A. The Executor’s Year
Generally, the executor cannot be compelled to pay any legacy before the expiration of one year from the date of obtaining the grant of probate or administration. Therefore, it has become the custom to allow executors at least one year to gather in the assets and settle the affairs of the estate. This is called the executor’s year.
B. Legislation Affecting Transfers
(i) Will variation claims
Division 6 of Part 4 of WESA allows a spouse or a child of the deceased to commence an action where the will fails to adequately provide for their maintenance and support. Section 61 of the WESA changes the limitation period from six months to 180 days from the date the representation grant is issued, and requires service of the Notice of Civil Claim on the executor of the will within 30 days of the expiry of the 180 day period.
Under s. 12 of the Wills Variation Act, the personal representative cannot distribute any part of the estate to any beneficiary until the six-month period following the grant of probate has expired, unless everyone entitled to apply under the act consents, or the court authorizes it. Under section 69 of WESA, title to property transferred to a beneficiary cannot be registered without the consent of the beneficiaries or the court's approval before the expiry of 210 days from the grant of probate.
There is always the possibility that a spouse or child has filed but not served a Notice of Civil Claim, so a search of the court registries and the Land Title Office for a Certificate of Pending Litigation may be warranted. You should explain this to your clients and seek instructions.
(ii) Income Tax Act
A personal representative is personally liable to the extent of the assets in the estate for all unpaid taxes, interest, and penalties (Income Tax Act, s. 159). Therefore, the personal representative should postpone distribution of the estate assets until they are certain of the amount of taxes, interests, and penalties that are owing. This is usually accomplished by obtaining a certificate from the Canada Revenue Agency certifying that all taxes, interest and penalties that have been assessed have been paid or arrangements for payment have been secured. This certificate is commonly referred to as a “tax clearance certificate”.
Alternatively, the personal representative may determine what the tax liability will be and hold back sufficient funds to pay taxes, while making interim distributions to the beneficiaries. The clearance certificate is still required but distribution can be hastened for the benefit of the beneficiaries.
If proceeding in this manner, personal representatives should obtain written confirmation of the tax liability from their tax advisor to justify the holdback amount. The personal representative should also obtain a signed indemnity agreement from the beneficiaries to reimburse for taxes.
Income tax filings are discussed in the section “Tax Consequences.”
(iii) Other transfers
Under s. 74 of the Estate Administration Act, the surplus of an estate may not be distributed for one year following the date of death unless the portion being distributed is for a dependant of the intestate deceased and such distribution is being made either as a result of a court order or as a result of the exercise of the discretion of the Public Guardian and Trustee of BC.
Under s. 155 of WESA, a personal representative must not distribute the estate within the 210 days following the issuance of a representation grant except with the consent of all the beneficiaries and intestate successors entitled to the estate or by order of the court.
C. Transfer Procedures
Once the grant of probate or administration has been obtained, the process of transmission and transfer of assets may begin, subject to the limitations set out above. The documents and procedures for transmitting or transferring various types of assets to the personal representative and ultimately to the beneficiaries are detailed in the British Columbia Probate and Estate Administration Practice Manual (Vancouver: CLE).
Recommended further reading to complete this module:
BC Probate and Estate Administration Practice Manual (looseleaf, The Continuing Legal Education Society of British Columbia). At §10.18 to §10.32, there is more information about the transmission and transfer of interests in real property in estate matters.
Court certified copies of the grant and office copies of the disclosure statement are often required for transmission and transfer of registered assets such as real property, stocks, vehicles, etc. Certified copies can be obtained from the court by request and upon payment of additional fees. Tables summarizing the documents required for various asset transfers are set out in the Probate and Estate Administration Practice Manual.
Transferring real property is common. In order to transfer the title of real property into the name of the personal representative, obtain court certified copies of the grant and the disclosure statement showing the real property. The registry will provide both upon request (usually in your Requisition when filing your application for the grant). In addition to these two documents, complete a Form 17 (Land Title Act) and a “Special” Property Transfer Tax form which allows the personal representative to claim an exemption from land transfer tax for a principal residence, a recreational property with a value of not more than $275,000 or a family farm or other properties specified in the regulations. The property will then be registered in the name of the personal representative as executor or administrator of the estate of the deceased. The personal representative can then transfer the property on sale or directly to beneficiaries according to the will.