If You Are Considering Administering a Deceased Estate Dunning Place 3123_If You Are Considering.indd 1 3/26/09 11:53:23 AM
3123_If You Are Considering.indd 2 3/26/09 11:53:23 AM
If You Are Considering Administering a Deceased Estate An executor appointed under a Will is entitled to administer an estate. If there is no Will, the closest relative is entitled to apply to the Court to become administrator of the estate. If there are no relatives able to administer an estate, the Public Guardian and Trustee (PGT) may administer that estate. The PGT views itself as the administrator of last resort. If you are considering acting as an executor or administrator (personal representative), you have many things to do and think about. If you are considering administering the estate without the assistance of a lawyer, you will require more detailed information than is in this booklet. You can refer to the Public Legal Education Association of Saskatchewan website at www.plea.org or their printed booklet entitled Wills and Estates. You might want to obtain a book on how to administer a deceased estate in Saskatchewan or search for reliable information on the Internet. If you are considering using a lawyer to assist you in administering the estate, then this booklet will assist you to understand the process and things you have to do as personal representative and the things the lawyer will do for you if asked. Do I need to apply to the Court? If the deceased owned land, you will have to apply to the Court. Many agencies and financial institutions will not release estate funds until the Court has appointed a personal representative. You need to discuss with your lawyer whether you can administer the estate without making a court application. If financial institutions will deal with you without Letters Probate or Letters of Administration (Letters), then you may not have to make a court application. What do I apply to the Court for? If there is a Will, then the application will be for Letters Probate. Letters Probate formally recognizes that a Will is 1 3123_If You Are Considering.indd 1 3/26/09 11:53:23 AM
valid and that an executor is entitled to deal with the estate. If there is no Will, then the application will be for Letters of Administration. Letters of Administration allow the administrator to deal with the estate according to law. In this booklet, we will refer to both as Letters. The following documents must be filed with the Court before Letters Probate can be issued: Original Will with Affidavit of Execution attached (Form 107) Application for Letters Probate (Form 98) Affidavit of Executor (Form 102) Statement of Assets (Form 104) Notice to Public Guardian and Trustee (where children under 18 or dependant adults are beneficiaries) (Form 101) The following documents must be filed with the Court before Letters of Administration can be issued: Original Will if applying for Letters of Administration with Will Annexed (where there is a Will but no Executor named, or the Executor is unable or unwilling to act) (Form 107) Application for Letters of Administration (Form 99) Affidavit of Applicant (Form 103) Renunciation from all persons with a prior or equal right to apply (Form 106) Statement of Assets (Form 104) Notice to Public Guardian and Trustee (where children under 18 or dependant adults are beneficiaries) (Form 101) A bond for administering the estate or alternatively the following: Consents by beneficiaries to administration without a bond; Consents by creditors to administration without a bond; Consent by the PGT to administration without a bond where children under 18 are beneficiaries; 2 3123_If You Are Considering.indd 2
Consent of a property guardian to administration without a bond on behalf of a beneficiary who lacks capacity. Bond In making a court application an executor does not have to provide a bond. However, an administrator does unless all the beneficiaries, creditors and the PGT (where there is a beneficiary under 18 years of age or a beneficiary who lacks capacity) consent. The amount of the bond is to be twice the value of the estate unless a guarantee company signs a surety and then the bond only has to equal the value of the estate. Small Estates If the value of the estate is less than $15,000 and you are administering the estate yourself, the court staff will assist you in preparing the application. See section 7 of The Administration of Estates Act and the Queen s Bench Rules. The Court will charge a fee for preparing and filing. When the estate does not own land, and when the value of the estate does not exceed $25,000, the personal representative can use a simplified procedure to obtain a court order authorizing administration of the estate. See section 9 of The Administration of Estates Act and the Queen s Bench Rules (Form 119). The Court charges a basic fee of $30 plus $6 on each $1,000 of sworn value. Beneficiaries The personal representative of an estate is required to identify and locate all beneficiaries of an estate. It may be necessary to search for information about the relatives of the deceased. The Intestate Succession Act along with The Wills Act, The Family Property Act, and The Domestic Relations Act legislate who, in succession, would be a beneficiary of a deceased estate. 3 3123_If You Are Considering.indd 3
If the personal representative has doubts about beneficiaries then the information should be verified by affidavits from knowledgeable family members. Additional documentation to support the determination of beneficiaries may be required and may include birth, death, and marriage certificates, written confirmation of adoption and DNA testing. The Administration of Estates Act does not define a common law spouse. The personal representative may require a person claiming to be a common law spouse to obtain a court order declaring the person to be a spouse. Based on Court decisions, some factors to consider when determining whether or not a spousal relationship exists are: shelter whether the parties lived under the same roof and their sleeping arrangements; sexual and personal behavior such things as whether they maintained an attitude of fidelity to each other, ate their meals together, assisted each other in illness, gave each other gifts, etc.; services who performed the chores necessary to sustain the household; social whether they participated together in community activities and how they conducted themselves around extended family; societal how did the community view their relationship; support (economic) how were their finances arranged and how did they hold their property? It is necessary to confirm and locate all of the beneficiaries in an estate before estate assets can be distributed and before a court application is made. In some estates, it is necessary to hire an heir locator to assist in the location of the beneficiaries. If the heir locator is not successful, then it may be necessary to make a court application for an order directing how the estate should be distributed. 4 3123_If You Are Considering.indd 4
