The following is no substitute for advice provided by a lawyer specifically for you. It is intended only to help you understand that advice. No responsibility is taken for any problems arising except due to paid legal advice.
©1996 Jaques Law Office. All Rights Reserved.
Protect Minors and other Incapable Dependents
- This must obviously be considered at an early stage, although the ability to act legally is limited until Probate is obtained.Once the Will is found, it may provide some insight.
- Arrange funeral and memorial. The Will may contain the deceased's desires in this area. The Will is not legally binding in this aspect. Discuss it with those closest to the deceased.
Locate all Wills and Codicils
- Check safety deposit boxes, any lawyers the deceased is known to have used, the court house (for registered Wills), and advertise in the Law Society Journal.
- Don't stop looking just because you found a Will. It may have been revoked or amended by a later document.
Inventory the property including any debts.This is a detailed process. Some may occur after probate, but it is best begun immediately. We have a separate page relating to some tips for this process.
Preserve Perishable Property
- This must obviously be considered at an early stage, although the ability to act legally is limited until Probate is obtained.
Analyze the Will.
- An Executor must first familiarize themselves with the basic concepts of a Will, including their own function.
- A lawyer can analyze the Will, and would then be responsible for any careless errors.
Assess Whether Estate Requires Probate.
What is Probate?
- Probate is essentially a court order that this document is the complete Will, and this person(s) is the Executor, the one who has authority over the property.
- Many things may require an Estate to be Probated.
- Probate should be obtained within a few weeks or even days in an emergency. Final distribution to the beneficiaries may take considerably longer.
Property In Control of Third Parties
- If there is property in the control of third parties, they should, properly, require Letters of Probate before turning anything over to the Executor. How do they know the deceased is even dead, let alone that this is a valid or current Will, or that this is the proper Executor? To release any property is a risk.
- Some third parties with close ties to the situation (e.g., rural credit unions) will not require this. Others may control their risk with other methods, such as indemnity bonds, etc.
- Certainly the Land Titles Office (now the Informations Services Corporation (ISC) requires probate. So, if there is land which is not held in joint tenancy with rights of survivorship, there must be probate.
- Investments often require probate.
- A lawyer can help find alternatives to probate.
Items With Rights of Survivorship
- Many couples will hold their land in joint-tenancy (as opposed to tenancy-in-common). This carries a right of survivorship, so that the survivor(s) will receive title to the property without any transfer from the estate of the deceased. Therefore, probate is not necessary.
- Many joint bank accounts and other joint investments will carry rights of survivorship too. Again, probate will not be necessary.
- Note that a joint bank account without rights of survivorship will permit the survivor to withdraw all the funds. However, the survivor may be liable, because the survivor is not necessarily the proper owner of the funds.
Risks to Executor
- If the Executor won't be keeping the property, then the Executor has risks too.
- Creditors of the deceased may demand payment from the Executor unless proper procedure is followed. This includes Revenue Canada.
- People who ought to have been beneficiaries may demand payment from the Executor if they don't get their share.
- The Probate Procedure will protect the Executor if followed properly.
- But if the Executor is getting everything anyway, and plans to preserve the property indefinitely, then it is not so important. Payment can be made later if a claim does arise.
- A lawyer can help assess these risks.
Cost of Probate
- The Court will charge a fee for the Application based on the total value of the estate. There are several smaller, specific fees, but the main one is the 0.7% fee for the application.
- The lawyer will charge a fee according to the value of the estate as well. Since October of 1993, to the present (February of 1997), the calculation is:
First $10,000.00 $300.00 Next $90,000.00 2% Next $400,000.00 1.5% Next $500,000.00 1.0% Any excess 0.5%
- That tariff is a maximum on what the lawyer may charge, but it only includes:
- preparation papers to apply for the grant of probate
- preparation estate/succession tax returns (not income tax or G.S.T., and not including any court work for that purpose)
- transmitting title to the personal representative
- transfer of title to a beneficiary
- publishing Notice to Creditors
- obtaining Public Trustee Certificate
- ordinary attendances and correspondences
- Some things which are not included are:
- securing assets
- inventorying assets
- ascertaining creditors
- income tax returns
- G.S.T. returns
- preparing and filing 'Accounts' for the estate
- By law, the lawyer must provide a copy of the Rules relating to fees to the Executors.
