Checklists, both for you and your client, are the most effective ways to gather information. The Law Society has many Practice Checklist Manual available on its website. It is a good idea to use these checklists to design a list of information that you would like the client to obtain before the first meeting. A list of information to collect is available on the table of contents page for this module.
The personal representative’s checklist is also available on the table of contents page for this module.
A. Locate Documents
You will require the following documents:
- Original will(s), codicils and any documents incorporated in the will by reference.
- Death certificate from the Director of Vital Statistics.
- Wills Notice search for all names used by the deceased.
- Land Title search if deceased is believed to own real property.
- Income tax returns and Notices of Assessment for previous year to ensure taxes have been filed up to date.
- CPP death benefit information.
- Life insurance information, if any.
- Details of bank and investment accounts including RRSP and RIF accounts.
- Ascertain possible designated beneficiaries outside of the estate.
You should check the will and codicils for any alterations or erasures and to ensure that it was properly executed according to the Wills Act or s. 37 of WESA. Note that s. 37 (2) of WESA may provide some leeway to the formal requirements of execution of a will, including permitting the court to make an order curing deficiencies pursuant to s. 58.
Review all gifts in the testamentary documents to ascertain if any are void, revoked, or lapsed. For example, under s. 16 of the Wills Act and s. 56 of WESA, a gift to a spouse may be void if there was a judicial separation or the marriage was dissolved after the will was written. Under s. 11 of the Wills Act or s. 43 of WESA, a gift in the will to an attesting witness or to the spouse of an attesting witness may be void. Note that s. 43 of WESA provides that upon application the court may declare that a gift to a witness or the spouse of a witness is not void if the court is satisfied that the will-maker intended to make the gift to the person even though the person was a witness to the will.
If there is no valid will, the deceased is said to have died "intestate". In this case, the estate must be dealt with under the rules for intestacy, which are set out in Division 1 of WESA. Under WESA, a spouse’s entitlement on an intestacy has increased to include the first $300,000 and half of the remainder of the estate if the deceased and the spouse had descendants in common. That amount will be reduced to $150,000 and half the remainder of the estate if the deceased’s descendants are from another relationship. It is important to review the transitional provisions of WESA to determine whether Part 10 of the Estate Administration Act applies if the deceased died prior to March 31, 2014.
Without a will to appoint a personal representative, the court will give priority to the person(s) set out in s. 130 of WESA (or s. 6 of the Estate Administration Act) for appointment as the administrator. The person applying to be the administrator must give notice of application to all those with equal or greater entitlement to apply for the position, as set out in Supreme Court Rule 25-2(2).
Section 128 of WESA (sections 16 and 17 the Estate Administration Act) deals with the security requirements for applicants for administration of estates where a minor or mentally incapable person has an interest, or if the court so orders. In general, there is no need for bonding if all the parties who may be beneficially interested in the estate have consented in writing to dispense with it. A sample waiver is available on the table of contents page for this module.
If all parties do not, or cannot, sign a waiver, the applicant may need to obtain a bond as part of the order granting letters of administration. Bonds can be expensive, depending on the value of the assets in the estate. Occasionally, you may have an unwilling beneficiary who will not consent to the appointment of an administrator without posting a bond. If the court requires the bond, you can obtain bonding through an insurance broker.
B. Prepare an Inventory
Make an inventory of assets and liabilities. This will form the foundation for information to be listed in the disclosure statement that accompanies the application for a grant of probate or administration. (More information on this topic can be found under the heading “Grant Applications – Probate and Administration”.) A sample inventory is available on the table of contents page for this module. This is a good time to consider whether you should be creating a separate folder for each asset. You might find that some assets, such as RRSPs, life insurance policies, bank accounts and real estate, are best organized in separate folders so that the correspondence relating to that asset (which can be voluminous) can be readily found. If you do, then you should make a list of each folder on the front of the main file, as a quick reminder of the key estate assets.
Make two separate lists: one for assets passing with the estate; one for assets passing outside the estate.
The inventory should include the accurate value of all assets and liabilities of the estate. You should have a list of all assets that will be passing into the estate and those that pass outside of the estate, such as joint tenancy interests in real estate, vehicles and other personal property, RRSPs, RIFs, etc. The inventory will be helpful when preparing accounts of the executor or administrator, filing an income tax return, and for considerations relevant to wills variation applications.
Different laws may apply if the deceased owns property located outside of British Columbia. This module does not address this issue in detail, but you should become familiar with the law dealing with this situation.
Liabilities include debts of the deceased. These should be included in the inventory and reported in the disclosure statement with the application for probate or administration. The personal representative may be held personally liable for debts of the deceased that are not discharged. However, this liability is only to the extent of the assets that come into the personl representative's hands. For example, if a personal representative takes in $100,000 of estate assets and distributes them without fully ascertaining the debts owed by the deceased, the personal representative may be held personally liable for up to $100,000 of unpaid debt.
Careful personal representatives will advertise for persons who may have a claim against the estate. This protects against later claims they did not know about.
When advising your clients, be sure to point out the need to protect themselves by advertising for creditors and claimants of the estate. Section 154 of WESA provides that a trustee may publish a notice once in the Gazette requesting claimants against a deceased's estate to present their claim within a specified period (not less than 30 days from publication). If a claimant does not give notice against the estate, and distribution occurs following the publication notice period, the claim will be unenforceable against the trustee unless the trustee had actual or constructive notice of the claim.
Care should always be taken in describing debts of the estate in the inventory. If the value of a debt is disputed or not ascertained, it should be included in the inventory (and ultimately in the probate disclosure statement) as "not yet determined". Probate Fees are calculated on the gross value, before deduction of Part III expenses. In an administration application, consent is required from all creditors whose debts are not discharged prior to the application. Consent will probably need to be obtained from credit card companies, utility providers, vehicle leasing companies, and others.
Questions always arise as to when and how to properly value the assets. The date of death is the relevant date for valuation. Other dates may be relevant for other purposes, such as calculation of capital gains.
An acceptable valuation for real estate is the most recent notice of assessment from the BC Assessment Authority. Alternatively, you may engage a real estate appraisal service to professionally appraise the value. In either case, when reporting the asset in Part I of the disclosure statement, you will have to state what method was used to value the property.
The notice of assessment value is likely to be lower than an appraised value, although these should be scrutinzed bearing in mind current market conditions. If you use the lower value, thinking the estate may save money by not incurring the expense of a professional appraiser or by paying lower probate fees, you may encounter tax problems later. If the property is sold at a higher price, the difference between the reported value and the actual sale price yields a much larger gain, which could be taxable as a capital gain for the period after the residence ceases to be the primary residence of the deceased. In short, be aware of creating increased tax burden when selecting the method to value assets. You should always recommend that your client seek the advice of a tax accountant when making decisions that affect the dates and values of assets. If this becomes an issue, a supplementary affidavit can be filed and additional probate fees paid.
It may be difficult to value other personal property, such as coin collections, artwork, antiques, jewelry, motor vehicles and firearms. In such cases, professional appraisers (such as auction appraisers or merchants) can be consulted for evaluation.
The applicant for probate has a duty to be accurate so the court can properly assess probate fees. The personal representative also owes a duty of fairness to the beneficiaries. If any tax consequences arise from the transfer, disposition, or realization of estate assets, there must be an accurate baseline from which to assess taxes.