What To Do When a Loved One Dies
Losing a loved one can be a very difficult and overwhelming process, especially if you are the executor under a will or the next of kin and there is no will. There are also some matters that you need to attend to in terms of administering the estate.
Questions you may be asking yourself include:
- How do I start this process?
- Do I need to apply for probate?
- What is the estate administration tax?
- Who can I turn to for help?
Our blog post will guide you through the process, ease your burden, and to make the estate administration process as easy as possible for you.
What is an Estate?
A person’s estate is made up of the deceased’s assets and liabilities which they own at the time of their death. It includes real property, bank accounts, investments, and any other assets owned by the deceased. It is equally important to identify what is not part of an estate. This includes property that is jointly owned, or assets that pass to a person because they have been named as a beneficiary outside of the will. Examples of such assets are real property that was held with another person as joint tenants, beneficiaries of Registered Retirement Savings Plans (RRSP) or Registered Retirement Income Funds (RRIF), beneficiaries of life insurance, and successor holders of a tax free savings account (TFSA).
The nature of ownership of the various types of assets is important for the purposes of calculating the Estate Administration Tax. It is also important to note that there are some rules about jointly owned property that will be explained in a bit more detail below, as some jointly held property may still be subject to the payment of the Estate Administration Tax.
How do I begin the Estate Administration Process?
First, you need to locate and gather all estate documents:
- A will (if any)
- Information regarding any real property owned by the deceased
- Bank statements
- Life insurance policies
- Proof of death (Death certificate)
- Debts – credit card statements, mortgages, unpaid bills
If there is no will, then you will need to obtain information about the deceased’s next of kin. Next of kin is a legal determination, and is not defined by relationship status. In other words, parents, siblings and children who are estranged may still be, at law, a deceased person’s next of kin. As such, they may have certain rights regarding the estate and the estate administration process.
Once you have gathered the necessary information, you are ready for the next step.
Do I Need to Apply for Probate?
Probate is not required in all cases. Probate is the process whereby the Court confirms the appointment of the executor (known in Ontario as the estate trustee) and oversees the estate administration process. Typically probate will be required when the deceased owned real estate and there is no surviving joint tenant, there are investment or bank accounts that were solely in the deceased’s name, or the deceased owned other assets that can only be sold/conveyed after probate. An experienced estates lawyer will be able to review the information and let you know which assets require probate, and which do not. Based on the value of the estate’s assets, the estates lawyer will be able to accurately calculate how much Estates Administration Tax needs to be paid.
The estates lawyer will then draft the relevant forms required to apply to the courts for a Certificate of Appointment of Estate Trustee. All forms must be completed correctly in accordance with the Rules of Civil Procedure. Errors in the application form can cause a delay in the already long probate process.
What is the Estate Administration Tax?
The Estate Administration Tax is the tax payable to the government of Ontario when someone applies for probate. The tax is calculated on the value of all assets in the estate, not including the value of life insurance policies if there are named beneficiaries, the value of RRSP or RRIF if there are named beneficiaries, or the value of a TFSA if a successor holder has been named. There always seems to be some general confusion about whether probate tax is payable when property is jointly-owned with a child. The Supreme Court of Canada’s decision in Pecore v. Pecore has established that there is a presumed trust if a parent names a child as a joint holder of assets (bank accounts, real property, etc.), unless there is a clear expression by the parent that they were making a gift. What that means is that the property is still legally owned by the parent, and therefore it becomes an estate asset on the death of the parent. As such, probate tax is payable on the value of those jointly held assets if probate is applied for.
Who can I turn to for help?
As you can see, the estate administration process is not without complication. While you may be able to navigate the system on your own, it may be beneficial to have an experienced estates lawyer guide you through the process. The estates lawyer can also help guide you to others who can assist you though this difficult process. There is a lot to deal with when you have lost a loved one. Having a trusted professional guide you through the process will help ease your burden.
Contact Us Now
We would be more than happy to assist you in the Estates Administration process. Our team is here to guide you through the process and to provide the legal assistance that you need.