- A lawyer can help find proper ways to reduce these costs.
If No Probate
- Then the Executor simply gathers the property, pays the debts, and passes the property to the beneficiaries under the Will.
If Probate is Required
Hire the Lawyer
- If the estate is small enough, the Registrar of the Court is obligated to prepare an application for you.
- There is no law against doing it yourself, it is merely unwise, difficult, and slow.
Determine the Type of Probate
- If there is no Will, then the names are changed, although the functions remain the same. The Executor is called an Administrator, and the Letters of Probate (court order) is called Letters of Administration.
- If there is a Will, but it doesn't cover all the property, or the executors refuse or are unavailable, then you apply for Letters of Administration with Will Annexed.
- If the Will was already probated in another jurisdiction, then an Order Resealing Foreign Grant is needed.
- If there was already a probate in Saskatchewan, but the Executor died, then you apply for Letters of Administration de bonis non.
Gather Documents Necessary For Application
Affidavit of Applicant
- This will be your oath, on paper, that all the facts necessary to the probate are true. You must also swear that the supporting documents are true.
- The penalty for perjury is high.
- You will probably have received a Funeral Director's Certificate of Death. The Doctor will also have signed a document certifying death. Some parties will accept these, especially if they don't know the difference, but sometimes, the proper Death Certificate must be obtained from Vital Statistics.
Bond or Alternative
- If there is no Will, then the Administrator is supposed to provide a Bond. That is essentially a paid insurance policy against improper acts by the Administrator. Of course, it costs.
- You can apply to the Court to reduce the bond, or to dispense with it.
- The normal grounds for that application are:
- the estate is less than $5,000.00; or
- the applicant is the sole beneficiary; or
- all the creditors and beneficiaries consent
- Of course, incapable beneficiaries (like children) can not consent. However, the Public Trustee can consent on their behalf.
Proof of First Claim to Act
- If there is a Will, the Will should have named an Executor. If that person is willing and available, that is sufficient.
- If not, then you must either prove that there are no others with a greater interest (typically by adding this to your affidavit) or that they Renounce the position and consent to your appointment.
- If, in fact, somebody with a greater right, wishes to act, but you feel that is undesirable, you may apply to the court with your reasons, and the court may override the normal order.
- A Power of Attorney from a Beneficiary is required if the applicant to be Administrator is not beneficially interested in the estate (i.e., neither a creditor nor a beneficiary).
- The normal order of precedence for appointments is set out by law.
Notice to Public Trustee
Schedule of Assets
- The fees charged are based on this. But you are swearing it on oath.
- Further, Revenue Canada will be considering it, so it should be carefully and accurately prepared with that in mind
- Although costly, sometimes it is wise to obtain appraisals.
Will and Proof of Proper Execution of the Will
- Normally this will be an Affidavit by a Witness to the Will. If the Will was holographic (all in handwriting), there may not be a witness. In that case, somebody must swear it is the deceased's handwriting.
- Wills for illiterate or blind testators require special treatment.
Succession Duty Return
- If death occurred in the following periods, you must file a Return, or a Waiver from the appropriate level of government:
- Prior to April 1, 1947 - Provincial Government collected Succession Duty
- April 1, 1947 to December 31, 1958 - Federal Government collected Succession Duty
- January 1, 1959 to December 31, 1971 - Federal Government collected Estate Tax
- January 1, 1972 to December 31, 1976 - Provincial Government collected Succession Duty
Certificate that No Infants are Interested in the Estate
- Under the new rules, you can ask the Registrar at the time of the application for Probate.
- Otherwise you must obtain from the Public Trustee.
- Normally, you must wait 6 months for the time limit under the Dependents Relief Act to expire.
Reseal in a Foreign Jurisdiction
- If there are assets out of Saskatchewan, and the primary probate was done in Saskatchewan, you must apply to Reseal in the jurisdiction(s) containing the other assets.
- This will have begun immediately. Now that you have obtained probate, you will be able to act legally, with much greater insulation from claims of improper handling of property.
