trustee of deceased estate Archives - Ira SmithTrustee & Receiver Inc.

If you would prefer to listen to the audio version of this Succession Law Reform Act Brandon’s Blog, please scroll down to the bottom and click on the podcast.

Succession Law Reform Act: Introduction

I wish to focus on the last provincial statute that is also important for the administration of a deceased estate; the Succession Law Reform Act, R.S.O. 1990, c. S.26.

This is my last blog in this collection to show how it would certainly be proper to appoint a licensed insolvency trustee (LIT or bankruptcy trustee) (formerly known as a bankruptcy trustee) as the estate trustee (formerly called an executor or executrix) of a solvent deceased estate.

As always, given that we are not lawyers, and I am not offering in this or any of the other Brandon’s Blogs in this series, suggestions on wills or estate issues. For that, you have to consult your lawyer.

My estate trustee blogs

In my blog TRUSTEE OF DECEASED ESTATE: WHAT A TORONTO BANKRUPTCY TRUSTEE KNOWS, I discussed some crucial issues when it entails a deceased estate and why a LIT would certainly be exceptionally knowledgable and qualified to serve as an estate trustee.

In the blog, TRUSTEE OF PARENTS ESTATE: DO I REALLY HAVE TO?, I discussed why many times moms and dads attempt doing the correct thing by selecting their youngsters as estate trustees and the several times it simply ends up all wrong.

In ESTATES ACT ONTARIO: TORONTO BANKRUPTCY TRUSTEE REVEALS HIDDEN SECRET, I describe how the needs and stipulations of the Estates Act are already very familiar to a bankruptcy trustee. As a matter of fact, a lot of the tasks called for by the Estates Act are currently carried out in the insolvency context by a LIT.

My blog ADMINISTRATION OF ESTATES ACT CANADA: EASY FOR TORONTO BANKRUPTCY TRUSTEE TO DO, I clarified why a LIT is an appropriate specialist to lead the management of Estates Act Canada.

In the blog TRUSTEE ACT ONTARIO BY A TORONTO BANKRUPTCY TRUSTEE, I describe the duties of a trustee under the Trustee Act Ontario and how a bankruptcy trustee is experienced to carry out those duties.

In this blog, I will explain why a bankruptcy trustee would be extremely comfortable working with this provincial legislation.

Things an estate trustee must be aware of

The Act has 79 sections and regulations. Sections 1 through 43 inclusive, set the ground rules for establishing wills and their validity.

The Act figures out how your estate and assets will be allocated to family members based on based upon guidance and a collection of policies.

This statute is different from the other ones I reviewed affecting acting as an estate trustee in a deceased estate. The Act is really just a set of guiding rules.

Intestacy and the entitlement of spouse and the preferential share

Section 44 of the Act deals with a person who has a spouse and no living children who die intestate. This section says that his or her spouse is entitled to all the property.

Section 45(1) of this Act deals with the situations where a person dies intestate and has both a spouse and living children. It says that where the value of the deceased’s property is not more than the preferential share, which is a defined term, then the spouse is entitled to all the property.

Preferential share is set by Ontario Regulation 54/95. It says that for the purpose of section 45 of the Act, the preferential share is $200,000.

Section 45(2) of the Act deals with the person who dies intestate, has a spouse and living children, and whose property is worth more than the preferential share. This section says that the spouse is absolutely entitled to the preferential share or the amount of $200,000. Presumably, the spouse and children then have to either agree or litigate about who is entitled to how much of the value above $200,000.

Just to add another wrinkle, Section 45(3) deals with the situation where the deceased dies with a will dealing with some property but intestate to the balance of the property and is survived by both a spouse and children. This section states that the spouse is always entitled to the preferential share out of the property not governed by a will. If the spouse is entitled to property under a will having a value of more than the preferential share ($200,000), then there is no need to be concerned with the workings of the preferential share.

Residue: spouse and children

Section 46(1) of this provincial statute says that where a person dies intestate and has a spouse and one living child, the spouse is entitled to one-half of the residue of the property AFTER payment of the preferential share.

