How to Administer an Estate in Ontario: Plain Language Handbook
The following are excerpts (the table of contents, introduction, and chapter one) from How to Administer an Estate in Ontario: Plain Language Handbook, a newly released book available on Amazon.ca in paperback and kindle format:
|Chapter One||First Steps||5|
|Chapter Two||Duties and Powers of the Estate Trustee||17|
|Chapter Three||Jurisdiction of the Estate||23|
|Chapter Four||Getting Probate||29|
|Chapter Five||Collecting and Preserving the Assets||37|
|Chapter Six||Estate Liabilities||51|
|Chapter Seven||Litigation and the Estate||57|
|Chapter Eight||Income tax returns||69|
|Chapter Nine||Estate Transfers||77|
|Chapter Ten||Distributions and Releases||87|
|Chapter Eleven||Estates with no Will||97|
|Chapter Twelve||Transfers to ongoing trusts||101|
|Chapter Thirteen||Estate accounting||113|
|Chapter Fourteen||Compensation for the Estate Trustee||135|
|Chapter Fifteen||Winding up the Estate||141|
This handbook is for those who have been appointed an executor (now called an “estate trustee”) in Ontario. When someone close to you has died, leaving you in charge of all their worldly possessions, and when others are also grieving and looking to you to settle things quickly and fairly, you need a plain language guide. This is that guide. It is divided into chapters, corresponding to the stages in the administration of the estate. It tells you what needs to be done, when to do it, what you can do yourself, and when you should seek the assistance of a lawyer or accountant.
The estate you are about to administer may look simple. It may be your mother’s, who was living in a nursing home, all her assets were invested in a balanced portfolio, and the remainder is to be divided equally between you and your sister. What can go wrong? The answer is, you don’t know yet. As you follow the stages in the administration of her estate, you will learn that her unpaid debts, her personal income taxes, and the estate’s income taxes are your responsibility. You may need to defend against a dependant support claim, or allegations that her will did not express her true wishes. You need to sleep at night, so use this handbook as a guide, and seek professional advice when necessary.
Some estate administration decisions can be difficult:
- How should personal possessions, like jewelry and paintings, be divided among the beneficiaries?
- What should you do with assets that have emotional values? For some, the family cottage, with childhood memories, where friendships and rivalries formed, where private thoughts were revealed, cannot be immediately sold for cash without hurt feelings within the family.
- What should you do with the family business? It may be difficult to value a family business if one child joined their parent entrepreneur while the others sought careers elsewhere. What is the value of an entrepreneurial business without its founder?
- What if the deceased accumulated wealth and remarried late in life, and he, her second husband, who she loved, but who always floundered and who was financially dependent on her – should her children from her prior marriage receive more than his children from his prior marriage when they both die?
- How should you administer testamentary trusts, such as trusts for young children, the surviving spouse, an adult child with a mental disability or substance concern, or a child with financial difficulties?
- How should you handle litigation? Sometimes, the surviving spouse will make a family law division claim or a spousal support claim. One of the children may claim dependant support. A former business associate could file a claim. Or, the estate may have a claim against the spouse, child, or business associate, for compensation, or that certain assets should revert to the estate which you, as estate trustee, have a duty to pursue.
There is a lot that can go wrong when administering an estate. This handbook doesn’t have all the answers, but it deals with the most common issues that can arise, and, if there are surprises, it points you in the right direction.
This handbook was written in August 2020 and it applies to Ontario, Canada estates. We have used plain language where possible. For example, we have used “will-maker” rather than “testator” or “testatrix.” Also, we have used “their” for singular possessive, rather than “his or her,” and we have used “they” rather than “he or she.”
Chapter One—First Steps
This chapter highlights the most pressing responsibilities, such as funeral and burial arrangements; gathering and reviewing important documents; caring for children and dependants; terminating leases; terminating licenses; terminating subscriptions and memberships; and documenting assets and liabilities.
Your first responsibility is to arrange the funeral and the burial or cremation.
You are not legally bound to follow the funeral or burial wishes expressed in the deceased’s will, but you should honour them as much as possible. Sometimes, people pre-arrange and pre-pay their funeral; if so, you should meet with the funeral director, pick a date for the service, draft the obituary, and follow the deceased’s wishes. Funeral expenses, if reasonable when compared to the funds available in the estate, must be paid before other debts.
You should inform family and friends of the death as soon as possible. You can search for contacts in email accounts, cell phone records, and personal telephone books. Contact the employer and organizations that the deceased belonged to, if necessary.
Inform close family members who wish to travel to the funeral that some airlines offer reduced prices, known as bereavement fares.
It can be an emotional time to draft the obituary, plan the service, and arrange the burial. The funeral director can guide you and arrange for publishing the obituary in the local paper or on its website, with details of the service. Know that the other administrative tasks can wait until the service is completed. There is no need to distribute a copy of the will at this stage, nor is there a “reading of the will” as you may have seen in the movies. After the funeral, you can send copies of the will to the beneficiaries. See below. For now, concentrate on paying your respects and dealing with the loss.
