Last week we talked about what happens if you pass away without a will. In this week’s blog, we talk about what your options are for estate administration with a will in place.
Estate administration refers to how your estate will be settled and covers everything from who will be your executor, to the process that will take place in order to have a court formally recognize your Will in Ontario (probate), and what type of tasks your Estate Trustee will be responsible for.
Being chosen to be a loved one’s executor is undoubtedly an honour and signifies the level of trust that an individual has in the person they select. However, that honour carries with it extensive obligations. Therefore, choosing and naming an executor should be a well-thought-out process, and the selection should not surprise the named executor.
You should know that even if you name someone to act as your Estate Trustee in your will, that individual has no obligation, outside of emotional obligations, to actually take on the appointment and if free to refuse to act. Therefore, naming an alternative to your main choice is prudent.
Generally, an executor is an individual named in a will to administer an individual’s estate. The formal term for an executor in Ontario is an Estate Trustee.
If the final will and testament does not name an Estate Trustee, Ontario has a formal process in place to have a court appoint an Estate Trustee to administer an estate. If the beneficiaries have an amenable relationship, they can nominate a trusted individual, lawyer, or trust company to act as the Estate Trustee. The court will decide whether the nominated person or entity is appropriate, or the court may choose to appoint a neutral party. In some cases, where no appropriate party can be named, the Office of the Public Guardian and Trustee may be appointed as a last resort.
Choosing your Estate Trustee is such an important process because of how many responsibilities the Estate Trustee has and is obligated to handle on behalf of an Estate.
Estate Administration goes beyond distributing the assets. As outlined by the Government of Ontario, an Estate Trustee is tasked with the following three broad areas of responsibility:
- winding up the affairs of the deceased
- paying taxes, bills and any other debts
- collecting the estate assets and distributing the residue of
Winding up the affairs of the deceased is the initial step that an Estate Trustee needs to take. This can include everything from cancelling newspaper subscriptions to cancelling government identification documents and personal services such as lawn mowing or snow clearing.
Some key immediate considerations will likely include:
- Funeral arrangements
- Contacting Canada Post to cancel/redirect mail
- Contacting current employer or most recent employer if retired
- Life insurance policies
- Private health insurance coverage
- Government agencies (pension, health, income subsidies)
- Personal identification (cancelling identification/membership cards)
- Professional associations (cancelling memberships/updating directories)
- Other estate trustees where the deceased may be a named beneficiary
- Life insurance policies
- Social media accounts (does the data need to be preserved for beneficiaries, photo storage, etc.)
Part of the wind-up will also include collecting information about the Estate’s assets, its obligations, and contacting beneficiaries.
The Estate Trustee will also apply to Probate, which is an essential step before the Trustee can begin to formally administer the estate.
Probate is the formal process of applying to the court to have the estate trustee’s Will and appointment approved by a court. The Probate process is a requirement in order to obtain a Certificate of Appointment of Estate Trustee or a Small Estate Certificate, depending on the value of the Estate. If an estate is valued under $150,000, the Estate Trustee may be able to pursue a Small Estate Certificate, which is a simplified process and reduces the burden on the Estate Trustee.
Probate is the process that:
- gives a person the authority to act as the estate trustee of an estate
- confirms the authority of a person named as the estate trustee in the deceased’s Will
- formally confirms that the deceased’s Will is their valid last Will
Once the application for probate is approved and the Estate Trustee is formally appointed, they can move forward to steps two and three below.
Once an Estate Trustee is granted a Certificate of Appointment, they must then begin the process of ascertaining what debts and assets an estate has. The actions taken in step one may have already paved the way for the Estate Trustee in terms of establishing contact information. Once the appointment is finalized, the Estate Trustee can act and can make payments against debts.
Real estate would likely need to be transacted on. For instance, a title transfer and payment of associated taxes, or a sale of the real estate property in order to unlock the home’s equity for the benefit of the beneficiaries.
In certain cases, the will may also create trusts for beneficiaries, which are referred to as testamentary trusts. Examples include Hansen Trusts for disabled beneficiaries. These are Absolute Discretionary Trusts that give the Trustee of that trust broad power to administer the trust for the benefit of the disabled beneficiary.
Deciding on who should be named as the Trustee for Hansen Trusts is also a big responsibility that falls on the Estate Trustee.
Once the debts and obligations of the estate are dealt with, the Estate Trustee can then finally distribute the remainder of the estate in accordance with the wishes outlined in the will.
In addition, the Estate Trustee will also need to file certain forms with the Ontario courts confirming the distributions, assets, taxes and other matters relating to finalizing the estate.
As the above makes clear, the process of Estate Administration is complex, time-consuming, and fraught with emotional pitfalls. It may also be the case that the Estate Trustee named in the will is unable to take on the task. Or even unwilling to take on the task when faced with the momentous task of actually administering an estate.
That is why it is always prudent to name not only a backup individual Estate Trustee but to consider naming an independent third party to take on the task for a reasonable fee. An independent third party will be able to make unbiased decisions and will be able to act in a timely and expeditious manner in order to ensure that an individual’s last will and testament is honoured to its full extent.
At Derfel Estate Law, our experienced team of estate lawyers are always up to date on estate administration requirements and can assist in acting as an Estate Trustee. Contact us by phone at 416-847-3580 or reach us online to discuss your estate needs.