DEALING WITH ASSETS

From Executor Guide for British Columbia
Jump to: navigation, search

Small Estates

There is no probate fee for estates of less than $25,000.

When the Wills, Estates and Succession ACT (WESA) was originally drafted it proposed a new class of “Small Estate” subject to special rules. When the new probate rules were drafted they effectively dealt with smaller estates without needing a separate regime. Click here for more.[1]

Making an Inventory

Listing the Estate Assets and Liabilities

For a step-by-step plan on how to list the estate assets and liabilities, click here. These steps apply to many estates in British Columbia, but some of them may not apply to the estate that you are administering.

For valuation of estates involving overseas assets or business assets, you will likely need to hire an accountant.

Assets that have not been left to particular beneficiaries but are going into the residue of the estate will be sold and the profits divided among beneficiaries. For household goods, an auctioneer may make an informal and cursory appraisal and conduct an estate auction, leaving the profit for the estate.

If you are transferring unsold assets, you may need to value them. In valuing investments for tax purposes you need to calculate the capital gain: the amount it is worth at the time of death, less the initial purchase cost. It may be necessary to hire an accountant. If the assets include jewellery or assets for which the value is uncertain, you may also need to get a professional appraisal.

How to List the Estate Assets and Liabilities

  1. Record all the expenses you incur in being executor, including funeral expenses.
  2. Arrange with the deceased’s bank or financial institution to view and list the contents of the safety deposit box.
  3. List all the banks or financial institutions where the deceased had accounts or loans. Include the account numbers. For each account, request the balance and the interest accrued to the date of death. Collect any bank books, cheque books, or statements of account, current to the date of death.
    1. Note that accounts may include lines of credit, credit cards, term deposits, tax-free savings accounts, registered retirement savings plans, and registered retirement income funds.
    2. Also note that account statements may be provided online or via e-mail.
  4. List all securities, stocks, or bonds owned by the deceased. Obtain the market value at the date of death.
  5. List all real estate that the deceased owned alone or with others. Also list any mortgages or agreements for sale that the deceased held or owed. Provide the full addresses of all properties. Have appraisals done, as of the date of death, on any properties that were not jointly owned.
  6. List all estate income that will be received after the date of death. This may include cheques for pensions, deferred profit sharing plans, dividends, interest, salary, or any repayments or refunds owing to the deceased.
  7. List any business assets or corporate shares owned by the deceased. Obtain appropriate valuations.
  8. Identify all people and businesses who owed money to the deceased. Provide any details you can of the nature of the debt and the amount owing.
  9. List any other assets, including cars, boats, household goods, jewellery, electronic equipment, collections such as coins or art, and other personal effects. Describe or photograph them (note serial numbers where possible). Estimate values. Discuss with your lawyer whether any of these are excluded assets for the purposes of the Family Law Act. (Excluded assets for the purposes of the Family Law Act, S.B.C. 2011, c. 25, s. 85, are assets that are not shared family assets but belong to one spouse alone. This may include such things as property owned by one spouse before the relationship began, or a family heirloom inherited by one spouse.)
  10. List all outstanding debts and liabilities of the deceased, including balances owed for taxes, utilities, and rent or property management.
  11. List any agreements or court orders to which the deceased was a party, or under which the deceased was liable. This might include divorce decrees, maintenance orders, marriage agreements, Family Law Act orders (or earlier orders under the Family Relations Act), guarantees, buy-sell agreements, partnership agreements, leases, employment contracts, and insurance owned by the deceased on the life of another.

Accounts at Banks or Financial Institutions

The will-maker may have had chequing or savings accounts at financial institutions or held assets in safety deposit boxes at financial institutions. Search for statements and account numbers.

For a safety deposit box, you will need the key. A bank representative will want you to make an inventory of the contents and leave that list in the box, then you may remove any contents.[2]

Contact the branch. There may be an individual at that branch who deals with accounts of deceased clients, and if not, they can refer you to their head office where they will help you. Typically they will want to see a certified copy of the grant of probate, and then they will transfer the name on the account into the name of the estate or of the executor. If you are not planning on applying for probate, perhaps due to the small size of the estate, the financial institution may have other forms or processes they require before they can release the assets.

