Table of Contents
What is Probate?
Seeing the term Probate, many people might think this is an area only Estate Professionals should traverse, but they are wrong. Everyone who has property and responsibilities should know about Probate and its process. The earlier in his life, he comes to understand it, the better.
Probate is a document issued by the court stating that the will (attached to that document) is valid and registered with the court. It also mentions the names of the executors who, in the court’s judgement, are entrusted with administering the state.
The term probate can also refer to the process of court-supervised administration, by which an executor, the personal representative is authorized to collect the assets, utilize them to pay taxes, debts, and administration expenses, and allocates them to beneficiaries.
Why is Probate Significant?
- The probate process is necessary because it establishes the legal authority of the executor or administrator to approach relevant institutions where the deceased’s assets lie, collect them, including all the deceased’s properties, and ultimately distribute them.
- Moreover, the probate process involves appraising the deceased’s estate, which is essential for tax purposes. Any inheritance without paying estate tax to the state will be irregular or unlawful.
- An estate needs probate when the property is only in the deceased’s name, to transfer it to the beneficiaries. In the absence of probate, disputes can arise.
- Suppose the accounts or securities are in the deceased’s name. In that case, the financial institutions will demand that you produce the probate document to release the funds to you as the executor.
- Even when an exception applies, if a bank where funds lie demands probate, then probate is mandatory. However, if the bank agrees, it will require the submission of indemnity bonds to ensure the bank doesn’t have to worry about any future claims.
- Who is the executor?
An executor (also called personal representative) is anyone who has the duty of fulfilling the provisions (of disposal, payment of taxes and distribution etc.) pertaining to an Estate, after the owner’s death. Most common choice as an executor is either a close relative, personal advisor, a lawyer or a trustee. An executor’s nomination occurs either through a will, or a court can appoint one, in certain circumstances.
When to File for Probate?
Delay benefits no one. It may take some time to gather facts and manage the grief, but one should move an application for probate as soon as possible. The sooner it happens, the less legal complexities it will have. Also, the estate will go into administration at the earliest.
- Step-by-Step Process of Probate:
All the steps in the probate process are equally vital. All the steps need due diligence, from collecting documents and filing applications to assessment, distribution, and estate closure. Three significant stages are involved in the Probate process:
- Opening
- Notice to Creditors, Administration
- Closing
The Opening:
The Opening includes the following steps:
Probate Opens at the filing of a petition in the competent court.
- The application seeks:
- Validation of the Will
- Appointment of an executor
Typically, an executor will be a person named in the will. However, the court itself appoints an executor when:
- The deceased was intestate.
- The Will doesn’t contain a provision naming an executor
- The Hearing
If the probate is to be formal (supervised by the court), there will be a short hearing at the beginning. However, a hearing is not required if probate is informal (unsupervised).
- Documents required for filing the petition for probate:
- The will
- Inventory of assets
- Financial Statements
- Death certificate
- Inventory of debts
- Application forms
- Affidavit of execution (a document confirming the validity of a will and the details of witnesses)
- Where to Find the will?
- In the deceased's home
- In a locker
- At his lawyer's office
- In a court record
- Do You Need a Lawyer in the Probate Process?
According to laws, most provinces in Canada do not require a lawyer to file for probate. However, you need one if your estate is large and complex or has unsettled issues. Most executors find it more convenient to have one.
Notice to Creditors
It is a vital part of the probate process. This step ensures that the executor pays off all debts, liabilities, and taxes before he distributes the estate.
- How do you serve notices?
An executor should issue notices to known creditors through the usual means. However, the executor should advertise for unknown creditors and the public in local newspapers.
- Who does the law hold liable if the executor missed this step?
Regulations in many states hold the executor responsible for skipping the issuance of notices.
In the past, there have been instances where the executor skipped this step out of negligence or to save time and money. The courts in those cases have held the executor personally liable.
- What happens if the executor serves the notice but claims surface after the final distribution
Suppose the executor advertises adequately in the newspapers or serves the notices correctly, but after the notice period expires and the estate devolves, claimants or creditors surface. In that case, the courts have held that the executor will have no personal liability.
