this year, I wrote several blogs dealing with the administration of wills and estates. As I previously wrote, Ira Smith and I got very interested in this area. The reason was that we saw that the skill set required and the activities undertaken by an executor of a deceased estate, were quite similar. In Ontario, the executor of a deceased estate is called an estate trustee.

My series of blogs on the administration of a deceased estate in Ontario, in no particular order, were:

  1. DYING WITHOUT A WILL IN ONTARIO: DISTRIBUTION TO HEIRS NOT EASY
  2. TRUSTEE OF DECEASED ESTATE: WHAT A TORONTO BANKRUPTCY TRUSTEE KNOWS
  3. TRUSTEE OF PARENTS ESTATE: DO I REALLY HAVE TO?
  4. ESTATE TRUSTEE ONTARIO REMOVAL ISSUES
  5. SUCCESSION LAW REFORM ACT OPPORTUNITIES FROM A TORONTO BANKRUPTCY TRUSTEE
  6. TRUSTEE ACT ONTARIO BY A TORONTO BANKRUPTCY TRUSTEE
  7. ADMINISTRATION OF ESTATES ACT CANADA: EASY FOR TORONTO BANKRUPTCY TRUSTEE TO DO
  8. ESTATES ACT ONTARIO: TORONTO BANKRUPTCY TRUSTEE REVEALS HIDDEN SECRET
  9. PROBATE IN ONTARIO – SMITH ESTATE TRUSTEE ONTARIO BEGINS

The purpose of this Brandon’s Blog is to review a very interesting recent Court of Appeal for Ontario decision appealing a lower Court’s ruling in an estate matter. The appeal was launched by the Estate Trustee who felt the lower court judge erred in approving a sale of an estate asset for a lower price than the Estate Trustee thought was proper. The Court of Appeal for Ontario upheld the lower court’s decision.

This could very well happen to a receiver or trustee in an insolvency file. Again, another similarity between the role we take on in an insolvency file administration and the role Smith Estate Trustee Ontario takes on as Estate Trustee in the administration of a deceased estate.

Wills and estates definition

First some basics. An estate is the property that an individual owns or has a lawful controlling interest in. The term is usually made use of to define the assets and liabilities left by a person after death. A will is a document that states your final wishes. It is a document that becomes operative after your death. It will appoint one or more people to act as an estate trustee. It will also provide for how you want your assets to be divided up amongst your beneficiary or beneficiaries.

On December 6, 2019, the Court of Appeal for Ontario released its decision in the legal case Loran v. Weissmann, 2019 ONCA 962 (CanLII). As I mentioned, the Estate Trustee appealed the lower court’s decision released in January 2019. The issue was one that could easily come up in other wills and estates. Since the issue being appealed was the lower court’s decision on a sales price for an asset, this issue also can arise in insolvency files. Just a different context.

Wills and estates Ontario: What was the issue?

This appeal by the estate trustee occurred out of a disagreement regarding a provision in the will concerning the sale of the business owned by the deceased. Unfortunately, this happens all too frequently. The provision in dispute was regarding the sales price of the business.

The will stated that the respondent, a long-time employee of the business, could purchase the business. The purchase price stated in the will was “…the lesser of $1.75 million or “the price determined by multiplying the earnings of…(averaged over the last three fiscal periods) by a factor of 5.5”.

The will also stated that the price paid by the respondent will be provided by way of a promissory note, with interest payable at 5% per year. There will be an annual repayment to the estate of not less than $180,000, to be made in month-to-month payments. The promissory note was to be secured by a general security agreement against the assets of the business and by the registration of a mortgage against the respondent’s house.

So far it sounds pretty simple, or so you would think.

They couldn’t reach a deal

The long-time employee tried to purchase the business, but the estate trustee and the employee could not agree on the purchase price. That is how they ended up in court.

The lower court judge hearing the evidence ruled that the sales price will be $529,611. He calculated this as $716,921, using the formula in the will, minus $187,310. This latter amount was an amount the Judge ruled was improperly paid by the company to the estate. The Judge also ruled that the employee was not required to provide the collateral mortgage. The estate trustee felt that this went against the will.