- We have prepared a separate page with some tips for common situations.
Transfer Things with Rights of survivorship
- As discussed above, there is no need for probate, so this may be commenced at any early stage.
- Typically, this is done at the Survivor's Expense.
- For land, the following documents will be required:
- Application For Transmission
- Affidavit of Execution of Application
- Affidavit of Surviving Joint Tenant
- Affidavit of Value
- Duplicate Certificate of Title (if it exists outside the Land Titles Office)
- Death Certificate
Change Names and Give Notices of Death
- In the Property Management page, we already suggested notices to any debtors of the accused, and to any entities who might offer benefits with respect to the deceased.
- One should also advise any creditors or other persons or entities with whom the deceased had regular correspondence or business, accounts or membership.
- Saskatchewan Health Services Plan (S.H.S.P.) likes to be advised.
- Advise the municipal clerk where any land held. This is a convenient time to request the assessed value and any taxes owing at the date of death or at present.
Transmit assets to Trustee
- Before the estate can transfer property to the beneficiaries, it must own the property. Transferring property from the deceased's name to the estate's name is called Transmission.
- The Will may have named a Trustee. More typically, the Will will say that the Executor will be the Trustee. Failing that, it is assumed that the Executor or Administrator will be the trustee.
- If the Trustee is the sole beneficiary, then it is sometimes possible to do the transmission and transfer at the same time. This works for land and usually share certificates.
- For transmission of land, one requires:
- Application for Transmission
- Affidavit of Execution
- Affidavit of Value
- Original and Notarial Copy of the Grant of Probate
- Affidavit of Identity (if names don't match exactly)
- Duplicate Certificate of Title (if it exists outside the Land Titles Office
Protect the Executor
- Before payment to any beneficiaries, all creditors must be paid, including any costs for burial and memorial services. If that does not happen, then the creditor can collect from the beneficiaries, or the Executor!
- To protect the Executor from unexpected claims, there is a procedure to cut off claims. If the Executor places a sufficient ad, in the appropriate newspaper, of the required frequency and prominence, then after the required waiting period, debts are not enforceable against the Executor.
- Sometimes there is not enough property to pay all the debts. Provided the Executor follows the proper priority scheme, the Executor will be protected. Saskatchewan is still using the old English common law scheme.
- We have been consulted many times by actual or potential beneficiaries, alarmed at the handling of some estate. In almost every case, the problem is simply a lack of timely communication.
- While there is no obligation to communicate with the beneficiaries, in our experience, it is wise to provide a Will, and outline the plan for distributing the estate. Do not underestimate the time it will take to complete the estate. In most cases, clearance certificates from the government will take up to a year.
- We often tell the beneficiaries that if they are interested in obtaining specific items from the estate, they should place an offer to purchase the item. Typically, payment will be made from their share of the estate, but it identifies sentimental items and evaluates them.
- If a beneficiary is upset, they can place a caveat on the court file to block probate or to block discharge of the Executor, and they can even apply to replace the Executor. They can sue the Executor for bad faith or negligence or acting beyond the Executor's powers, among other things.
Payment of Debts
- Of course, even if the creditors are paid in the proper order, the beneficiaries might complain if their portion was used to pay the debts. Again, if the proper procedure is followed, the Executor is protected. The first three are:
- Personal Property not specifically bequeathed (retaining a fund sufficient for general pecuniary legacies);
- Realty specified by the Will for the purpose of the payment of debts;
- Realty that descends to the residuary beneficiary
Handling of Estate
- If the Executor or Trustee acts without power to do so, from the court or from the Will, the Beneficiaries may complain and the Executor can be liable for any losses. We recommend that the Will provide ample powers to the Trustee to protect the Trustee except in the case of bad faith or negligence.
- Either way, the Trustee and Executor may protect themselves by obtaining Releases from the Beneficiaries, or by Passing Accounts.
- Releases are cheaper and simpler. The Executor simply requires the Beneficiaries to sign a Release prior to receiving their share of the estate. A basic accounting will probably still be required to satisfy educated Beneficiaries.
- As with any Consent, it must be remembered that Incapable people (like children) cannot consent. So the Public Trustee can consent on their behalf.