Assets of the Estate The personal representative is required to identify, locate, secure, value and insure all assets of an estate owned at the date of death. These assets are listed in the Statement of Assets (Part I) of the application for letters. The personal representative should review the personal papers of the deceased, write inquiry letters, arrange for redirection of mail and conduct searches of Information Services Corporation (ISC) and Saskatchewan Government Insurance (SGI). It is necessary to determine: cash assets of an estate including funds held in financial institutions, pension plans and benefits provided by government agencies such as the Canada Pension Plan (CPP) and Old Age Security (OAS). personal property including vehicles, farm equipment, jewelry, firearms, household items, musical instruments, electronic equipment, antiques and collectables. real property owned by the estate. The value of the property should be established by obtaining a report from a land appraiser or Agrologist, a market evaluation from a real estate agent, or a property assessment from a city, town or municipality. Pending the sale or transfer of agricultural or residential property, it may be advisable to lease or rent the property. Under The Administration of Estates Act, a lease cannot be for more than one year unless all of the interested beneficiaries consent. Real property can be dealt with in one of the following ways: Transferred to all beneficiaries as part of their share; Transferred to one beneficiary as part of his/her share; Transferred to a city, town or municipality in lieu of property tax arrears; Transferred to a mortgage holder; 5 3123_If You Are Considering.indd 5
Sold to pay debts; Sold at the request of all beneficiaries. If there are estate debts and insufficient funds to pay those debts, then real property may have to be sold to pay those debts. In these instances, the consent of the beneficiaries is not required, but it is wise to obtain it anyway. When the personal representative sells property, the following should be obtained: Written consent of all of the beneficiaries; Certificate of No Infants Interested, when there are no minor beneficiaries (children under the age of 18); For minor beneficiaries (children under the age of 18), the following is required: consent from the legal guardian as children under the age of 18 cannot give legal consent; an acknowledgement from each minor beneficiary fourteen years of age or older, which indicates that he or she has been advised of the particulars of the proposed sale of real property and consents to the sale; consent to the transfer of the property must be obtained from Children s Services at the PGT. This authorization document is a requirement of ISC. When an estate has real property it must be transmitted at ISC into the name of the personal representative of the estate. Afterwards, if the estate is not insolvent, the property can then be transferred into the name of one or more beneficiaries or a purchaser. It should be noted, legislation requires that the estate cannot be distributed for six months after Letters are obtained where: dependants of the deceased may have a claim pursuant to The Dependants Relief Act. Dependants include a legal, common law or same-sex spouse, children under the age of 18 years, or children over the age of 18 years who by reason of physical or mental disability are not able to support themselves; and 6 3123_If You Are Considering.indd 6
a legal, common law or same-sex spouse may apply for a division of the family property after the death of the other spouse under The Family Property Act. Assets not part of the estate In the application for Letters, the personal representative has to list in the Statement of Assets (Part II), the assets that are not part of the Saskatchewan estate. Part II Assets include: property jointly owned with the deceased at date of death, assets with a named beneficiary, and property outside Saskatchewan. Typically, the executor or the administrator of the estate does not have to deal with these assets. Estate Debts In estate administration, it is necessary to identify the debts of the estate. The personal representative should review the personal papers of the deceased, make inquiries to family, friends, neighbours, and businesses and conduct Writ and Personal Property Registry searches. In addition, a notice to creditors should be published as required by The Administration of Estates Act. This should be published in a newspaper located in the closest community to where the deceased last resided. In the court application, it is necessary to indicate whether there are no debts, or whether there are debts. If there are debts, it is advisable to supply the Court with an affidavit of those debts. If there are debts and you are applying to be appointed as an administrator, The Administration of Estates Act requires a bond or requires the consent of all creditors to administration with a bond. In some instances, the assets of the deceased may be insufficient to pay all the outstanding debts. The personal representative of the estate must ensure that the debts are paid from the estate assets, to the extent possible, in accordance with the relevant law. 7 3123_If You Are Considering.indd 7