The appeal by the estate trustee

The appellant submitted that the application judge made the following mistakes:

  • he treated the respondent as a beneficiary as opposed to a favoured buyer;
  • he ignored the need of a collateral mortgage;
  • he approved the respondent’s evidence about the amount to be attributed to the deceased owner’s wages for the purposes of computing the earnings of the company; as well as
  • he incorrectly subtracted from the sales price the $187,310 paid out of the company to the estate.

The Court of Appeal for Ontario did not agree with any of these grounds for appeal.

The reasons were given by the Court of Appeal for Ontario

Beneficiary vs favoured buyer – The appellate court did not find any error in the lower court ruling on this. The Court of Appeal for Ontario noted that the will did not try to maximize the value of the business. It did not state that the estate trustee had to run a marketing effort to obtain the best price under the circumstances.

You would expect this to be the case in any sale by either an estate trustee or a receiver or licensed insolvency trustee. The appeal court noted this absence of intention. Rather, they agreed with the lower court that the intention was for the long-time employee to buy the business under the formula in the will.

Collateral mortgage – The evidence before the lower court was that at the time the will was written, the long-time employee did not own a home. The will also did not have any language about what minimum amount of equity the long term employee’s home had to have to provide for the collateral mortgage security. There was no argument that the lower court judge had the right to apply commercially reasonable terms. So, since the will was so unclear on what wording and real value the collateral mortgage security had to have, the lower court judge ruled that it would be meaningless and was unnecessary in the circumstances. The Court of Appeal for Ontario agreed again with the lower court judge.

The owner’s salary adds back to normalize earnings – The evidence was that at trial, both the appellant and respondent provided expert witness reports on this issue. The lower court judge preferred the respondent’s expert evidence. The appellant took issue with this. The Court of Appeal found that the lower court judge had the right to rely on one or the other of the expert’s reports and made a judgment call. There was nothing in that decision to be overturned.

Payment of $187,310 – The appellant’s position was that this payment would one day be rectified by the company recording this payment as a dividend. The appellant stated that the company had the right to pay dividends, which it had in the past. The lower court judge agreed that, as long as the payment of dividends did not render the company insolvent, it could do so.

The lower court judge also found that in the past the company had paid a dividend. However, it did not characterize this payment as a dividend, but rather, just payment to the estate. The lower court judge ruled that the purchaser should get the benefit of those funds having been stripped out of the company by a reduction in the purchase price of that same amount.

It turned out that the estate trustee caused the company to make that payment to the estate so that the estate could then pay out those funds to support the deceased’s widow. The company did not record that payment as a dividend or as salary to the widow. The lower court drew a distinction between dividends and gratuitous payments from the company’s bank account. The appeal court found that decision was within his discretion and there is no basis to interfere with the lower court judge’s finding.

So, the appeal court dismissed the appeal entirely and ordered that the appellant pay the respondent’s costs fixed in the amount of $10,000.

Summary

As I stated at the beginning, there are a lot of similarities between acting as an estate trustee and administering an insolvency file. Disputes normally arise in insolvency files. As this case shows, disputes also arise regularly in the administration of a deceased estate.

As a result of the similarities, we started this year Smith Estate Trustee Ontario. We currently have several estate trustee administrations underway. Our mix of empathy, experience and impartiality provides us with a distinct viewpoint. We have the capability to appropriately administer a deceased estate. Through our efforts, we minimize problems and accomplish outcomes for all stakeholders in an economical way.

We provide a full range of services to provide solutions for the complex Estate issues to end the pain and frustration the stakeholders are experiencing. We apply our expertise and creative thinking to take care of all details to end your pain and achieve the goals of the beneficiaries and other stakeholders. Contact Smith Estate Trustee Ontario today for your free consultation. Get our no cost full-scale analysis of your issues and our recommended options to solve your problems allowing you to move forward confidently. Check out our website by clicking HERE.

