Tag: Estates Act
An unfortunate reality with the administration of estates is that probate can take a long time to be issued. It is not uncommon for it to take six to eight months, if not longer, after the application is filed before the Certificate of Appointment is issued. As many institutions such as banks require a Certificate of Appointment before they will grant access to estate funds, and the Estate Trustee is generally unable to deal with any real estate owned by the estate until the Certificate of Appointment has been issued, this delay can often result in complications with the initial administration of the estate. These complications can be particularly acute when there is an urgent need for the Estate Trustee to complete a particular task which requires probate, such as the potential urgent need to deal with certain real estate or assets on behalf of the estate.
In the past when faced with the urgent need for probate a common solution would be to bring a Motion seeking an order directing the Registrar to expedite the issuance of the Certificate of Appointment. As anyone who has recently attended an event at which an estates court judge has spoken can attest however this option generally appears no longer to be available, as the message being conveyed is the court is generally not prepared to order the Registrar to expedite the process absent extraordinary circumstances. Such a reluctance appears in part based on the court not wanting to place the Registrar in a position of being in contempt of court if they are unable to comply with the expedition order, as well as administrative issues the expedition orders were causing at the estate office.
The general inability to expedite the issuance of probate absent limited circumstances has raised a number of questions about what, if anything, an applicant Estate Trustee can do if faced with the urgent need for probate and their situation does not meet one of the limited circumstances the court has indicated they will consider expediting probate. Would the applicant Estate Trustee simply have to wait however long the probate application takes in the normal course, or are there other options absent expediting probate that may be available to them?
One potential solution is the use of a “limited grant” under section 29(3) of the Estates Act as a stop-gap, with the applicant Estate Trustee being provided with the authority to complete the particular urgent task under the limited grant until such a time as probate is issued at which time the limited grant would expire. As the limited grant should not require the active involvement of the Registrar, with the individual’s authority to complete the task being derived from the order itself, many of the concerns raised in relation to ordering the Registrar to expedite probate do not appear present with the limited grant.
The limited grant is technically a separate appointment from Estate Trustee, such that the order providing for the limited grant should likely contemplate items such as what is to happen to any assets subject to the limited grant upon the limited grant expiring (i.e. are they to be returned to the Estate Trustee), as well as whether an accounting for the limited grant and/or any compensation to the appointee is payable now or if it is to be deferred to any accounting for the main estate.
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When there is a Last Will and Testament the question of who is going to act as Estate Trustee is usually fairly straightforward, with the Will typically naming an individual to such a role. In the event the individual who is originally named as Estate Trustee is unable or unwilling to act, the Will often provides for an alternate individual to be appointed. But what happens when the Will does not name an Estate Trustee or an individual dies intestate? Who gets to be the Estate Trustee under such a circumstance?
The order of priority for who gets to act as Estate Trustee when there is no one appointed is governed by section 29(1) of the Estates Act, which provides:
“Subject to subsection (3), where a person dies intestate or the executor named in the will refuses to prove the will, administration of the property of the deceased may be committed by the Superior Court of Justice to,
(a) the person to whom the deceased was married immediately before the death of the deceased or person with whom the deceased was living in a conjugal relationship outside marriage immediately before the death;
(b) the next of kin of the deceased; or
(c) the person mentioned in clause (a) and the next of kin,
as in the discretion of the court seems best, and, where more persons than one claim the administration as next of kin who are equal in degree of kindred to the deceased, or where only one desires the administration as next of kin where there are more persons than one of equal kindred, the administration may be committed to such one or more of such next of kin as the court thinks fit.”
Although the court retains the power to select amongst this group as it “thinks fit”, generally speaking the individual entitled to be appointed as Estate Trustee is the Deceased’s spouse followed by their next of kin (or some combination of these individuals). Section 29(3) of the Estates Act contemplates that the right of these individuals to be appointed as Estate Trustee is not absolute, with the court having the ability to select a different person if it thinks fit. The position of a majority of the beneficiaries can also be taken into account in selecting the individual under section 29(2).
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The settling of an estate often involves probate, where the court grants someone authority to act as an estate trustee for the deceased. This procedure, set out in the Estates Act, also confirms that the deceased’s will is their last Will and Testament.
