Tag: small estates
Administering an estate can be problematic, regardless of the size of the estate. Even small estates can be fraught with administrative difficulties that can arise by reason of actions or inactions of the deceased, issues as to the relationship between the surviving beneficiaries, or both.
The matter of Gibbons v. Lemont is a good example of the problems that can arise, and their reasonable resolution.
There, the deceased was survived by her three children. In her will, the deceased appointed two of her children as estate trustees.
The estate was a relatively small one, consisting of a house having a value of $100,000 at the time of death. The low value was partially attributed to the fact that the deceased was a hoarder.
To complicate matters, the two estate trustees had a strained relationship with their brother. The brother took issue with the actions of the estate trustees, which lead to a trial and a decision. The decision reflects some of the difficulties in dealing with estates, small or large, and addresses ways of dealing with those issues.
- The trial proceeded by way of a summary procedure. Affidavits were relied upon in lieu of examinations in chief, and cross-examination was limited. The judge observed that “the parties were well advised not to run up the costs by days of evidence and cross-examinations.” However, in the same paragraph, the judge notes that as a result of the extremely limited cross-examination, the judge did not have any assistance in making determinations as to credibility and reliability.
- Rather than sell the home “as is”, the estate trustees spend thousands of hours cleaning and repairing the house to prepare it for sale. This resulted in a gain in the value of the house of approximately $70,000. But for this work, there would probably have been no estate to distribute after the mortgage was paid. The judge commended the estate trustees for their efforts, and observed that in hindsight, the estate trustees might have been better off in declining to act, and to let the mortgagee take enforcement proceedings and sell the property.
- With respect to the time spent to clear, clean and improve the real property, the court found that the estate trustees were entitled to compensation for their work. While the deceased’s will expressly provided that the estate trustees were not entitled to compensation for acting as estate trustees, the work done by the estate trustees went beyond the work reasonably expected of an estate trustee.
- The brother alleged that the estate trustees unfairly and unequally distributed the deceased’s personal effects. However, the estate trustees tried to contact the brother for the purpose of distributing the items, but the brother did not respond. The estate trustees then divided the personal property into lots and assigned a number to each lot. A number was drawn for each child, and the personal effects were distributed accordingly. The court held that this was a fair way of dealing with the personal effects in the circumstances.
At the end of the day, after payment for compensation and out-of-pocket expenses (but before any award of legal costs) the net estate for distribution would be about $47,000, or $15,000 to each beneficiary. Even with the summary procedure that was adopted, the trial took two days to hear. However, notwithstanding the size of the estate, it appears that the issues were important enough to the beneficiaries and estate trustees so as to warrant a judicial determination.
Unfortunately, whether a large estate or a small one, sometimes a determination by the court as to the rights of the parties or the propriety of the action of the estate trustees is necessary. Unfortunately, often the parties are not able to cooperate to ensure that the legal determination can be obtained as efficiently and cost-effectively as possible. The parties and their counsel, in this case, should be commended for their cooperation in having the diverse legal issues put before the court in an efficient manner.
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Further to our article “Small Estate” in Ontario now $150,000, as of April 1, 2021, for an estate valued at $150,000 or less, probate can be applied for through the small estate court process.
Applying for probate can be a complicating and overwhelming process, especially considering the fact that the steps that need to be taken or forms that need to be filled out can vary depending on the specific circumstances of the estate.
The Probate of a Small Estate webpage provides helpful information on some of the steps included in applying for probate of a “Small Estate”.
Please see below a brief overview of some of the important things to consider when applying for probate of a “Small Estate”.
Depending on the specific circumstances of the estate, different court forms may need to be completed and filed with the court.
As noted in Rule 74.1.03(1) of the Rules of Civil Procedure, “A person may seek a small estate certificate by filing an application for a small estate certificate (Form 74.1A) together with,
(a) a request to file an application for a small estate certificate or an amended small estate certificate (Form 74.1B);
(b) proof of death;
(c) a draft small estate certificate (Form 74.1C);
(d) if there is a will, the original of the will and of any codicils, together with the following evidence of due execution of the will and each codicil:
(i) if the will or codicil is not in holograph form,
(A) an affidavit of execution (Form 74.8) of the will or codicil,
(B) if the will or codicil contains an alteration, erasure, obliteration or interlineation that has not been attested, an affidavit as to the condition of the will or codicil at the time of execution (Form 74.10), or
(C) if each of the witnesses to the will or codicil has died or cannot be found, such other evidence of due execution as the court may require, or
(ii) if the will or codicil is in holograph form, an affidavit attesting that the handwriting and signature in the will or codicil are those of the deceased (Form 74.9);
(e) any security required by the Estates Act; and
(f) such additional or other material as the court directs.”
