Wills & Estates
Administering an Estate
When someone dies, the assets they leave behind is the person’s " estate". The person who distributes the estate is called a "Personal Representative" or PR. To distribute the estate, the PR needs to obtain a "grant of probate" when there is a will and "letters of administration" when there is no will.
The PR has many duties. These include attending to funeral arrangements, payment of outstanding debts, obtaining the death certificate, obtaining a grant of probate, identifying all property, caring for the property, locating beneficiaries, notification of banks and insurance companies, filing tax returns and final distribution of the estate. In some cases the PR will also be in charge of administering any special trusts created in the Will. For example, where money is held in trust for several years on behalf of minor children or a handicapped adult child the PR will look after this money.
All expenses in administering the estate (including legal fees) are payable out of the estate. A PR is entitled to compensation for the time and effort they expend.
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How Long Does It Take
The time to fully probate an estate can be quite lengthy. Even in the simplest case, by the time property is distributed and final tax returns are filed and approved many months have passed. In complex estates, without considering any trusts, the time typically exceeds one year.
Estate administration is much quicker when the deceased has made a list of all their property. Contact people for all the assets and the names of others such as the accountant and stock broker are helpful. Old outdated documents can substantially delay estate administration. An old share certificate for a defunct company obligates the PR to engage in an often lengthy search to verify the exact status of the investment.
If you know that you are appointed as a PR, make your job easier by contacting the person who has appointed you to ensure that they make your job easy.
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Duties and Responsibilities
A PR must act fairly to all persons that have an interest in the estate including creditors, specific beneficiaries and residual beneficiaries. The PR must account for every transaction they perform. The beneficiaries must receive a detailed accounting. They can then object to any item and demand a further explanation or ask the court for a review.
The PR must maintain property until it is either sold or distributed. For example, if there is a house, the PR is responsible for looking after the house until it is sold. This can involve a substantial amount of time and effort.
Failure to perform can result in claims against the PR. For example, if the PR does not advertise for creditors or fails to pay debts and then distributes the estate, the creditors can pursue the debt against the PR personally.
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Liabilities
The Estate assets must be used to pay any outstanding funeral expenses, burial expenses, taxes, credit cards or other debt. Distributions to beneficiaries cannot be done until all debts are addressed.
What happens if there are not enough assets in the Estate to cover the debts? Only the Estate is responsible for the debt. If there is a shortfall, the PR cannot be forced to pay any of the debts. Likewise, beneficiaries or family members are not liable for debts. The only time the PR, beneficiaries, or family members can be liable is where they have improperly removed assets from the Estate. Even then, their liability only extends to the value of the property removed from the Estate. In other words, the liability rests with the Estate and assets can be traced to other persons.
Where debts remain unpaid even after liquidation of assets, those creditors will be left high and dry. The debts will remain unpaid and the deceased person may ruin their credit rating. Of course, this is a non-issue once they are deceased.
The PR can be personally liable where assets have been distributed to beneficiaries and all the claims or debts have not been paid. This can include debts or claims that are not even known until after distribution to beneficiaries. This is why we highly recommend placing an ad in the local newspaper with a notice to all creditors and claimants providing them a deadline for submitting their claim. Any claims arising after the deadline must still be paid out of Estate assets. However, if the Estate has been distributed the PR is no longer personally liable.
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Claims Against the Estate
It is highly recommended that every PR place a classified ad in the local newspaper for creditors and claimants. This notice provides a deadline for filing a claim. After the deadline has passed the PR is free to distribute assets without any worries about personal liability.
Notice the ad is for creditors and claimants and not just creditors. Often times, legal language uses several words to say the same thing. This is not one of those cases. A claimant is anyone having a claim against the Estate. This goes well beyond creditors. Claims against the Estate include everything from contractual claims to Civil claims. For example, someone may have a claim for injuries suffered at the hands of the deceased person through either a motor vehicle accident or a slip and fall at the deceased's home. There may also be a claim for work done for which no contract exists. For example, in one recent case, a neighbor claimed against an Estate saying he was promised something in the Will. He said he had done a lot of work in the deceased's home including building her a deck. She was on a fixed income and could not pay him. Instead, according to the neighbor, promised to leave him something in her Will. Since he had lots of evidence including receipts for all building materials, his claim was accepted.
Claims can surface long after the date of death. Hence, the importance of the classified ad providing a deadline for claimants and creditors.
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Trusts
A trust is created in a will when the testator specifies that certain property must be held by the estate on behalf of one or more beneficiaries. This usually occurs where there are minor beneficiaries.
The PR is usually responsible for the ongoing administration of any trust. However, a separate Trustee can be appointed in the will. The PR or Trustee must look after the assets, prepare accountings and tax returns and follow the directions for distribution in the will. Where the beneficiary is a minor, the Public Trustee often becomes involved.