Estate trustees can file an application for an estate certificate (previously called “letters probate” or “letters of administration”) at the Superior Court of Justice, in the county or district office when the testator or intestate lived at the time of death. If that probate application is successful, the court issues a Certificate of Appointment of Estate Trustee, evidencing that the person named in the Certificate has the legal authority to deal with the estate and its assets.
To help people avoid common errors when completing this application, the Attorney General provides this guideline.
As our associate Sydney Osmar has noted, people can now file probate applications, supporting documents and responding documents by email to the Superior Court. Sydney’s blog post provides helpful information about sending these documents electronically, with the email address for each court location listed here.
Certificates of Appointment are not always required when it comes to an estate administration, but they may be if:
- the deceased died without a will;
- the will does not name an estate trustee;
- a financial institution requires proof of a person’s legal authority to receive the financial assets of the deceased; or
- the estate’s assets include land or buildings that do not pass to another person by right of survivorship.
One of the times probate will not be necessary is if the entire estate is held jointly, and all assets are passing to the surviving joint owner by right of survivorship. A scenario might include a husband and wife with a joint bank account and a jointly-owned home. If the husband died and left the entire estate to his wife, probate can be avoided since banks and financial institutions have no risk exposure.
The Estate Administration Tax, better known as probate fees, is charged on the value of the estate if a Certificate of Appointment is applied for and issued. Estate trustees must be able to substantiate the fair market value of the assets at the time of death through documentation, such as financial statements or valuations from appraisers.
Assets to include in determining the value of an estate include real estate in Ontario, bank accounts (including foreign banks), investments, vehicles and insurance (if proceeds are left to the estate).
Once the value of the entire estate is determined, you can then calculate the tax. If the estate is worth $50,000 or less, you do not have to pay any probate fees, although you still must file an Estate Information Return within 180 calendar days after the estate Certificate has been issued.
For estates valued over $50,000, the tax will be calculated as $15 for every $1,000 (or part thereof) of the value of the estate on top of the $50,000 exemption. For example, for an estate valued at $240,000, you would only pay tax on $190,000, resulting in $2,850 being owed to the Minister of Finance.
Use this tax calculator to determine the amount owing.
The probate process can be time-consuming and confusing, which is why many people rely on the services of a wills and estates lawyer to help guide them through the paperwork and procedures.
Please feel free to call me if I can assist you – and have a great day,
In the Estate of Oliver (Re Oliver Estate, 2021 ONSC 2751) decision on April 12, 2021, the applicant, who was treated as a stepdaughter by the deceased, had her motion seeking appointment as Estate Trustee dismissed. William Oliver died intestate on July 14, 2020, and had no spouse, children, parents, siblings, nieces or nephews survive him. The applicant was the daughter of the person with whom the deceased cohabited in a common-law relationship in the 1980s and she had remained close to him, even being appointed attorney for him on a TD bank account in 2017.
Justice Macleod found that the daughter of a partner with whom the deceased co-habited, does not fall within any class of person recognized as an heir on an intestacy pursuant to the Succession Law Reform Act, RSO 1990 and Letters of Administration could not be issued under the Act. It was possible to make an order appointing the applicant as administrator of the property of the deceased under s. 29 (3) of the Estates Act, RSO 1990. Instead however, the court referred the matter to the Public Guardian and Trustee to investigate. Such investigative authority can be found in the Crown Administration of Estates Act, RSO 1990 where the “Public Guardian and Trustee is authorized to, (a) identify and locate, (i) persons who may have an interest in the estate, and (ii) other persons, but only for the purpose of locating persons who may have an interest in the estate; and (b) identify the estate’s assets.”
The court can refer a matter to, but cannot order the Public Guardian and Trustee to be appointed as a result of the provisions of Public Guardian and Trustee Act RSO 1990, where, “The Public Guardian and Trustee shall not be appointed as a trustee, by a court or otherwise, without his or her consent in writing”. Given staffing issues and limited resources as well as pandemic restrictions it is perhaps not entirely moot to ask what happens to the estate if the Public Guardian and Trustee does not consent to be appointed Trustee in a case like this.
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Last Friday, February 12, 2021, the Attorney General for Ontario announced changes to the Estates Act that raise the limit of a “small estate” to $150,000.