Section 46(2) states that if the intestate dead person has a spouse and more than one child, the spouse is entitled to one-third of the residue. Again, this is after payment of the preferential share. Section 46(3) deals with the situation of any children predeceasing the parent who died intestate. This section says that for the purposes of calculating the spouse’s share, assume the deceased child(ren) is alive.

Distribution of kin

Section 47 of the Succession Law Reform Act deals with how property should be distributed when a person dies intestate. The general principle starts with the property being divided between the spouse and living children as described above. The balance of the section deals with the treatment of grandchildren, parents, siblings and nephews and nieces when a person dies intestate.

This section ultimately says that if there are no kin, then the intestate property becomes the property of the Crown under the Escheats Act, 2015.

Succession Law Reform Act: Designation of beneficiaries of interest in funds or plans, survivorship and support of dependants

The balance of the Act deals with specific rules about:

the designation in plans or funds of specific beneficiaries;
how to deal with the death of two or more persons at the same time who either hold property together or may be entitled to all or some of the other’s property; and
support of dependants.

Summary

I really hope that this collection of blogs show to you just how the various provincial statutes describing the obligations of a trustee or estate trustee tracks actually near to exactly how a LIT executes in either a Court-appointed receivership or bankruptcy mandate.

If you have any type of concerns about a deceased estate and the requirements for an estate trustee, whether it is solvent or insolvent, call the Ira Smith Team. We have decades and generations of experience in helping people and companies overcome their financial problems. You don’t need to suffer; we can end your pain.

If you have any questions at all, contact the Ira Smith Team.

Trustee of deceased estate: Introduction

I have previously written on what happens when a person dies insolvent, i.e. their debts are greater than the value of their assets. My blogs on being a trustee of deceased estate that is insolvent are:

I am now switching a bit. Over the next few weeks, I am going to be writing a series of blogs and vlogs to explain why I believe that a licensed insolvency trustee (formerly called a bankruptcy trustee) is the professional you should be thinking of making the executor of a deceased estate and recording it in your will. I am talking about solvent estates. Those with many assets and beneficiaries. I will be making the case why over the next few weeks. I will not be on insolvent estates of deceased persons.

I repeat that these blogs and vlogs will have nothing to do with debt, insolvency or bankruptcy. However, I will show how, based on the knowledge and expertise possessed by licensed insolvency trustees, it makes them the perfect candidate to serve as an executor of a deceased estate that is rich with assets. I will also be focussing my comments on the Province of Ontario. There may be some variations from province to province.

I caution that I and my firm are not lawyers, and I am by no means providing in this and upcoming Brandon’s Blogs advice on wills or estate planning matters. For that, you must consult your lawyer.

In this blog, I wish to set the stage by going over some basics when it comes to a deceased estate.

Trustee of deceased estate: The executor/executrix or estate trustee

In Ontario, an estate trustee (also known as the executor or executrix) is the only individual with the lawful authority to handle or disperse an estate. When an individual dies they might leave items, property, real estate, cash and investments and other possessions which is called their estate.

Probate is a treatment to ask the court to:

provide an individual with the authority to work as the estate trustee of an estate;
verify the authority of an individual acting as the estate trustee named in the deceased’s will; and
officially accept that the deceased’s will is their legitimate last will.

You can apply for probate in the Ontario Superior Court of Justice. The procedure is governed by the Estates Act and the related Rules of Civil Procedure.dece

If your probate application succeeds, the court will provide a Certificate of Appointment of Estate Trustee, which is evidence that an individual has the lawful authority to manage the estate. If there is a will, it is also evidence that the will is valid.

Trustee of deceased estate: Must I always apply for probate?

A probate Certificate is not needed in every situation for a deceased estate. Prior to beginning an application for probate, you might want to establish whether the deceased estate actually needs a probate Certificate.