If any accounts are held jointly, ensure that the joint account holder has not withdrawn all the funds, unless that was the will-maker’s wish.

There may be a need to keep accounts open temporarily. If there are payments that must continue to be made from current accounts (such as payments for utilities or mortgages for real property assets), ensure that there continue to be sufficient funds in the accounts until these matters are finalized or the assets are sold. If there are rent, annuity, or other payments being deposited, keep the accounts open or advise the payor where to redirect payments.

If there is no need to maintain these accounts, then close them.

Investments

If the estate includes securities, such as stocks, bonds, or mutual funds, you should check with the company holding the securities about how to transfer or sell the securities. You may have to apply for probate in order to transfer them, depending on the requirements of the account holder(s). Depending on the nature of the investment assets and the needs of the beneficiaries, it might be helpful to seek the advice of a lawyer, accountant, or tax planner before you transfer the assets.

Some investment assets may have restrictions or tax consequences on transferring them. For example, transferring funds might impute capital gains to the recipient, gains that could be avoided if the transfer were delayed or the assets were held in a more tax-effective way.

If there are rollover dates, such as for GICs or investments that mature at particular dates, take note of the maturity dates and any penalties for liquidating the assets before or after the key dates. Be careful to avoid penalties where possible, so as to be prudent and maximize the estate value.

If you need to reinvest before you can distribute estate assets, be careful to choose prudent investments. You may be personally liable if you make imprudent or unreasonable choices and the estate loses money or incurs unnecessary penalties.

The Trustee Act[3], (ss. 15.1-15.6) sets out the basic guidelines for investment by a trustee or an executor. A trustee is expected to exercise the care and skill that a prudent investor would exercise. A trustee is not personally liable if the investment suffers a loss so long as the investment strategy was reasonable and one that a prudent investor would follow. A trustee may delegate investment authority to an advisor where doing so is reasonable and prudent.

The securities may also have a designated beneficiary, so they would go directly to that person and not be part of the estate assets at all.

Real Estate

A will-maker might hold real property assets or a charge on title (such as a mortgage or judgment). A search at the Land Title and Survey Authority of BC(LTSA)[4] will produce a state of title certificate. This search can be done in person at the Land Title Office that holds records for the area where the property is located, or it can be done by a lawyer.

If the will-maker held title to property, find out find out how the title to these assets is held. If the deceased held title as a joint tenant then the other surviving joint tenants still own the entire property. Joint tenancy includes what is called a right of survivorship, meaning that if one joint tenant dies then the property continues to be fully owned by the surviving joint tenants. Often spouses will own a home as joint tenants, so that when one dies the other becomes the sole owner of the entire property.

If the property is held by a surviving spouse as a joint tenant and that spouse is living there, the property passes outside the estate and there are no concerns about the estate having to sell it or manage it.

That is different from being tenants in common, where each owner owns a portion of the property. When one joint tenant dies the share owned by that person is held by the deceased’s estate, and then may be transferred in the will or sold.

If the deceased was the only owner, or if the deceased owned property as a tenant in common, find out who is living there now, if anyone, and what share the deceased owned. Until the property is sold or transferred, ensure that there continues to be insurance coverage and that utility payments are being made. If there is no one occupying the property, check into the terms of any homeowner insurance, which may require that the property not be left vacant for a month. If the property is unoccupied, inform the police.

Land Title Act Provisions
The Land Title Act[5], Part 17, covers transmission of ownership after an owner dies. For joint tenants, the Land Title Office will register a transfer of title from one joint tenant to a surviving joint tenant upon filing the deceased’s death certificate, or the certified copy of the grant of probate (Land Title Act, s. 269).