Categories
Brandon Blog Post

DYING WITHOUT A WILL IN ONTARIO: DISTRIBUTION TO HEIRS NOT EASY

Introduction

The official term for dying without a will in Ontario, or anywhere else, is that they have died intestate. The consequences of dying without a will in Ontario are significant. A recent Court decision about this famous Canadian’s Estate highlights the issue.

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. The departed passed away without leaving a will. His 3 siblings, Phillippa Baran, Goldie Cranston and Guy Cranston were proclaimed the sole heirs of the Estate by the Second Civil Court in San Miguel de Allende, Guanajuato, Mexico in August 2015.

Phillippa is the Estate Trustee. She was initially named “Executor” of the estate by the court in Mexico on September 2015. A Certificate of Appointment of Foreign Estate Trustee’s Nominee as Estate Trustee without a Will was issued by the Superior Court of Justice in Ottawa on December 8, 2016. This also includes a certificate of appointment of estate trustee without a will.

The assets of the Estate were located both in Canada and in Mexico. Upon his death, the Estate consisted of about 20,000 items of original art, bank accounts and other property. The initial worth of the Estate was around $6,258,520.

According to Phillippa, the unsold or unrealized property includes $429,958 in money and around $1,577,371 in the artwork. The deceased’s original artwork was placed on consignment at several art galleries for sale.

Siblings disagree on what to do with the remaining original artwork

At first, the siblings collaborated to carry out what needed to be done in the Estate. After Toller Cranston’s death, they took a trip to Mexico to deal with the Estate. Along with selling the real estate, a variety of paintings as well as other assets which were split between them.

Consequently, Goldie and Guy Cranston came to be worried regarding Phillippa’s management of the Estate. They stated that Phillippa has actually mishandled the Estate and they are worried about how she will deal with the remaining Estate assets.

Especially bothering to Guy and Goldie Cranston is Phillippa’s views on dealing with the rest of the Estate. It is the artwork that is a significant emphasis on disagreement. These are among the main reasons Goldie and Guy are asking that an Estate Trustee During Litigation be assigned right now.

Goldie and Guy were particularly disturbed over the following:

  1. Concerning the artwork in storage, they have repeatedly requested that they receive their share of the actual artwork. They don’t want or need it to be sold. Phillippa has ignored their requests.
  2. There was evidence that the art gallery where a major amount of artwork was placed on consignment was having financial difficulties. The concern was that the gallery may not continue in business and the artwork could be lost.
  3. The law firm acting for Philippa also acts for the art gallery in financial trouble.
  4. Neither Guy nor Goldie requires the paintings to be sold. In fact, Guy owns an art gallery in Nova Scotia. They do not want to lose up to 50% of the value of the artwork they are entitled to because of art gallery commissions. Therefore, Phillippa’s insisting that the artwork must be sold is an unreasonable loss for them.
  5. Toller Cranston’s legacy. They say that Phillippa’s actions related to marketing and licensing opportunities that the artwork could yield once the passing of accounts is concluded are unreasonable. She is more focused on that, without any consultation with the other heirs, than she is in administering the assets currently in the Estate.
  6. They are surprised that the Estate Trustee has paid herself the amount of $528,228 from the Estate. They also have issues regarding the $315,774 spent by Phillippa in legal fees.

Guy and Goldie request the appointment of an Estate Trustee During Litigation

Goldie and Guy Cranston state that Phillippa ought to be replaced as Estate Trustee in order to avoid causing incurable damage to the heirs if the artwork is sold off in the current fashion. They propose that an Estate Trustee During Litigation should be designated to protect the assets of the Estate and to disperse the artwork in-kind amongst the heirs.

They nominated a specific lawyer as the Estate Trustee During Litigation. The Court found that his credentials are not a problem and that he is capable of acting in that capacity. Phillippa opposed this request.

The Court reviewed the relevant case law. The decision also states that Phillippa’s handling of the artwork in either marketing it over the arguments of the other heirs or in creating strategies when it comes to the future rights of the artwork without notifying or speaking with Goldie or Guy is unreasonable. The Court also found that it runs opposite to her

responsibilities as an Estate Trustee to act in the best interests of the heirs. The Court concluded that Phillippa remains in a conflict of interest.