Gift of organs or tissue
The deceased may have included a provision in their will or other document expressing an intention that their organs or tissue be donated for transplants or medical research. Under Ontario’s Trillium Gift of Life Network Act, any person who has attained the age of sixteen years may consent, in writing signed by the person at any time or orally in the presence of a least two witnesses during the person’s last illness, that the person’s body, or parts of their body, be used after their death for therapeutic purposes, medical education or scientific research. If they have died, their spouse, or if the spouse is not readily available, their children, or if the children are also not readily available, the deceased’s siblings can give consent. In some cases, another person in lawful possession of the body can give consent.
Burial and spreading the ashes
In Ontario, the body or cremated remains must be buried in a licensed cemetery. Rights to bury or scatter the ashes in a designated part of the cemetery can be purchased, though scattering rights are not available at all cemeteries. You can buy rights to place the cremated remains in a niche (or compartment) in a columbarium. You may scatter the ashes on private property with the written consent of the landowner. You may also scatter the ashes on unoccupied Crown lands and Crown lands covered by water, if there are no signs prohibiting the scattering of remains.
Writing the obituary and giving a eulogy
The funeral director will help you write the obituary, which is the notice of death, often published in the local newspaper. Standard information includes the deceased’s age and date of death. A short biography can follow, including place of birth, education, vocation, and significant life events. Then, a list of family by name, including the spouse, children, parents, siblings, and close relatives, and those who have predeceased. Grandchildren can be named, or mentioned as “survived by six grandchildren, four nieces,” etc. Contact information for a charitable foundation or society to direct any memorial donations can be listed. Details of any funeral service should be included.
A eulogy is a speech given at a service in memory of the deceased. It needn’t be long, probably three to five minutes. The tone will depend on who gives it and the circumstances of the death. One for a teenager who met an untimely death will be different than one for someone who died peacefully at an old age. Briefly introduce yourself and your connection to the deceased, state some basic information, welcome those who have attended, and then tell a story or incident that illustrates the deceased’s good qualities and why the deceased was important in your life. Write what you wish to say ahead of time and arrange with a friend to read your speech if you become too emotional or nervous to deliver it yourself.
Gather the documents
Locate important documents, including:
- The original will (or wills, if there is a primary and secondary will);
- Affidavit of the witness who saw the signing of the will (“affidavit of execution”);
- Any notes or memos the deceased may have left with their will;
- Any notes or lists of the deceased’s assets;
- Death certificates, issued by the funeral home;
- Details of any insurance policies;
- Deceased’s income tax returns and income tax information slips; and
- Details of any safety deposit box.
Safety deposit box
If the safety deposit box is held only in the name of the deceased, the financial institution should allow you, as the estate trustee, to examine the contents. Usually the institution will not allow the removal of the contents (except the will) until a Certificate of Appointment of Estate Trustee (i.e. probate) is obtained, or a notarized copy of the will is produced along with an indemnity by the estate trustee to compensate the institution against claims related to any wrongful removal of the contents.
Sending copies of the will to the beneficiaries
You should send copies of the will, or extracts of the will, to the beneficiaries after the funeral. If, however, you anticipate that you will need probate (a “Certificate of Appointment of Estate Trustee With a Will”—see chapter four), then you could wait. As part of the probate application, you will be required to send copies, so you could wait until then to avoid duplication.
The legacy beneficiaries should be sent copies of only the relevant clauses. For example, if a beneficiary is to receive a $5,000 gift, then you could write to the beneficiary and state that the deceased’s will includes a gift of $5,000, which will be sent as soon as the administration of the estate has reached the stage of a distribution.
The residuary beneficiaries who are to receive a percentage or share of the estate should receive copies of the entire will, because the amount that they will receive depends on who else is receiving and what the debts and costs of the estate will be. If you wish, you could estimate the value of the estate, or you could state that you will be sending an estimate in due course.
Young children and dependants
Is there a clause in the will about who should have custody of the deceased’s young children? The appointment is binding only for 90 days. The court retains the authority to appoint a guardian thereafter. However, the expressed wishes of a parent in their will is an important factor for the court to consider in the event that there is any dispute beyond the 90 days.
Do the children or other dependants need immediate access to funds? If so, you should make financial arrangements if possible.
Cancel health card, passport and driver’s license
You should return the Ontario health card to the Ontario Ministry of Health and the deceased’s passport to the Passport Program, Gatineau, Quebec, K1A 0G3.
Apply for a refund for the driver’s license if there are six months or more remaining before it expires and there are no outstanding fines. An “Application for Refund of Driver’s Licence” form cancels the driver’s licence and requests a refund of the licence fee, if applicable. You must return the original, plastic licence card.