In other cases of transferring real property after the death of the owner, the executor must file a certified copy of the grant of probate with the Land Title Office (Land Title Act, s. 266(5); WESA, s. 122). The executor may also be required to file a portion of the affidavit in Form P3 or P4 that correctly describes the land parcel in question, although the Registrar of Land Titles may dispense with that requirement (Land Title Act, s. 266(6)). An executor who applies to the Land Title Office to discharge a mortgage must also file the certified copy of the grant of probate (Land Title Act, s. 267).

The executor has all the power the will-maker had over the land, whether the will-maker held title to the land or held a charge on title. Once the executor is registered in the LTO as taking the will-maker’s place on title, the executor has the power the will-maker had (Land Title Act, s. 264).

Foreign Assets

If the will-maker owned assets in another province or another country, consult a lawyer who can advise you as to tax requirements or restrictions on selling assets in that jurisdiction.

Collections and Miscellaneous Assets

If you are not sure of the value of any of the will-maker’s assets, or whether there is any value, seek professional valuation before you liquidate them. For example, if the will-maker collected art, stamps, coins, jewellery, books, comics, or other memorabilia, the value of the assets may not have been known to the will-maker or even to other family members.

If you are not sure of the value of any assets, get an appraisal.

Controlling and Preserving Assets

These suggestions for safeguarding assets apply to many estates but may not all apply to the estate that you are administering. This list doesn’t include all possible assets, so keep in mind that there may also be other assets in the estate that you are administering, assets that require protection.

Suggestions for Safeguarding Assets

  1. Search for cash, insurance policies, securities, jewellery, and other valuables. Arrange for their safekeeping.
  2. Cancel the deceased’s credit cards.
  3. Lock up the deceased’s residence, if it is not occupied. If it is vacant and not being supervised, tell the police.
  4. Arrange for an immediate inventory of all the deceased’s personal assets.
  5. Check the insurance on the deceased’s assets (e.g., house, furniture, motor vehicle). Check the expiry dates and check the vacancy provisions to ensure that the coverage continues (most home insurance limits vacancy to 30 days). Notify the insurers of the death, and ask about a vacancy permit if the property will continue to be unoccupied.
  6. Arrange for interim management of the deceased’s business.
  7. Collect and deposit any outstanding cheques (e.g., pensions, dividends, interest, salary).
  8. Cancel subscriptions or redirect mail, if necessary.
  9. Check for mortgages (and determine if they are life-insured) and agreements for sale, and make the payments to keep them up to date.
  10. Check leases and tenancies. If the deceased had tenants, tell the tenants where to send rent payments, and give notice of termination if necessary (make sure that you check the terms of the lease and the relevant laws).
  11. Review the last cheques written by the deceased to ensure that there were no irregularities.
  12. Apply for Canada Pension Plan Death Benefits.

For information about Canada Pension Plan death benefits, contact Service Canada at http://www.servicecanada.gc.ca/eng/home.shtml or call 1-800-277-9914. If you are mailing documents to Canada Pension Plan, the address is PO Box 1177, Federal Building, Victoria, BC, V7W 2V2.

Assets Passing Outside a Will

Life Insurance

Contracts of life insurance permit the insured to designate a beneficiary to receive the insurance proceeds when the insured dies. The insurance proceeds do not become part of the deceased’s estate and are not included in the assets calculated for probate.

An insured can designate more than one beneficiary to receive the insurance proceeds. If one beneficiary has predeceased the insured, the other surviving beneficiaries will receive the proceeds when the insured dies. If there are no surviving beneficiaries, the proceeds are paid to the insured’s personal representative.[6]

The Insurance Act [7] identifies possible conflicts that could arise between beneficiary designations in a will and a contract of insurance.

Conflicts Between Insurance and Wills

The insured might also describe life insurance in his or her will and identify a beneficiary to receive the proceeds. If that will turns out not to be valid, the designation of beneficiary may still be valid.

If the insured made a will leaving life-insurance proceeds to a particular beneficiary, and then after the date of the will files a designation with the insurer designating a different beneficiary, the later designation is effective and the designation in the will is not.