- If the Beneficiaries won't sign Releases, or if the Trustee wants additional protection, then Accounts should be prepared. Notices will be given to all interested parties, and then the Accounts will be filed and passed by the Court.
- In fact, the Beneficiaries demand accounts within two years of the grant of probate, or earlier if an earlier discharge is required. It is also required if a change of security (bond) is desired.
- Whether the Accounts are Passed, or Consents are used, the Trustee may apply for a Discharge from the Court.
- There are two entities involved, the deceased and the estate. There are special rights on these returns.
- If either does not pay proper tax, then Revenue Canada can collect it from the beneficiaries (to the extent they receive property) or from the Executor!
- To protect the Executor, you should obtain Clearance Certificates from Revenue Canada
- Provide the lawyer, or your chosen tax expert (bookkeeper, accountant) with the deceased's tax returns for the last five years. If necessary, printouts can be obtained from Revenue Canada.
When to File
- The Return for the Deceased must be filed, to the date of death, within 90 days of death, even if income is less than the personal exemption.
Capital Gains and Rollovers
- See the page we have prepared on this subject. This is a critical area.
Special Right to Split Income
- In the last tax return, the deceased is permitted to file a "Rights and Things" return. This is advantageous, because there is a basic personal exemption available on both returns.
- Some types of situations which may permit using the Rights and Things Return:
- unclipped matured bond coupons
- grain or other farm inventory
- Accounts Receivable
- A Cash basis taxpayer
- Unpaid remuneration if owing at the date of death for wages from completed pay periods
- Untaxed work in progress of a professional
- In the last tax return, the deceased is permitted to file Business return. Normally, business income is reported on the same tax return. Again, this is advantageous, because there is a basic personal exemption available on both returns.
- One type of situation which may permit using the Business Income Return:
- if the deceased was a Partner or Proprietor of a business at the date of death
- Revenue Canada will send a Notice of Assessment. If it is satisfactory, apply then for a Clearance Certificate
When to File
- The estate must file every year after death until complete, if any of the following are true:
- beneficiaries outside Canada will get income on their share;
- one year has elapsed and there is more than $500.00 income;
- the estate is ready to distribute and there is more than $500.00 income;
- This is a special Trust Return, called a T3.
- This obviously, is an overhead to any lengthy trusts.
- This calls for tax planning since it is usually possible to eliminate any income by distributing it to the beneficiaries as income, and requiring them to declare it.
Special Right to Split Income
- Each Year, the estate may use a Rights and Things Return (if applicable) as well as the Trust Return (T3), for the same reasons and advantages.
- Revenue Canada will send a Notice of Assessment. If it is satisfactory, and if it is the last return, apply then for a Clearance Certificate.
- This Clearance is in addition to the Clearance for the Deceased.
- There is an ugly Catch-22. Presumably the estate will want to continue to invest before it distributes. Then it will earn more income before the Certificate arrives. Then it must file another return and request another Certificate, and so on.
- Your lawyer can offer solutions to this problem.
- Like Income Tax, there is a deemed disposition at the date of death.
- However, Revenue Canada permits the estate to step into the deceased's shoes and continue to use the same registration number.
- Therefore, the imaginary sale is to the Beneficiaries, not the estate.
- In addition to the disposition to the beneficiaries, if anything is sold or otherwise disposed by an estate which is a G.S.T. Registrant, may be G.S.T. taxable.
- As with Income Tax, failure to remit means Revenue Canada may collect from the Executor/Administrator.
Non taxable dispositions
- The following are, for differing reasons, not taxable
- Transmission of Property due to rights of survivorship - not considered a supply
- Financial Instruments, such as money, accounts, shares, bonds, debentures, trust/Partnership interests, mortgages (where deceased was the mortgagor (creditor)) - exempt
- Financial Services - exempt
- Residential - home, cottage, mobile homes
- Agricultural produce
- Agricultural Equipment listed in the Regulations
- Resource property
- Foreign property - not a supply in Canada
- Items not used in the course of business - because personal assets
- G.S.T. Rollovers are similar but not identical to Capital Gains Rollovers.