Debts of the deceased must be paid before any of the gifts provided for in the will are paid or transferred to a beneficiary. Where there are insufficient assets in the estate to pay all creditors, generally, the debts of an insolvent estate are paid in the following order: 1. Secured creditors are paid, to the extent of the value of the asset over which they have security. If there is a deficiency, i.e. the value of the asset is less than the debt owing, the secured creditor will rank with the other unsecured creditors with respect to the deficiency. 2. Reasonable funeral and testamentary expenses incurred by the personal representative. 3. The costs of administration of the estate, in the following order: i. the expenses and fees of the personal representative; ii. legal costs. 4. Debts that have legislative priority. For example, maintenance for children, rent owing to a landlord or wages, salaries or commissions owing to an employee of the deceased. 5. Debts owing pursuant to The Income Tax Act. 6. All other unsecured debts, including claims of the Government of Canada or any province that does not have legislative priority. If there are insufficient funds, they are paid rateably. Expenses The estate is responsible for paying all disbursements or costs incurred by the personal representative in administering an estate. Disbursements include out of pocket expenses. The Court can review the disbursements paid to ensure they are accurate. Common costs related to administering an estate include: Court costs when applying for Letters (see Rules of Court); Fees payable to the PGT to obtain consent to sell land that was left to a child, or to obtain a Certificate of No Infants; 8 3123_If You Are Considering.indd 8
Fees payable to ISC to transmit and transfer land; Fees payable to the lawyer representing the personal representative (see Rules of Court); Personal representative s fees. Income Tax The personal representative is required to file estate tax returns. The Income Tax Act requires that every personal representative obtain a final clearance certificate before distributing to the beneficiaries any property under their control. The personal representative can be held personally liable if assets are distributed prior to the receipt of the final clearance certificate. The personal representative should review the last five years of the deceased s income tax returns and financial information. In some instances, it is necessary to file prior income tax returns. It may take significant time to gather the information required to complete the return. The following is the process for handling estate income tax, unless the estate is insolvent: T1 date of death return (for the period from January 1, to the date of death). Annual T-3 return(s) (to be filed annually for the year(s) after the date of death). If real property or other estate assets do not need to be sold to pay estate debts, a clearance certificate to date of death, or partial clearance, must be issued by Canada Revenue Agency (CRA) before the assets can be distributed to beneficiaries. After all real estate and other estate property is sold or transferred to beneficiaries, all prior returns have been filed and assessed, all tax has been paid then a windup date can be selected. At this time, a final T3 income tax return must be filed. It can take three to eight months to receive a notice of assessment for this return. 9 3123_If You Are Considering.indd 9
After the notice of assessment is received for the final T3 income tax return, an application should be made to CRA for a final clearance certificate. It can take three to six months for the final clearance certificate to be issued. This clearance certificate covers income tax liability up until the windup date. Until the final clearance certificate has been received, and all income tax owing has been paid, funds should not be distributed to beneficiaries. After the final clearance certificate is issued, it may be necessary to file a final T3 return from the windup date until the release date. If all of the beneficiaries reside in Canada, it may be possible to allocate the interest to the beneficiaries for this time period. If there is a beneficiary that resides outside of Canada, an NR4 return must be filed and the non-resident withholding tax (Part XIII Tax) must be submitted to CRA. An NR4 slip must be sent to the beneficiary. Distributing Assets If there are estate assets or estate funds available to be distributed to the beneficiaries, the personal representative should provide each beneficiary with an estate accounting and a release. The estate should not be distributed until a signed release is received from every beneficiary. If the personal representative is not able to obtain releases from all beneficiaries, an application should be made to the Court to have the accounts approved. Where a beneficiary is under the age of 18, the personal representative should obtain a signed release from the legal guardian. The share that is payable to the infant beneficiary is then held in trust according to the Will or transferred to Children s Services at the PGT to be held in trust (see Public Guardian and Trustee website). 10 3123_If You Are Considering.indd 10
Fees A personal representative is entitled to charge a fee for work done. The fee is based on the amount of time spent and the responsibility involved. You should discuss this with your lawyer. Your lawyer will also charge a fee. This should be discussed at the first interview and you should ask for a written statement listing the fees. Legislation The Administration of Estates, The Intestate Succession Act, and The Dependants Relief Act can be viewed from the PGT website. Forms Forms for the application to Court are contained in the Queen s Bench Rules of Court. The forms contained in this booklet can be viewed on the PGT website. Questions You may have other questions about estate administration. You can check the PGT website for further information. If you do not obtain the answer there, you should then discuss the matter with your lawyer. This booklet is a summary and a guide based on the law. It is not as comprehensive as the law itself. It is not legal advice. If, after reading this booklet, you have questions or are uncertain about how to interpret the information, you should consult with a lawyer. 11 3123_If You Are Considering.indd 11
Contact Information Public Guardian and Trustee of Saskatchewan 100-1871 Smith St. Regina, Saskatchewan S4P 4W4 Telephone: (306) 787-5424 Toll Free: 1-877-787-5424 Fax: (306) 787-5065 Email: pgt@gov.sk.ca Website: www.justice.gov.sk.ca/pgt Office Hours: Monday through Friday, 8:00 a.m. to 5:00 p.m. (Closed for the noon hour and holidays) 12 3123_If You Are Considering.indd 12
3123_If You Are Considering.indd 13
3123_If You Are Considering.indd 14