The Court’s decision

The Court ordered that:

  1. The lawyer is selected to act as the Court-appointed Estate Trustee During Litigation of the estate of Toller James Montague Cranston.
  2. He is to act without posting an Administration Bond.
  3. He will immediately file his written Consent with the Court and take immediate control of all properties of the Estate.
  4. Phillippa will totally co-operate in the hand-over of the Estate property and documents
  5. The Estate Trustee During Litigation is to examine and prepare for circulation a plan for the distribution of and liquidation of the remaining artwork.
  6. To determine his plan, he must consult with all three heirs.

Conclusion – Dying without a will in Ontario

Dying without a will in Ontario is not helpful to anyone, especially your loved ones you wanted to have the benefit of your property when you die. There are many times where a neutral third party should be considered either to act as Estate Trustee or Estate Trustee Under Litigation. Consider these examples:

  1. Moms and dads select all their kids to serve as Estate Trustee. Each child has a various degree of abilities, and some none, in what is called for to administer an Estate. Some children identify that either they do not have the necessary abilities or simply do not desire the obligation. Anxiousness, clashes and pain results.
  2. Many affluent family members have disagreements over exactly how the family wealth should be handled. These fights can become very public and expensive when they resort to the courts.
  3. A person passes away with assets yet no will. Many people think, deservedly or not, that they are entitled to the assets in the deceased’s estate.
  4. You are a lawyer, estate planner or financial advisor. You hesitantly consented to be the Estate Trustee of the estate of the person that was the owner of your best corporate client. The person passes away and you find yourself in the middle of an illogical dispute of passion between the heirs. The problem is so extreme, it threatens your capability for maintaining the company as your client and therefore your future earnings.
  5. As the Estate Trustee, you are not in conflict. Nonetheless, the time required to handle all the complicated estate problems is like a second full-time job. It is having a negative impact on your business as you cannot devote the necessary time to it. You have to get out, however, you do not have an option to replace yourself.
  6. The heirs and the Estate are involved in significant expensive lawsuits. There is no end in sight. Nevertheless, there are live problems that require to be attended to in managing the Estate so that the assets are protected and do not dissipate. There is an instant need for an Estate Trustee Under Litigation.

These are all real-life examples. Nothing has been made up. This is why we started Smith Estate Trustee Ontario.

If you find yourself in the middle of an Estate problem, contact the Smith Estate Ontario Team. We will sit down with you and listen to the issues. We will provide you with a plan for moving forward and ending the pain, frustration and cost being caused by the Estate issues. There is no charge for this initial consultation.

Call the Smith Estate Trustee Ontario Team today. We will help you move forward. We do so with compassion, experience and impartiality. Call the Smith Estate Trustee Ontario Team now.

dying without a will in ontario

Categories
Brandon Blog Post

PROBATE IN ONTARIO – SMITH ESTATE TRUSTEE ONTARIO BEGINS

probate in ontario

Introduction

I have written several blogs on the topic of when someone dies and their estate is insolvent. One of our most popular blogs is WHAT HAPPENS TO DEBT WHEN YOU DIE CANADA: ARE YOU FREE OF DEBT? I have also written on estate matters including probate in Ontario. Not from an insolvent estate perspective, but as to why a licensed insolvency trustee (formerly called a trustee in bankruptcy) has the skill set to be an estate trustee.

Historically, estate trustees have been a trust company, a lawyer or family of the deceased, such as children. Based on our work with insolvent deceased estates, we have learned all about the emotions and even pain that family and business ties can cause and place parties in conflict.

So, I am pleased to announce that today we have opened up a new business division, Smith Trustee Estate Ontario. You can click on the button above or below to take you to our website. Have a look and let us know what you think.

Why use a licensed insolvency trustee as an estate trustee?

We have the skillset to perform the duties of an estate trustee. We also understand the role and responsibilities that the statutes demand, such as the:

Estate trustee problems we can help solve

In Ontario, an estate trustee is the only person with the lawful authority to look after an estate. Probate in Ontario is a process to ask the court to:

  • give a person the authority to work as the estate trustee of an estate; or
  • verify the authority of a person named as the estate trustee in the deceased’s will.

