Reference Articles > What You Need To Know About Estate Administration: In Three Parts- Part 1 

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This article is the first of three articles that reviews the process of estate administration in Ontario. The second part examines the roles of the various players in the administration process and the third reviews the accounting responsibility and process.

PART I – THE ADMINISTRATION PROCESS

When a person dies, becomes incapable or a bankrupt, the property he or she holds, whether real or personal, is called an estate. Only the deceased’s interest in real or personal property forms part of his or her estate. A Will is a legal document that names the person or persons that the testator or testatrix wants appointed as estate trustee (formerly in Ontario an executor/executrix), sets out the scheme of distribution of the assets and provides the powers that enable the estate trustee to administer the estate. The authority for administering the estate comes from the Will (not the certificate of appointment) and is effective the moment the person dies. The person appointed estate trustee (and not the person who may be acting under a power of attorney which immediately ceases to have effect upon the grantor’s death) has the immediate power (if they accept the appointment) to so act.

If there is no Will then the person is considered to have died intestate. A statute will then dictate who receives the deceased’s assets and in what share. Charities and friends are not part of this intestacy distribution. Accordingly, if the charity or friend is not named in the will (or improperly named and the gift cannot be “saved”) then the charity or friend will not be part of the distribution.

The term probate refers to the obtaining of court proof of the appointment of the person who will be administering the estate (the estate trustee or administrator (if there is no Will)). Once probate is obtained, the estate trustee can satisfy any third party queries as to his or her authority to act as estate trustee and, in turn, third parties can rely on the appointment and begin to deal with the person as estate trustees. Probate is obtained provincially by filing certain documents with the court and paying a fee. In Ontario, the fee is called an estate administration tax as is based on the value of the estate being probated. For example, in Ontario, a fee of $2,950 would be paid on an estate valued at $230,000 for probate purposes. For more information about probate see the accompanying article(s).

If there are no challenges to the appointment or will being probated, then the court will issue a Certificate of Appointment (also known as Letters Probate). By issuing the Certificate, the court is confirming the validity of the Will and the authority of the estate trustee to administer the estate. Probate is not always required. It is the nature of the assets that will determine whether probate is necessary.

Whether or not probate is obtained, the process for administering an estate is the same. The Will provides the blueprint. The steps are as follows. First, someone must assume control – usually the person appointed estate trustee. It is recommended that careful thought go into the person appointed to ensure they have the necessary skill sets. The person appointed may at the time decline to accept the appointment. In this case, an alternatively named person is appointed. Sometimes charities are asked whether they could act as estate trustees. This request must be treated with caution. In some limited situation it may be appropriate. Second, the assets are realized and preserved and debts paid. Third, after dealing with any claims or litigation that may arise and the filing of income tax returns, an accounting is provided and approved by the beneficiaries. Then compensation is paid to the estate trustee, the assets are distributed, releases and receipts provided, and the estate is wound up. Typically, an estate trustee will hire a lawyer (and sometimes accountant) to assist. During the administration each player has a distinct role. Sometimes these roles get blurred which can result in over charges in legal fees and/or compensation.

A charitable or non-family beneficiary should be treated like any other beneficiary during the estate administration process. If the charity or person is receiving a legacy (i.e. “I give $10,000 to Sally) then upon receipt of the $10,000 Sally’s involvement and interest in the estate ends. A receipt for the gift (not a release) should be given. If the charity or beneficiary is a residuary beneficiary then the beneficiary has a larger role to play. The person should get a complete copy of the will. As well, during the administration such a beneficiary is entitled to receive reports on the status of the administration, to ask reasonable questions and receive prompt answers. At this stage it is usually appropriate for the estate to make an interim distribution.

It is, therefore, very important that when notified of an interest in an estate that the documents provided be reviewed. A system should be in place to monitor the estate administration with regular follow-up. Generally speaking, some time is required to administer an estate. Traditionally, an estate trustee is allowed “a year” for the administration. Unless litigation is involved, in Ontario, most if not all of an estate should be administered within a year. The wait tends to result around waiting for the clearance certificate from Canada Revenue Agency. Beneficiaries should not hesitate to contact the estate trustee or estate solicitor or seek professional advice when reports are not forthcoming. In these cases it can mean that no news is bad news.