An application for a probate Certificate is normally made if:

the departed individual passed away without a will
the deceased’s will does not show an estate trustee
a financial institution desires evidence of an individual’s lawful authority to get the cash or financial investments of the deceased
the estate’s properties consist of real estate which does not pass to an individual by right of survivorship
there is a disagreement about who ought to be the estate trustee
there is a conflict or possible conflict about the legitimacy of the will; or
some of the beneficiaries are unable to supply legal consent.

Trustee of deceased estate: Trustee of estate responsibility

What should the estate trustee’s first steps be? Here is where the actions the estate trustee should immediately take are almost the same as when a licensed insolvency trustee is first appointed either as:

a receiver for a secured creditor;
the receiver appointed by Court order; or
a bankruptcy trustee

The will and financial records

Assuming the family has already made arrangements for and the funeral has taken place, the estate trustee should first find a copy of the will and any books and records of the deceased that will explain the deceased’s financial affairs. If the estate trustee cannot find a copy of the will, he or she should consult with the deceased’s family and lawyer. Hopefully one or both will have a copy.

As the licensed insolvency trustee, we must also find the books and records of the company or person, so that we can start learning about the financial affairs of the insolvent or bankrupt.

Proof of authority

The estate trustee will also require a certified copy of the death certificate, to prove the death to financial institutions and the government. The will, and/or the probate Certificate, will be proof of the estate trustee’s authority to act.

In the same way, the licensed insolvency trustee requires a copy of its Appointment Letter in a private receivership, the Court order in a Court-appointed receivership, or the Certificate of the Superintendent of Bankruptcy in a bankruptcy. These documents evidence the appointment of the licensed insolvency trustee.

Taking possession and control of the assets

The estate trustee must now take control of any assets that do not automatically by operation of law transfer to another person by right of survivorship. The estate trustee must establish physical control, take an inventory of the assets and arrange for appraisals to be performed where required. The estate trustee should establish the market value of the assets as soon as possible.

In the same way, upon being appointed as either receiver or trustee, a licensed insolvency trustee must establish control and/or possession of the assets, properties and undertakings of the insolvent/bankrupt debtor, whether in the debtor’s possession or that of a third party. The licensed insolvency trustee must make an inventory of the assets and where required, arrange for appraisals.

Insurance and bonding

The estate trustee must make sure that, in the case of real property and chattels, that the assets are properly insured. As well, if an application was made to Court for probate and the Court issued the Certificate, the Court may also require the estate trustee to get a bond for a specific value to protect the beneficiaries. The amount of the bond will have a relation to the estimated value of the assets.

In the same way, the receiver/trustee must make sure that the hard assets are properly insured. In a bankruptcy, the Superintendent of Bankruptcy sometimes requires the trustee to get a bond to protect the bankruptcy estate.

The bond will be issued by an insurance company licensed to provide such coverage in Ontario.

Trustee of deceased estate: The responsibilities of the estate trustee

In general terms, an estate trustee has the following responsibilities:

be impartial amongst beneficiaries
act in a commercially reasonable way
to act in the best interests of the beneficiaries
not make decisions for individual gain
keep accurate records of all decisions made and actions and activities; and
acting in accordance with the will if one exists

In every Court appointment, be it a receivership or bankruptcy, the licensed insolvency trustee must live up to these same standards. Rather than beneficiaries, there are stakeholders. The Court officer must be impartial and must act in the best interests of all stakeholders.

Trustee of deceased estate: Trustee vs executor of an estate

So hopefully from this blog, you can see that the knowledge, experience and expertise of a licensed insolvency trustee would stand him or her in a good position to act as executor, executrix or estate trustee of a deceased estate.

If you have any questions about a deceased estate and the need for an estate trustee, whether it is solvent or insolvent, contact the Ira Smith Team. We have decades and generations of experience in helping people and companies overcome their financial problems. You don’t need to suffer; we can end your pain.

In my next blog, I am going to write about a topic that is becoming more and more common in deceased estates; picking the right estate trustee. As you will see, it is much more than just finding the right skill set.

In the meantime, if you have any questions at all, contact the Ira Smith Team.

trustee of deceased estate