“Right now, the process to apply to manage an estate in Ontario is the same, whether the estate is worth $10,000 or $10,000,000. The process can be time-consuming and costly, deterring people from claiming smaller estates – and that isn’t right,” said a press release.
The new regulation, introduced in the Smarter and Stronger Justice Act, does not come into effect until April 1, 2021, but will make it easier to file a probate application for small estates and removes the requirement for a security bond in many small estate probate applications.
Among the changes to simplify the probate process for small estates are allowing for the completion and filing of a new simpler application form; removing requirements for certain supporting documents to be filed (for example, a commissioned affidavit of service); and more guidance for applicants on the process to file a probate application for a small estate.
Estate administration tax is still applicable to the portion of the small estate that is larger than $50,000, but these changes to procedure represent a positive step for grieving families who might otherwise leave a small estate unclaimed.
It’s worth noting that banks and other financial institutions often can’t take instructions from an estate trustee unless probate has been granted. By raising the limit for small estates, and simplifying the probate procedure, many estates will be settled sooner and with fewer burdens or costly hurdles for grieving families.
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Ian Hull and Daniel Enright
In June of this year, the Divisional Court of Ontario clarified that Section 10(1) of the Estates Act did not supersede the Courts of Justice Act where leave is required in order to appeal an interlocutory order.
In Luck v. Hudson Re: Estate of Albert Luck, the court however did grant leave, in order to immediately dismiss an appeal that raised issues not heard by the judge in the court of first instance and revealed ulterior concerns.
Steven Luck is the son of the late Albert Luck. Albert owned a house jointly with his wife Marylou Hudson. The relationship between Steven and Albert had deteriorated during Albert’s life and litigation ensued. Albert sued his son, who in turn filed a counterclaim- skidoos and cottage upgrades were all under dispute. Then Albert died, and the Will challenge began.
The motion judge, Justice Salmers, held that money from the sale of the house of Albert and Marylou be paid into court to the credit of the estate of Albert and to be paid out and distributed pursuant to the terms of the Will.
Subsection 10(1) of the Estates Act says that a party to a proceeding under that statute “may appeal to the Divisional Court from an order, determination or judgment if the value of the property affected” exceeds $200. Steven did not seek leave to appeal the interlocutory order and instead relied on 10(1) saying that he had an appeal as of right.
Since only this brief decision is reported, we do not know the underlying dispute which gave rise to Salmers, J’s interlocutory injunction, but the panel made two issues clear:
1: Leave is required to hear an appeal of interlocutory injunction
2: An appeal is not the appropriate venue to raise new issues, or air grievances.
The Courts of Justice Act is clear in section 133 that no appeal lies without leave from an order made on consent, or where the appeal is only to costs. The test for granting leave to appeal from an interlocutory order is an onerous one. If the panel feels the decision was well reasoned and the issues raised are not of general importance (Bell ExpressVu Ltd v Morgan (2008) O.J. No. 4758) leave will not be granted.
In this case, the court determined that Steven was seeking not only to appeal the injunction but that, “at its root the true purpose of that motion was to raise concerns as to the validity of the Will.” While Steven made no objection to the appointment of Trustees or to the Will in first instance, the court went on to say:
“What has become apparent is that Steven Luck wants to contest the Will in order to overturn the distribution of the funds held in court. He wishes those funds to remain available as security for the enforcement of a counterclaim he has made in response to an action commenced by his father (prior to his death) against Steven Luck.”
The court determined that Steven was actually seeking a Mareva injunction: A freezing of the estate assets, as security, in advance of any judgement made, potentially, in his favour.
The court found Steven had not met any of the prerequisites for such an order, and in fact, may have been barred by the Limitations Act, 2002, as previously determined by Justice Salmers.
In the end, as quickly as leave was granted, the appeal was dismissed. And Steven, now on the hook for a $25,000 cost award, was no better off.
A valuable caution to those considering the appeal route.
Thanks for reading!
Suzana Popovic-Montag and Daniel Enright
You would be forgiven for thinking that the entire process for an Application to Pass Accounts is set out in rule 74.18 of the Rules of Civil Procedure as the rule appears to provide a comprehensive step by step guide to how an Application to Pass Accounts is to proceed before the court. Although rule 74.18 likely contains the most cited to and fundamental steps and principles for how an Application to Pass Accounts is to proceed, you would be wise to remember and consider the applicable provisions of section 49 of the Estates Act as they may offer additional insights and tools for a passing of accounts beyond those found in the Rules of Civil Procedure.
