Estate Property (Probate Property)
The Estate Administration Act gives the executor the authority to take possession of the estate’s property—assets and liabilities—and distribute the property to the beneficiaries. The intent is to give the executor the same authority as the deceased person, had he or she been alive.
The property is first registered in the executor’s name (transmission) and then registered by the executor in the names of the beneficiaries (transfer). The executor must distribute all property of the estate as soon as practicable.
(Note: the term “personal representative” is the current legal term used to refer to an executor/executrix, administrator/administratix, and judicial trustee.)
Inventory and Valuation of the Estate Property (Probate Value)
The first step in this process is for the executor or administrator to take an inventory, and establish a value, of all property as of the date of death. This inventory is important:
- For the application for a grant
- As a checklist to ensure thoroughness
- To ensure all debts of the estate are paid
- To assist in preparing the terminal tax return by the executor
- For approval by the beneficiaries
- As a basis for determining probate fees, executor fees, and lawyer fees
Unless the property of the estate is minimal, the executor will likely need to use a qualified appraiser to establish the value of the assets.
The executor should record all changes to the inventory—sales, debt payments, investments, and distributions—during the course of administering the estate.
Estate Property Included
Assets and liabilities that form part of the estate include:
- Real property (real estate)
- Stocks and bonds
- Life insurance
- Pensions and other benefits
- RRSPs, RRIFs, and annuities
- Bank accounts and investments
- Motor vehicles, mobile home, boats, and aircraft
- Mobile homes
- Personal possessions
- Assets in foreign jurisdictions
- All debts due to, and owed by, the deceased
Each type of asset has different requirements for proof of ownership and transferring ownership.
Estate Property Excluded
Certain property may not form part of the estate, such as:
- Assets held in joint tenancy. This property transfers directly to the surviving joint tenant, such as real estate owned jointly by spouses.
- Assets with designated beneficiaries, such as certain insurance policies, pensions or retirement plans, CPP death benefits, RRSPs, and RRIFs.
- Depending on the amount of debt, assets that are designated in the deceased’s will as specific gifts.
- Assets of a bankrupt estate. These assets may be vested in a bankruptcy trustee and the executor has no further involvement.
Executors are responsible for settling any debts and liabilities of an estate before distributing the estate, otherwise they may be personally liable for those debts.
Debts typically fall into three main categories:
- Debts incurred by the deceased while alive
- Loans, credit cards, and utilities
- Continuing debts: certain spousal or child maintenance agreements, mortgages, and leases
- Contingent liabilities, such as an existing lawsuit
- Enforceable pledges made by the deceased to make gifts or donations
- Debts related to the death, most commonly funeral expenses
- Debts incurred by the executor: reasonable fees and expenses
The executor must undertake a thorough investigation of all of the deceased’s records, and contact all known creditors to determine outstanding balances. While it is not mandatory, the executor may also choose to advertise for creditors and claimants. Unless the estate is very simple and the executor is very knowledgeable about the deceased’s affairs, it would be prudent to advertise since the executor may be liable for those debts.