Probate in a nutshell:
“Probate” means obtaining a document from the court stating that a specific will, or no will at all, applies to an estate and that a particular executor is in charge of that estate.
Although probate is not always mandatory, an executor may need probate to administer an estate. For example, an executor will need usually probate if there is no will, if an executor has to transfer or sell real estate, or if an executor needs to access money from a bank unwilling to release funds.
Sometimes, a bank will give an executor a bank draft payable to our firm so that the executor does not have to pay our fee personally.
Learn about what an executor must do, should do, and the extent of their personal liability by reading below:
Terminology:
Executor: someone who administers the estate of a deceased person. The term “executor” is sometimes used on this page interchangeably with the more modern term “estate trustee”, even though the two terms are not necessarily the same. “Executor” is also used as a singular in this article, even though there may be multiple executors administering an estate. We will try to use the term “executor” whenever possible.
What is probate?
Probate Historically in Ontario
Probate was the formal court procedure used to grant a person the legal authority to manage and distribute an estate when a deceased person passed with a will. In other words, probate was how someone would obtain proof that they were in charge of an estate. When probate was granted, the Court would issue “Letters Probate” in cases where the deceased passed with a will, or “Letters of Administration” when the deceased passed without a will.
Modern Probate in Ontario
While the procedure for obtaining proof of control of an estate is now technically called an Application for Certificate of Appointment of Estate Trustee (with or without a will), most people still refer to this process as “probate”. If someone’s probate application is accepted by the Court, they will be appointed Estate Trustee through a Certificate of Appointment of Estate Trustee.
An Application for Certificate of Appointment of Estate Trustee (with or without a will) serves the following purposes:
Testate estates, meaning with a will:
- to seek the Court’s approval that the will included in the probate application is the deceased’s last valid will;
- to confirm the authority of the applicant to act as executor under the deceased’s will. Ontario banks and the government will have to recognize the executor as the proper representative of the estate once probate is obtained. Banks should release funds to the executor armed with a Certificate of Appointment of Estate Trustee; and
- some limitation periods for claims against the estate are triggered by the completion of probate.
Intestate estates, meaning without a will:
- to confirm the authority of an applicant who wishes to be appointed as executor where the deceased passed without a will. Ontario banks and the government will have to recognize the executor as the proper representative of the estate once probate is obtained. Banks should release funds to the executor armed with a Certificate of Appointment of Estate Trustee;
- to confirm that the deceased’s estate will be distributed according to the laws of intestate succession; and
- some limitation periods for claims against the estate are triggered by the completion of probate.
When should I apply for probate?
Since it can sometimes take the court several months to review a probate application, it is best to get the application into the court’s hands as soon as possible after the death of a deceased person. Where we can demonstrate undue hardship to beneficiaries or a time-sensitive risk to the estate, your lawyer may ask the court to expedite the application to obtain probate sooner.
When is probate required and do I really need to obtain probate?
No one wants to obtain probate as it can result in the payment of taxes and legal fees. Unfortunately, probate may be necessary when the deceased passed without a will. If the deceased did have a will, probate may also be necessary to access funds in a bank account, sell some types of estate property, or prove the validity of a will.
Probate is often required when:
- it is necessary to validate a deceased’s will;
- a deceased died without a will, referred to as an intestacy;
- the deceased owned real estate, such as a house, that is not subject to a real estate exemption called “first dealings”; or
- the executor cannot access the deceased’s bank accounts.
Do I need to hire the lawyer that drafted the deceased’s will?
No. An executor does not need to hire the lawyer that drafted the will and may hire any lawyer that they choose to obtain probate. It is important that an executor feel comfortable with their lawyer as they will be working closely with this lawyer through the estate administration process. The lawyer represents the executor, not the estate or beneficiaries.
Who can apply to be an executor?
Almost any adult and some corporations in Ontario can apply to be an executor. An executor is responsible for managing the affairs of a deceased person’s estate, including collecting and managing the assets of the estate, paying debts and taxes, and distributing the remaining assets to the beneficiaries according to the terms of the will or the laws of intestacy.
To be appointed as an executor, a person must apply to the Ontario Superior Court of Justice for a Certificate of Appointment of Estate Trustee. The Court will consider the application and may appoint the person as the executor if it is satisfied that they are suitable for the role. In making this decision, the court may consider factors such as the person’s financial knowledge, ability to manage the estate, and their relationship with the deceased and the beneficiaries. This is especially true if multiple people wish to be appointed or if the application for appointment is opposed by another person.
If the deceased person had a valid will, the will may identify an executor. If the will does not name an executor or if the named executor is unable or unwilling to act, the Court may appoint someone else as the executor.
Estate Administration Tax
At the time an application for probate is made, the person applying will need to provide a bank draft or certified cheque to the Court to satisfy any Estate Administration Tax owing. Estate Administration Tax is a small percentage of the total value of the estate at the time of deceased’s death. If an executor does not have the money to pay the Estate Administration Tax at the time that they apply, does not know the value of the estate, or cannot access the deceased’s bank accounts to satisfy the payment of Estate Administration Tax, they can request that the Court delay the payment of the tax until after probate is granted.
Estate administration bonds
The Court may require a person applying for probate to obtain an estate administration bond, which can be tremendously expensive. A bond is a type of insurance policy that protects the estate’s creditors and beneficiaries should the executor act improperly or mismanage an estate’s assets. Not all executors are required to obtain a bond at the time of their application. A bond will generally not be required if a deceased person named a proposed executor in their will and that person lives in Ontario. The requirement for a bond can be waived by the Court using a few exceptions. A Katzman Estate Law lawyer can assist you in dispensing with a bond when applying for probate
Compensation for acting as executor:
Acting as an executor is difficult work often worthy of compensation. Section 61(1) of the Trustee Act sets out that an executor is entitled to such fair and reasonable allowance for the care, pains and trouble, and the time expended in and about the Estate. While the Trustee Act does not specify what a “reasonable allowance” is, generally speaking, in Ontario executor is entitled to compensation in the amount of 2.5% of all money that comes into an estate and 2.5% of money that leaves an estate. This does not always mean 5% of the total value of the estate. The court may also award a “care and management fee” of 0.4% on the average annual value of an estate’s assets. Confusingly, this is often worded in the caselaw as “two fifths of 1%”. The Court will also consider the following five factors, as outlined in a case called Toronto General Trust Corp. v. Central Ontario Railway, 1905] O.J. No. 53, when reviewing whether an executor’s claim for compensation is reasonable:
- the magnitude of the estate or trust;
- the care, responsibility and risks assumed by the executor or trustee;
- the time spent by the executor or trustee in carrying out their responsibilities;
- the skill and ability required and displayed by the executor or trustee; and
- the results obtained and degree of success associated with the efforts of the executor or trustee.
Being an executor can be a difficult job. While being an executor comes often comes with power and discretion, even before probate is granted, it also comes with significant legal liability. An executor can be sued by creditors and beneficiaries for failing to perform their duties properly. An executor will likely need legal advice to guide them through the estate administration process, as discussed in the section below.