Yesterday I blogged in part about section 49(4) of the Estates Act, and the general availability to convert more complex objections that are raised in the Notice of Objection into a separate triable issue thereby potentially opening up more typical litigation processes such as discovery and the calling of witnesses at the eventual hearing of the matter. Although the ability to direct certain complex objections to a separate trial is an important tool under section 49(4) of the Estates Act, it is not the only potential tool or thing to consider under section 49 of the Estates Act when involved in an Application to Pass Accounts.
These additional tools and considerations for an Application to Pass Accounts as found in section 49 of the Estates Act include section 49(3), which provides the court with the ability to consider any “misconduct, neglect, or default” on the part of the executor or trustee in administering the estate or trust within the Application to Pass Accounts itself, and may make any damages award against the executor or trustee for such misconduct within the Application to Pass Accounts itself without a separate proceeding being required. As a result, if, for example, a beneficiary should raise an allegation of negligence in the Notice of Objection against the executor for something such as a complaint that certain real property that was owned by the estate was sold undervalue, the court under section 49(3) of the Estates Act has the power to consider such an allegation and, if ultimately proven true, may order damages against the executor for any loss to the estate within the Application to Pass Accounts process itself. Without section 49(3) the beneficiary may otherwise have been required to commence a new and separate Action against the executor to advance these claims and/or be awarded damages.
Section 49 also contains answers to numerous procedural questions which may come up in an Application to Pass Accounts which otherwise are not mentioned in the Rules of Civil Procedure, including section 49(9) which provides what the executor is to do when an individual has died intestate and you are unable to locate any next of kin to serve, and section 49(10) which provides the court with the ability to appoint an expert to review and opine on the accounts on behalf of the court when the accounts are particularly complex.
Thank you for reading.
The Application to Pass Accounts serves an important function in the administration of estates and trusts, providing the beneficiaries with the ability to audit the administration of the estate or trust and raise any concerns through their Notice of Objection.
The procedure that is followed for the Application to Pass Accounts is somewhat distinct from any other court process, with the process being governed by rule 74.18 of the Rules of Civil Procedure. These procedural steps include the filing of the “Notice of Objection” and the “Reply” to the Notice of Objection, processes and documents which are distinct to the Application to Pass Accounts. Although the Application to Pass Accounts process differs in certain ways from a more traditional Application, at its core the Application to Pass Accounts is still an “Application” and not an “Action”, with the process designed to be more summary in process as compared to the typical Action.
I have previously blogged about the procedural differences between an “Application” and an “Action”, and how things like Discovery and Affidavits of Documents, as well as calling witnesses to give oral evidence, are generally not available in an Application. The same generally holds true for an Application to Pass Accounts, with there generally being no Discovery process or witnesses called at the eventual hearing for the passing of accounts, with the summary process designed to be adjudicated on the paper record of the documents contemplated under rule 74.18.
Although the simplified and summary process intended for the Application to Pass Accounts may present many benefits to the parties, including allowing the beneficiaries to pose questions and objections to the trustee without having to resort to potentially prolonged and expensive litigation as provided in a typical Action, it could present some challenges if the claims that are being advanced are complex or seek significant damages as the process may not allow for the full record to be adequately explored.
If the claims or issues which are being advanced in an Application to Pass Accounts are complex, such as for example claims that the trustee was negligent or committed a breach of trust, the summary process designed for the typical Application to Pass Accounts may not provide the depth of procedural process that the claims may deserve. Under such circumstances the parties may seek to direct and/or convert the complex objections into a separate triable issue, thereby potentially opening up the procedural processes more typically reserved for an “Action” such as Discovery or the calling of witnesses to the issue.
The process by which certain objections are directed and/or converted into a separate “triable issue” is governed by section 49(4) of the Estates Act, which provides:
“The judge may order the trial of an issue of any complaint or claim under subsection (3), and in such case the judge shall make all necessary directions as to pleadings, production of documents, discovery and otherwise in connection with the issue.”