Estate Administration Tax
It is important to determine the value of the estate.
Estate Administration Tax is payable on the value of the estate of a deceased person as of the date of their death, for estates valued over $50,000.
For estates valued over $50,000, the Estate Administration Tax will be calculated as $15 for every $1,000 (or part thereof) of the value of the estate. Estate Administration Tax can be calculated using the calculator provided on this Ministry of the Attorney General webpage.
Service of Documents
Pursuant to Rule 74.1.03(3) of the Rules of Civil Procedure, “the applicant shall send or give the following documents to each person entitled to share in the distribution of the estate, including charities and contingent beneficiaries:
- A copy of the application for a small estate certificate (Form 74.1A) and of any attachments.
- If there is a will, a copy of the will and of any codicils.”
It’s important to note that pursuant to Rule 74.1.03(4) of the Rules of Civil Procedure, “if a person who is entitled to share in the distribution of the estate is less than 18 years of age, the documents listed in subrule (3) shall not be sent to the person but shall instead be sent or given to a parent or guardian and to the Children’s Lawyer.”
Further, a copy of the application and a copy of the will and codicil (if applicable) may need to be provided to Office of the Public Guardian and Trustee.
Detailed information in respect of “Small Estates” and the process of applying for probate of a “Small Estate” can be found in Rule 74 of the Rules of Civil Procedure.
Please note, the above-noted information has been provided for informational purposes only and is not legal advice. For more information, please reach out to one of our team members who will be happy to assist you.
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After considerable research and public consultation, The Law Commission of Ontario (“LCO”) released its final report for the Simplified Procedures for Small Estates Project on November 19, 2015.
The LCO’s mandate for this project was to recommend law reform measures to enhance and improve the estate administration procedure such that its current benefits would be more accessible to small estates with a gross value of up to $50,000.
After considering a range of alternatives to the court-based supervision that should be used in the small estates process in Ontario, the LCO ultimately concluded that a court-supervised model would be most appropriate in keeping with the protective function of the regular probate system. In this regard, it is recommended that amendments to Rule 74 of the Rules of Civil Procedure and the Estates Act should be amended to provide for a simplified small estate procedure which will result in the issuance of a Small Estates Certificate that will have the same legal effect as a Certificate of Appointment of Estate Trustee.
The only difference between a court-issued Small Estates Certificate and a Certificate of Appointment of Estate Trustee is that estate trustees pursuant to a Small Estate Certificate will only have the authority to deal with the estate assets listed in the application.
To determine whether an estate qualifies for access to the small estate process, the LCO recommends that the value of the estate be calculated in accordance with section 32(1) of the Estate Act and should include all assets belonging to the deceased at the time of death, including those discovered after the issuance of the Small Estate Certificate.
The LCO recommends that a formal application process which mirrors the current probate process should be adopted for small estates with the exception of some of the evidentiary requirements. For example, an applicant under the small estate process would not be required to file proof of the validity of a will and their legal entitlement to administer the estate. Instead, an application would simply be required to make a declaration to this effect. The only evidence required would include:
- a copy of the death certificate;
- a copy of the will if there is one; and
- a form declaring that the application was sent to the beneficiaries, including the Ontario Public Guardian and Trustee and/or the Office of the Children’s Lawyer,
Applicants under the small estate process would also be required to send a copy of the application and an explanatory form to all known persons with an entitlement to a share of the estate, including the OPGT and/or the OCL. This must be done at least 30 days before filing the application. However, payment of security would not be a requirement of the application process.
The LCO also makes recommendations to the Ontario Government and the Ministry of the Attorney General with respect to amendments to the Estate Administration Tax Act and the development of an on-line filing system and paper filing procedures. Other recommendations include information guides specifically for unrepresented applicants with step-by-step instructions and public awareness campaigns to educate the public regarding the importance of making a will and appointing an estate trustee.
To find out more about the LCO’s recommendations and to read the full report visit http://www.lco-cdo.org/en/small-estates-final-report
Thank you for reading and have a great weekend!
Today on Hull on Estates, David M Smith and Joshua Eisen discuss potential legislative developments for easier administration of estates at the federal and provincial level. Here is a Questionnaire released by The Law Commission of Ontario for Ontarians dealing with the subject of small estates. Should you have any questions, please email us at firstname.lastname@example.org or leave a comment on our blog page.
Click here for more information on Joshua Eisen.