Cancel credit cards, cell phone contracts, subscriptions, and forward mail
Cancel: (i) the deceased’s credit cards, (ii) cell phone contracts, (iii) refilling prescriptions, (iv) utilities, unless heat and water are required to maintain a property, (v) memberships, (vi) newspaper, magazine and online subscriptions, and (vii) any online accounts.
Arrange for mail forwarding to your personal address.
Advise Canada Revenue Agency of the death
Canada Revenue Agency (“CRA”) should be informed of the death as soon as possible. This can be done by calling 1-800-959-8281. The deceased’s social insurance number will be needed. An alternative to calling is to complete the form in the CRA’s information sheet RC4111 “What to do following a death” and sending it to your nearest tax centre. A copy of the death certificate should be sent with the notification of death. The notification will stop, as applicable:
- The Harmonized Sales Tax (“HST”) tax credit payments;
- Ontario Trillium payments
- Canada child benefit payments
Advise Service Canada of the death
Service Canada manages the Canada Pension Plan (CPP) and Old Age Security (OAS) payments. Service Canada should be informed promptly of the date of death to avoid overpayments which would otherwise need to be repaid. Benefits paid for the month in which the death occurs can be kept, but benefits received for later months must be returned. Service Canada can be contacted by telephone at 1-800-622-6232 and they will provide the address of their closest office. As with CRA, the initial correspondence with Service Canada should include a copy of the deceased’s death certificate.
CPP payments can include a retirement pension as well as disability payments. OAS payments can include the OAS pension as well as the Guaranteed Income Supplement payments.
Notify property insurance companies
Notify property insurance companies of the death to ensure ongoing and adequate coverage of the house and other real estate, for protection in the event of an accident or fire. You should also lock and secure any vehicles to prevent use and confirm that adequate insurance is in place.
Notify life insurance companies
The life insurance companies need to be contacted so that they can begin processing any claim. See chapter five. They will need to be provided with a copy of the death certificate and the contact details of the life insurance beneficiaries.
If the deceased was renting an apartment, or was a resident in a nursing home, arrange to store their possessions and cancel the lease. If there was a fixed term lease, then the landlord will have a legal obligation to mitigate by taking reasonable steps to try and rent it once the deceased’s property has been removed.
As you go through the deceased’s personal items, add those items to the list of assets below.
Make a list of assets
Make a list of assets, with their “opening” values as of the date of death. You have an obligation to keep a complete accounting for all assets (see chapter thirteen). Also, to file the personal income tax return, income tax returns for the estate, and the estate administration tax return, you will need the value of each asset as at the date of death. For personal possessions, it is not necessary to record each item, but it would be helpful to keep a list so that you can record how personal items are distributed.
Make a list of liabilities
You are responsible for the payment by the estate of all of the deceased’s and the estate’s debts and income taxes, to the extent that there are sufficient funds in the estate. If you know that there are sufficient assets to pay all of the debts and taxes, then you should pay those debts which incur the highest interest rate charges first, such as credit cards.
You should review the deceased’s banking records for the last few months to confirm that there were no suspicious charges or withdrawals.
Traditionally, estate lawyers have recommended the advertisement for creditors in the local newspaper. This is to establish that you have made reasonable efforts to locate legitimate creditors. As society changes, and fewer people read traditional newspapers, other efforts should be considered. For example, the deceased’s personal papers, paid invoices, contracts, and work records should be reviewed to see if any potential creditors should be notified. Whether or not to advertise for creditors and how to do so, should be discussed with your estate lawyer.
For accounting purposes, we recommend a spreadsheet in Excel or Google Sheets, with separate sheets for each asset. This spreadsheet will allow you to begin recording the accounts as described in chapter thirteen. This example spreadsheet is available for free on the Allen & Malek LLP website: www.allenmalek.ca/the-estate-accounting-sample[omitted]
Contact financial institutions
Arrange for a meeting with the deceased’s bank(s). Once the bank receives proof of death, it should create an estate account and transfer all bank accounts held solely in the deceased’s name into the estate account. It may require a notarized copy of the will and death certificate to do so. If there are any accounts which are registered in the deceased’s name and another as joint owners, then the joint account will not be transferred into the estate account; instead, the surviving joint owner will be entitled to deal with those funds. You should make a note of any accounts in joint names so that you can determine later whether the funds are to be held for the estate, either by virtue of a declaration to that effect or by a resulting trust (see chapter seven).
You should direct the financial institution to convert the investment accounts into secure investments, such as GICs or cash equivalent. Sometimes, an investment advisor may be reluctant to change the investment portfolio, since the advisor may be earning higher commissions with growth-oriented investments which carry more risk. Unless all of the beneficiaries instruct you otherwise, the investments should be converted. Your role is to preserve assets and transfer the remainder of the estate to the beneficiaries as soon as practicable. If you retain speculative investments and the stock market crashes, you could be liable for breaching your “duty to take reasonable care” as described in chapter two.