Designation in will
61 (1) A designation in an instrument purporting to be a will is not ineffective by reason only of the fact that the instrument is invalid as a will, or that the designation is invalid as a bequest under the will.

(2) Despite the Wills, Estates and Succession Act, a designation in a will is of no effect against a designation made later than the making of the will.
(3) If a designation is contained in a will and subsequently the will is revoked by operation of law or otherwise, the designation is revoked.
(4) If a designation is contained in an instrument that purports to be a will and the instrument, if it were valid as a will, would be revoked by operation of law or otherwise, the designation is revoked.

Real Property

Joint tenancy includes what is called a right of survivorship, meaning that if one joint tenant dies then the property continues to be fully owned by the surviving joint tenants. In the case of joint tenancy, the title passes outside any will, and the asset is not valued as part of the estate for probate purposes. The title can pass by filling out a form at the Land Title Office and presenting the death certificate.

Often spouses will own a home as joint tenants, so that if one dies the other spouse becomes the sole owner of the entire property. Sometimes a parent and child will own a home together as joint tenants, so that the child continues to own the home after the death of the parent, without any sale or transfer of title.

Real property that is not owned in joint tenancy passes into the deceased’s estate and is treated like any other asset of the estate. The executor as trustee will “own” the property until it passes to the beneficiary.[8]

Designated Beneficiaries

Benefit plans, pensions, TFSAs, RRSPs and RRIFs

Some benefit plans allow the plan holder to designate a beneficiary of that plan.[9] Such plans could include workplace benefit or pension plans, TFSAs, RRSPs, or RRIFs.

If the deceased had such a plan, the deceased may have already designated a beneficiary by completing a form and submitting it to the plan administrator. The deceased may also use the will to designate a beneficiary[10] who will receive the benefit of the plan.

If the deceased had such a plan at work or through a financial institution, contact the plan administrator about paying the plan benefit to the designated beneficiary.

If the deceased paid into the Canada Pension Plan,[14] advise your local Service Canada office of the pensioner’s death. There may be CPP death benefits, orphan benefits, or survivor benefits or death benefits payable to the deceased’s spouse or children. Note that any CPP or old age security cheques for the month after the month in which the person died must be returned uncashed.

Survivor benefits[15] are paid to the person who was married to the deceased, unless the deceased had a common-law partner at the time of death, in which case the benefit is paid to the common-law partner.

Check with the deceased's employer about any workplace pension benefits and any insurance that may include death benefits.

Wages

The wages owing to a deceased worker will be payable to the surviving spouse. If the employer is uncertain about whether a person claiming to be the spouse is entitled, that spouse can provide an affidavit saying that he or she is the only one entitled.[16]

Resources

Online Resources

Legislation

Regulation and Forms

References

  1. “Wills, Estates and Succession Act and Probate Rules Questions and Answers” at www.ag.gov.bc.ca/legislation/shareddocs/wesa/qa.pdf [1]
  2. WESA, s. 183
  3. Trustee Act [2]
  4. LTSA [3]
  5. The Land Title Act Land Title Act, R.S.B.C. 1996, c. 250, Part 17
  6. Insurance Act, S.B.C. 2012, c. 1, s. 63(1)(c) WESA, s. 91
  7. Insurance Act, S.B.C. 2012, c. 1, s. 61 [4]
  8. WESA, s. 162 [5]
  9. See “Part 5: Benefit Plans,” in WESA, ss. 84-100 [6]
  10. WESA, s. 85 [7]
  11. WESA, s. 95 [8]
  12. WESA, s. 86 [9]
  13. WESA, s. 91 [10]
  14. canlii.ca/t/7vfd
  15. Canada Pension Plan, R.S.C. 1985, c. C-8, s. 1 (Definition of “survivor”)
  16. WESA, ss. 176-178 [11]
  17. Land Title and Survey Authority of BC (LTSA)