Sometimes an objective and experienced party have to be assigned to function as the independent estate trustee. Take into consideration the possible circumstances:

  1. Moms and Dads select all their kids to work together as an estate trustee. Each child has various degree of abilities, and some may have no desire, to do is called for to carry out the estate trustee duties. Stress and anxiety, clashes and pain results without any end in sight.
  2. Lots of well-off family members have disagreements over just how the family’s assets need to be invested. Rich family members aren’t beyond turning family squabbles into public fights in the courts. Often the circumstance simply calls out for a caring, skilled and neutral party to become the Officer of the Court to aid everybody gets to a good and fair outcome. This also will ideally decrease or prevent the demand for costly lawsuits.
  3. Somebody passes away with assets however no will. Many people think they are entitled to all or part of the deceased’s estate. Somebody without a financial interest yet with the abilities and experience is required to intervene to work things out in a reasonable and objective and cost-effective method.
  4. You are the lawyer or financial advisor to a great client. You have hesitantly consented to be the estate trustee of the estate of the person that is the driving force behind one of your best corporate clients. The person passes away and you find that you are now in the middle of an illogical dispute amongst the beneficiaries that is driven not by business sense but by passion and hate. The dispute is so serious, it endangers your capability to maintain the corporate client and the prospective future earnings to your business that this client can generate.
  5. As the lawyer or financial advisor to a person, acting as the estate trustee is not a problem. Nevertheless, the time required to take care of all the intricate estate problems may be that it takes you far from the remainder of your professional practice. You believe that you really cannot afford to do so. You want to relinquish the estate trustee duty, however, you don’t have a reasonable alternative to make sure that the estate can be effectively carried out.
  6. The person names as the Estate Trustee has a real conflict and must be replaced. Again, a skilled party who has no financial interest in the outcome and is easily recognized as an expert by the Court is required, and fast!
  7. There is a crucial demand for an Estate Trustee Under Litigation. Our experience in working as an Officer of the Court has actually resulted in our being identified for acting in a proficient and neutral way. We comprehend exactly how to navigate the different regulations and Court procedures associated with being an estate trustee. The Court acknowledges our capabilities and approves our qualifications without question.

The fact of the matter is with many problems such as these, the estate is most likely to be involved in significant expensive lawsuits. It will certainly not finish anytime quickly. Nevertheless, in the meanwhile, there are actual time problems that require to be attended to in managing the estate assets so they do not dissipate or otherwise are at risk.

Probate in Ontario – Why work with us?

Our mix of empathy, experience and impartiality provides us with a distinct viewpoint and the capability to appropriately administer the estate, minimize problems and accomplish outcomes for all stakeholders in an economical way.

Professional and impartial Officer of the Court

  • Acting as estate trustee
  • Obtain probate in Ontario
  • Asset management
  • Investigation and valuation
  • Monetization of assets
  • Trust accounting
  • Beneficiary reporting and distribution

Estate Trustee Under Litigation

  • Professional and impartial Officer of the Court
  • Asset investigation, valuation and safeguarding
  • Trust accounting
  • Reporting to the Court and all stakeholders

Conflict resolution

  • Protecting assets
  • Experienced as Officer of the Court if estate trustee has conflict – perceived or real
  • Minimize costs
  • Stakeholder strategies

Insolvency

  • Planning and strategy to safeguard assets
  • Restructuring and Turnaround
  • Acting as Trustee of an insolvent estate

We provide a full range of services to provide solutions for the complex Estate issues to end the pain and frustration the stakeholders are experiencing. We apply our expertise and creative thinking to take care of all details to end your pain and achieve the goals of the beneficiaries and other stakeholders. Contact Smith Estate Trustee Ontario today for your free consultation.

Get our free full-scale analysis of your issues and our recommended options to solve your problems allowing you to move forward confidently. Check out our website by clicking on the button below. All our details are there.

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