Under section 49(4) of the Estates Act the court may direct any objection which fits under section 48(3) of the Estates Act, which includes allegations of breach of trust, to be separately tried before the court, with section 49(4) noting that the judge shall make necessary directions regarding pleadings, Discovery, and the production of documents for the objection.
If an individual wishes to direct an objection to be tried under section 49(4) of the Estates Act such an intention should be raised at the early stages of the Application to Pass Accounts, with an Order being sought which would specifically direct the objection(s) in question to be tried by way of Action. To the extent that such an Order cannot be obtained on consent a Motion may be brought regarding the issue, with the court also being asked to provide direction regarding the procedures to be followed for the triable issue.
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It appears that the Ontario government is taking action to make it easier and more affordable for executors of modest estates to access the courts.
Where the value of an estate is relatively small, the cost of obtaining a Certificate of Appointment (otherwise known as “probate”) can be perceived as too expensive. As a result, an executor (“estate trustee”) of a small estate often administers the estate without the protection of probate. In some cases, people choose not to administer a small estate at all and abandon the assets altogether.
Foregoing probate may lead to roadblocks when administering an estate. Third parties (like banks and persons buying the deceased’s real or personal property) will often require that the estate trustee obtain a Certificate. Probate reassures these third parties of the estate trustee’s authority and protects third parties from liability, as it verifies that the person they are dealing with is authorized to deal with the estate’s assets.
In the past, we have blogged about the Law Commission of Ontario’s efforts on this issue, including the release of a questionnaire to Ontarians who have administered what they consider small estates.
It now looks like the provincial government is looking to address the issue as well. Attorney General Doug Downey recently introduced the Bill 161, Smarter and Stronger Justice Act. If passed, the Act is intended to improve how court processes are administered to make life easier for Ontarians.
Notably, one of the proposed amendments includes allowing for a simplified procedure to make it less costly to administer estates of a modest value.
Right now, the probate process for all estates in Ontario is the same, no matter the size of the estate.
The Smarter and Stronger Justice Act would make amendments to Ontario’s Estates Act to exempt probate applicants from the requirement to post a bond for small estates in certain cases.
Other proposed changes to the Estates Act include safeguards to protect minors and vulnerable people who have an interest in an estate, and to increase efficiency by allowing local court registrars to perform the required estate court records searches, rather than a central court registrar.
It will be interesting to see if the proposed changes will be passed, and how they may encourage more people to apply for probate and administer an estate of lower value.
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The requirement to post a bond can be found in section 35 of the Estates Act. An Estate Trustee will be required to obtain an administration bond in instances including where: the deceased passed away without a will; the will does not name the applicant seeking to be appointed; or, the Estate Trustee resides outside of Ontario.
The amount of the bond is to be double the sworn value of the estate. However, practice has developed (see D’Angelo Estate) such that the size of the bond has been reduced to the sworn value of the estate.
While section 36(1) of the Estates Act sets out specific instances where security is not required, it is section 37(2) which gives the court the general power to reduce the amount of the bond or dispense with it altogether. In the helpful decision of Henderson (Re), the court indicates that the applicant Estate Trustee who seeks an order dispensing with the requirement to post a bond, should file affidavit evidence in support, containing the following:
- The identity of all beneficiaries of the estate;
- The identity of any beneficiary of the estate who is a minor or incapable person;
- The value of the interest of any minor or incapable beneficiary in the estate;
- Executed consents from all beneficiaries who are sui juris to the appointment of the applicant as estate trustee and to an order dispensing with an administration bond should be attached as exhibits to the affidavit. If consents cannot be obtained from all the beneficiaries, the applicant must explain how he or she intends to protect the interests of those beneficiaries by way of posting security or otherwise;
- The last occupation of the deceased;
- Evidence as to whether all the debts of the deceased have been paid, including any obligations under support agreements or orders;
- Evidence as to whether the deceased operated a business at the time of death and, if so, whether any debts of that business have been or may be claimed against the estate, and a description of each debt and its amount;
- If all the debts of the estate have not been paid, evidence of the value of the assets of the estate, the particulars of each debt – amount and name of creditor – and an explanation of what arrangements have been made with those creditors and what security the applicant proposes to put in place in order to protect those creditors.
Applicants should make sure to address each of these factors when applying to dispense with an administration bond.
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