Background
An Estate Trustee obtains his/her authority from a Will. Some banks and financial institutions may consider the Will to be sufficient to allow them to accept the instructions of the Estate Trustee for distribution of Estate funds. However, the first question that could be asked is how a bank, or a financial institution would know that the Will being presented is the “Last Will” of the deceased. It is only the Last Will that has authority and so if there is a later Will, the one presented would have no authority in law.
The most stringent requirement for accepting a Will as the “Last Will” is the probate of a Will. The word “probate” means that the Will has been filed with the Court. Ultimately, the Court will provide other potential holders of a Last Will an opportunity to file a later one. This is because the Court ultimately issues a document, entitled Certificate of Appointment of Estate Trustee With a Will. In other words, before issuing the Certificate, the Court requires that notice of the probate application must be given to all beneficiaries under the Will. The concept is that if someone has a newer Will, they will present it to the Court, but if they do not do so, then the Certificate is granted pursuant to the application.
Once the Certificate is issued, banks and financial institutions can rely on the Certificate. In other words, if they pay out money pursuant to a Certificate they cannot be found to have paid it out incorrectly.
The Certificate is also a necessary document if one is to transfer land, because it is the Estate Trustee that places his/her signature on the transfer document, and the authority for their signature is derived from the Certificate.
Filing an Application for a Certificate of Appointment of Estate Trustee
This procedure, when completed, has significant legal authority. Thus, there are a number of technical steps in the process. Not only in the form, but in the reporting of the funds of the Estate. There are specific rules, and interpretation of these rules, that require skills and experience to understand. Thus, although it is theoretically possible for an Estate Trustee to probate a Will without a lawyer, the skills and experience of a lawyer in the completion and filing of materials can make sure that the process moves quickly, and smoothly. The Courts that issue these documents are very particular, and if mistakes are made, it can delay the process by weeks or months. The costs of this process is paid for from the funds of the Estate.
If mistakes are made in the filing of the documents, not only can there be delay, there can also be other additional charges imposed by the Ministry, for not reporting or paying funds as the stipulated rate.
If the Estate is relatively small (a few thousand dollars), it may be possible to avoid probating the Will. In these situations, a letter from a lawyer to the bank may assist in the bank’s reliance on the Will presented with the letter.
Distribution of Estate Funds
The Estate Trustee has an onerous responsibility. They are what is called a “financial trustee” having fiduciary obligations. They have duties imposed on them by law. If they do not follow those duties, they can suffer significant penalties.
One of the duties is to treat all beneficiaries in a fair and equal manner. The Trustee is not to show any preference, and has to report to the beneficiaries what has occurred.
A lawyer that is engaged by the Estate Trustees, to report to the beneficiaries, will do so in their usual and standard approach. This not only gives some protection to the Estate Trustee, but also can very much put the beneficiary at ease in terms of everything being completed properly. This is especially important if the Estate Trustee is close to one of the beneficiaries but not so close to the other. For example, if the Estate Trustee is closely related to one of the beneficiaries (such as that beneficiary being his/her spouse) and the other beneficiary is for example, a sibling of their spouse, then one could say that any decision made by the Estate Trustee is going to be made in favour of the close relative to the Estate Trustee. To offset this possibility, or even argument or feeling by the other beneficiary, a lawyer reporting in the standard and usual form to both beneficiaries on behalf of the Estate Trustee may put the not so closely related beneficiary at ease.
The cost of providing this type of assistance to the Estate Trustee is paid ultimately by the Estate. The Estate Trustee could choose to bill the Estate. Reasonable fees for their time and services, and if they did so, any external expenses, such as for lawyers or accountants could be part of the bill. The Estate Trustees, in many situations, do not actually bill an additional amount for their time or services but bill for the professionals that they have engaged. If the Estate Trustee billed the Estate for compensation greater than the costs incurred, Canada Revenue Agency would consider that a fee or money generated as income in the calendar year in which it is paid. Thus, the Estate Trustee would have to pay taxes on the portion that is for fees for his/her services.
Detailed Obligations of Estate Trustee
There are many specific tasks that Government agencies would like Estate Trustees to have completed, the most major of those being Canada Revenue Agency requiring the Estate Trustee to arrange for the payment from the Estate the taxes that are due. There is a return that is done up to the date of death. There is also an Estate Information Return that is to be completed and submitted to the Minister of Finance. Professional assistance, from lawyers and accountants, in completing these documents can be very crucial. If a mistake is made, the Canada Revenue Agency does not pursue the funds from the beneficiaries that receive the money, but instead pursues the outstanding taxes from the Estate Trustee of the Estate. This situation must be avoided.
Numerous other Government agencies wish to receive notice and documentation related to the deceased. This would include Ministry of Health, Ministry of Transportation etc. To avoid fraudulent use of identification, the Ministries want to know about the death, and want to receive the original documents back. An Estate lawyer will have the addresses and particulars for sending these materials, and can do it with support staff in a very cost effective and efficient manner. This avoids a lot of challenges for the Estate Trustee.
In Conclusion
An Estate lawyer can be of great assistance to a Estate Trustee to make sure that things go smoothly, that the various steps are taken, and that funds are distributed appropriately. They can also assist in making sure that the Estate Trustee is not going to be accused by other family members of having not done things properly. An Estate lawyer is often seen by other members of the family, or other beneficiaries, as a neutral making sure that things are done correctly. An Estate lawyer is paid from the Estate funds and ensures what would be a fair, proper and balanced distribution of the Estate, pursuant to the Will.
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