Receiving a Grant of Probate from the BC Supreme Court is an important milestone in administering an estate. For most executors, however, it is not the end of the process.
The Grant of Probate confirms the executor’s legal authority to deal with the deceased’s estate. With the grant in hand, the executor can generally begin collecting and transferring assets, paying outstanding debts and expenses, addressing the deceased’s tax obligations, and preparing the estate for distribution to the beneficiaries.
Exactly what happens next will depend on the estate, but there are several steps that most executors in British Columbia can expect to encounter. Best to consult with a probate lawyer after reading this summary though, as there are many traps executors can unknowingly fall into.
Using the Grant of Probate to Deal With Estate Assets
Before probate is granted, banks and other institutions may restrict access to assets held solely in the deceased’s name. One of the main purposes of the Grant of Probate is to provide those institutions with formal confirmation that the executor has authority to act for the estate.
Once the grant has been issued, the executor can provide copies to banks, investment companies and other institutions holding estate assets. The grant may also be required when dealing with real estate registered in the deceased’s name.
The executor can then begin collecting, transferring or otherwise dealing with those assets as part of the administration of the estate.
Opening and Using an Estate Bank Account
In many estates, the executor will use a dedicated estate bank account to hold money belonging to the estate.
Funds collected from the deceased’s bank accounts, investments, the sale of assets and other sources can be deposited into the estate account. Estate expenses, debts, taxes and eventual distributions to beneficiaries can then be paid from the same account.
Keeping estate funds separate from the executor’s personal finances is essential and also makes it much easier to maintain an accurate record of everything that has come into and gone out of the estate.
Paying the Estate’s Debts and Expenses
An executor is responsible for dealing with the deceased’s outstanding debts and the expenses associated with administering the estate before making the final distribution to beneficiaries.
Depending on the circumstances, these may include credit cards, loans, funeral expenses, professional fees, property expenses and other amounts owing at the time of death.
Executors should be careful not to distribute the estate before they are reasonably satisfied that its debts and liabilities have been addressed. If there is uncertainty about whether additional creditors may exist, legal advice can be helpful in determining whether further steps should be taken to identify potential claims against the estate.
Dealing With the Deceased’s Taxes
Tax matters are another important part of estate administration and can continue well after probate has been granted.
The executor will generally need to ensure that the deceased’s final personal income tax return is filed. Depending on the circumstances, additional tax returns may also be required for income earned by the estate after the date of death.
For example, an estate may continue to earn interest, investment income or rental income while it is being administered.
Should an Executor Wait for a CRA Clearance Certificate?
Before making a final distribution, an executor will often apply to the Canada Revenue Agency for a clearance certificate.
A clearance certificate generally confirms that the CRA has assessed the relevant returns and that amounts for which the executor may be liable have been paid or secured.
This is an important protection for executors. If an executor distributes estate assets and an unpaid tax liability is discovered afterward, the executor may face personal liability for amounts that should have been paid before the estate was distributed.
For that reason, obtaining appropriate tax advice and considering whether a clearance certificate is required are important steps before completing the administration of an estate.
Understanding the 210-Day Period After Probate
One of the most important timelines for executors to understand involves potential wills variation claims.
Under British Columbia’s Wills, Estates and Succession Act (WESA), a spouse or child of the deceased may apply to the court to vary a will if they believe the will did not make adequate provision for them.
A wills variation proceeding must generally be commenced within 180 days from the date the representation grant is issued.
There is also an additional period for the executor to be served with the proceeding. As a result, executors will commonly hear lawyers refer to a 210-day period following the issuance of the grant.
Can an Executor Distribute an Estate Before 210 Days?
Executors need to be particularly cautious about distributing an estate during this period.
WESA provides protections intended to preserve the estate while an eligible spouse or child still has an opportunity to bring a wills variation claim. Depending on the circumstances, an earlier distribution may be possible, including where the necessary consents have been obtained or the court has authorized a distribution.
However, distributing an estate too early can create significant risk for an executor if a claim is subsequently made.
For that reason, executors should obtain legal advice before making an early distribution rather than assuming that receiving the Grant of Probate means the estate can immediately be paid out.
Keeping an Accounting of the Estate
Good record-keeping is important throughout the entire administration.
An executor should be able to account for the assets received by the estate, income earned, debts and expenses paid, and amounts ultimately distributed to beneficiaries.
Keeping organized records from the beginning can make the final stages of administration much easier. It can also be particularly important if beneficiaries have questions about how the estate has been handled.
In some circumstances, an executor may need to provide a formal accounting or have their accounts reviewed and approved through a court process.
Distributing the Estate to the Beneficiaries
Once the executor has dealt with the estate’s assets, debts, expenses and tax obligations, considered any applicable claim periods, and is satisfied that it is appropriate to proceed, the remaining estate can generally be distributed according to the terms of the will.
The exact process will depend on what the deceased owned and what the will says.
Some assets may need to be sold and the proceeds divided among beneficiaries. Others may be transferred directly to a beneficiary. The executor may also need to deal with specific gifts of money or personal property before distributing the residue of the estate.
Before completing the final distribution, beneficiaries will also commonly be provided with information about the estate’s accounts and the amount they are entitled to receive.
How Long Does Estate Administration Take After Probate?
There is no single timeline that applies to every estate.
Even after probate has been granted, it can take several months to a year to complete the remaining administration. Executors may need to wait for tax matters to be resolved, assets to be sold or transferred, claim periods to expire, and other administrative matters to be completed.
A relatively straightforward estate may be completed within approximately a year to a year and a half of the deceased’s death, but more complicated estates can take considerably longer.
Estates involving disputes between beneficiaries, wills variation claims, businesses, foreign assets, difficult-to-sell property or complicated tax issues may take significantly more time.
Beneficiaries can understandably become anxious when an estate takes longer than expected, but a delay does not necessarily mean that the executor is doing something wrong. Executors have an obligation to administer the estate carefully, and sometimes that means waiting before making a final distribution.
Why Executors Should Be Careful About Distributing Too Soon
One of the more difficult parts of being an executor is balancing beneficiaries’ desire to receive their inheritance with the executor’s responsibility to protect the estate. Executors should be wary about distributing and estate too soon.
Once money has been distributed, recovering it can be difficult. If an executor distributes too much or distributes before an outstanding debt, tax liability or legal claim has been resolved, the executor could potentially face personal liability.
This is why receiving probate should not automatically be treated as permission to immediately divide the estate among the beneficiaries.
Before making a final distribution, an executor should be comfortable that the estate’s liabilities have been addressed and that any applicable legal and tax considerations have been properly dealt with.
Speak With a Probate Lawyer in British Columbia
Receiving the Grant of Probate is an important step, but there may still be significant work required before an estate can be fully administered and distributed.
At Westcoast Wills & Estates, our probate and estate lawyers assist executors across North Vancouver, Vancouver, Burnaby, Surrey, Richmond and surrounding communities throughout the estate administration process, from obtaining the initial grant through to dealing with estate assets, beneficiaries and the eventual distribution of the estate.
To get started or to learn more, contact our office to book a consultation today.
Disclaimer: The information in this blog is for general informational purposes only and should not be relied upon as legal advice. Please review our Privacy Policy.