- Since G.S.T. Registrants can claim back any G.S.T. paid, Revenue Canada sometimes permits simply filing an election, rather than the supplier paying the G.S.T. then the recipient claiming it back.
- Therefore, the Executor should consider advising the beneficiaries to become G.S.T. Registrants.
- Some available rollovers include:
- Land (whether or not to beneficiaries)
- all or substantially all business property (whether or not to beneficiaries)
- any asset, to a beneficiary of an estate, for business purposes
- One problem is that the Executor won't know if the deceased should have registered. If the deceased was not registered, Revenue Canada usually won't supply a clearance.
- There is another Catch-22. In this case, the problem is that you can't get clearance before the final return. Usually the lawyer and executor don't charge until just before distribution, and after the clearance. The estate wants to collect the G.S.T. paid to the lawyer, bookkeeper, perhaps Executor or other costs, yet has filed the 'final return'.
- Your lawyer will have a solution to this problem.
- The Clearance is given only to the Executor/Administrator to the date of distribution. It probably does not protect the beneficiaries.
- The Executor/Administrator is entitled to fees for the (considerable) work they do. However, the court must theoretically approve them.
- As with the handling of the estate, Consents of the Beneficiaries are usually sufficient.
- As with any Consent, it must be remembered that Incapable people (like children) cannot consent. So the Public Trustee can consent on their behalf.
- A general rule of thumb is that the fees should not exceed about 2% of the estate.
- Often the Executor/Administrator waives fees and simply collects out of pocket costs.
- This must be included in the Accounting if one is required.
- If fees are paid, they must be reported as employment income. The estate must then prepare and file T4A slips and a T4-T4A summary.
Transfer Assets to the Beneficiaries
Wait For Six Months
- The Dependents' Relief Act permits a 'dependent' (including a spouse, common law spouse, or child) to apply within six months to change the Will if they didn't receive a 'reasonable allowance.'
- The Family Property Act (formerly known as the Matrimonial Property Act) permits the spouse to apply within six months to divide the property.
- The Wills Act permits applications within six months to attack the Will.
- Consents can be obtained from all the people who have the power to apply. Of course, as always, incapable people like children cannot consent, although the Public Trustee may do so on their behalf.
- However, identifying with certainty all the people who are eligible is not easy. Some find it better to simply wait the six months.
Analyze the Distribution
- If there is no Will, then the Intestacy Act will set out the distribution. Analysis and research may be required into the family tree of the deceased.
- If there is a Will, there may still be issues to consider.
- if the Will gave an item which has changed or disappeared
- if a Witness is a beneficiary
- if a change in marital status affected the Will
- if liabilities secured by, or incurred to acquire, an asset (do they go along with the asset)
- conflicts - e.g., in one actual case, items in the house went to one, and vehicles went to another, and money went to another. There was $50,000.00 in the car, which was in the attached garage.
- interpretation - e.g., does livestock include the ostrich flock?
- In some cases, it might be prudent to bring an Interpretation Application to the court. This would fully protect the Executor from disgruntled beneficiaries.
- A lawyer should assist you with this.
- As above, the estate may want to reduce taxable income by distributing income to the beneficiaries, and having them declare it.
- If so, it should be reported to Revenue Canada with the Social Insurance Numbers and addresses of the Beneficiaries
Trusts and Incapable Beneficiaries
- It is illegal to transfer a gift to an incapable beneficiary, such as a child. It must be held in trust until they become capable.
- If the Will did not create a trust then it must be paid to:
- Indian Affairs for native incapable beneficiaries
- The Public Trustee for other incapable beneficiaries
- If the Trustee named in the Will is not the Executor, it may still have to go to the Public Trustee under the Children's Law Act. See your lawyer.
- If there are doubts about the competence of any beneficiaries, get a medical certificate or ask the Public Trustee to search for Certificates of Incompetence.
- To register any transfers of land, you must either have a Certificate from the Public Trustee that no infants are interested, or the consent of the Public Trustee.
- If a beneficiary is not a Canadian Resident, then you must calculate and withhold tax, get a Non-Resident Account Number from Revenue Canada, and pay it to Revenue Canada
Transfer To Beneficiaries
- The requirements of this step will depend upon the nature of the property.
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