- Can a notice be published online?
Some states now allow the publication of notices online. This is because more people search for the debtor’s name online and are less likely to read print newspapers. Moreover, online publishing costs less. Hence, many courts have observed that online publishing is sufficient to protect the executor from liability.
Administration
Here’s how you can become a deemed resident of Canada:
- The administration of assets takes place as per the will.
- The executor must claim any benefits the estate is entitled to, from the government
- Protect the assets.
- Secure the rights of survivors, joint tenants, and all beneficiaries.
- Close the deceased's accounts at all banks.
- Further steps include:
- Firstly, transfer titles to your name (as an executor).
- Secondly, collect all money payable to you (executor).
- Thirdly, sell any assets that need selling as per will and circumstances.
- Fourthly, keep a record of everything incoming and outgoing.
- Fifthly, follow the will for any investment needed.
- Sixthly, arrange rollovers.
- Related offices for Title Transfers
- Land Titles Office deals with transferring real estate.
- The Registries Office deals with transferring vehicles.
- What death benefits can an administrator claim for the estate?
These can include:
- Canada pension plan
- Allowance for the survivor (for low-income spouse)
- Public pension plans (for former employees)
- Last post fund (funeral benefits for eligible veterans)
Closing
The final steps can include:
- First, paying off all taxes.
- Second, drafting a final statement of all assets, debts, liabilities, etc.
- Third, getting approval of beneficiaries on the statement before distributing assets.
- Fourth, getting releases signed by beneficiaries that they consent to the detail of distribution and won't claim against the estate.
Other steps can include:
- Distribute the assets.
- If there is residue, distribute it as if there were no will.
- Close the estate bank account.
- Write a report and send it to beneficiaries.
Probate Fees
Probate fee, also known as estate administration tax, is calculated in proportion to the size of the estate. For having an idea, following is a table of probate fees in Alberta:
(Alberta has the minimum probate fees in Canada with maximum capped at $525)
Value of Estate Probate Fee
Under $10,000 $35
$10,000 to $25,000 $135
$25,000 to $125,000 $275
$125,000 to $250,000 $400
$250,000+ $525
How Long Will the Probate Process Take?
Usually, it takes a few months. However, timely fulfillment of all requirements, correct filing of taxes, and fulfillment of all legal responsibilities can expedite the process.
Ordinarily, the duration of the process depends on the following factors:
- The duration of the notice period granted to creditors.
- The extent and type of property
- How quickly the executor acts.
- The extent of agreement on the part of the beneficiaries.
Nonetheless, if legal disputes between beneficiaries related to the will or initiated by creditors arise, the process can then take years. Nevertheless, proper estate planning before death ensures that the probate process runs smoothly.
Probate will not be necessary for certain circumstances.
- Firstly, an exemption exists when the property is held in joint tenancy, and the right of survivorship is present in the tenancy document. In this case, after one partner has died, property transfers to the other partner without the need to apply for a probate.
- Secondly, if the property consists only of cash and personal logins, one may not have to seek Probate to administer it.
- Thirdly, if the amount left behind by the deceased is small, i.e., below $150000, the executor can distribute it in line with the will without applying for Probate. Notably, the authority to administer a state originates mainly from the document of will itself, on which the court grants probate certificate.
- Fourthly, an exception is for property held by the deceased for more than 30 years: The First Dealing exemption. It applies only to the first transfer. The original Will needs to be surrendered. Hence, it applies only to a single property will and no probate on this will should have taken place.
- Sixthly, ‘Things’ with a named beneficiary are passed on directly to the beneficiary, and no probate is required. For example, insurance policy.
Hence, Probate is a secondary element and is not always a necessity. The grant of Probate is only for structural and procedural efficiency. But in most states, it is the norm.
Bottomline
Probate can be easy but can also be tricky. So, it is advisable to seek help from a professional lawyer at any stage where you feel necessary. However, equipping yourself with know-how of the process is expedient, before filing probate application. Finally, preparation for probate stage should begin well before time with effective estate planning on the part of the testator. Giving due diligence to estate planning saves time, money, and effort for the deceased’s loved ones.