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Estate Litigation
Estate litigation, while rare, can arise for many different reasons. When there are competing claims against the estate or unclear directions in the will the court may have to determine the final outcome. The PR is responsible for directing any litigation to its conclusion. Estate litigation can take the form of a simple application to the court for "advice and direction" or it can involve a complex and expensive trial.
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Estates – How Can We Help?
The administration of an estate can be a complex matter. Galbraith Law can help. We inform you of your duties and responsibilities, handle the paperwork, and make sure nothing is forgotten. We handle almost all the paperwork involved in administering the Estate from beginning to end. Where you need to take action we can provide you with guidance and support. If any aspect of the Will is challenged in Court, we can make sure you are represented so your rights are properly protected.
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What Is Probate?
Probate is a court procedure which certifies the validity of a will. When you receive Probate on an estate, you receive a document from the court that is signed by a Judge that in essence says: "The attached will is the only valid will for this estate." In modern usage the definition of Probate has been expanded to include the entire process of dealing with an estate. Someone will typically say: "We will probate this estate". This means they will look after the estate from beginning to end.
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What Are Letters Of Administration?
Letters of Administration is the document issued by the court when someone dies without a will. It states who has the legal authority to deal with the estate. The Letters of Administration do not determine how the estate is distributed. That is determined by the Intestate Succession Act.
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What happens when someone dies without a Will?
The distribution of the Estate is governed by the Intestate Succession Act. Don't worry, the Estate does not go to the government.
Under the Intestate Succession Act, when someone is married with no children the Estate goes to the spouse. Where there is a spouse and one child the first $40,000 goes to the spouse and the rest of the Estate is divided equally between the child and the spouse. Where there is a spouse and more than one child, the spouse receives $40,000 and one-third of the rest while the children share two-thirds of the rest.
If there are no children and no spouse the Estate goes to the parents of the deceased. Where there are no parents it goes to the brothers and sisters.
The list carries on from there to name even more distant relatives. Finally, if there are no relatives, the Estate will go to the universities in Alberta.
Should the Estate be divided between brothers and sisters and one brother or sister has predeceased and left children then those children will take the share of their deceased parent. In one recent case, this resulted in shares going to 6 children of a deceased brother and each of them received 1/30 th of the Estate.
Most people find the division between a spouse and children inappropriate. The idea that their spouse may have to sell the house to pay off the children is often enough motivation to get people to do their Wills.
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What Is A Clearance Certificate?
A Clearance Certificate is a document issued by the Canada Revenue Agency to verify that all taxes for a deceased person have either been paid or that the CCRA has accepted security for payment.
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Why Do I Need a Clearance Certificate?
Without a Clearance Certificate a PR remains liable for any unpaid taxes even after the estate has been distributed. For example, should the CRA re-assess taxes for a deceased person for any of the years prior to their death, the personal representative is liable to pay those taxes even if they have already distributed the estate.
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How Do I Apply For A Clearance Certificate?
You complete a form called "Asking for a Clearance Certificate". This form is completed and sent to CRA after the last tax return has been filed for the deceased. You will also need to enclose basic information such as a copy of the Will, a copy of the application for Probate or other document that you have filed and a statement showing the property distribution plan.
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What Is The Maximum Liability Of The Estate Or Personal Representative For Unpaid Taxes?
The liability will not be more than the value of the property in the estate. In other words, a PR cannot be required to pay money out of their own resources for unpaid taxes except to the extent that they have already distributed estate property.
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Is A Handwritten Will Valid?
A handwritten will can be valid. It must be entirely in your own handwriting, dated and signed. So, the classic wild west gunman that writes, dates and signs his will in blood has a valid will. No witnesses are required. If any part of the will is not in your own handwriting, such as the pre-typed parts on a store bought form, it is not a valid will unless all the formal requirements for witnessing are met.
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Why You Need a Will
Many people think a Will is only for someone with a lot of money. In fact, everyone should have a Will. It is the only way to ensure that your assets will go to the friends, relatives, and charities important to you. You can also set up special trusts, name the people who will handle your estate, specify funeral arrangements, or appoint legal guardians for your children.
If you die without a Will, the government will specify who gets your property and who manages your estate. People you were hoping to remember with a special gift may end up getting nothing. On the other hand, someone you were planning to write out of your Will (such as an estranged spouse) may receive everything you own.
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What Information Do I Need?
Unless you wish to make specific gifts items, you do not need a list of your property. It is usually better to avoid naming specific pieces of property. Most people provide for certain special gifts or important specific items in their Will and then simply divide the residue amongst their beneficiaries. Many people will list family keepsakes in a separate handwritten list. This avoids the need to constantly change the Will as you dispose of or acquire property
You need a list of your beneficiaries and their residence. Make sure you have the full legal name for any organizations that may receive charitable gifts. Galbraith Law has a list of the proper legal names for most charitable organizations. You can make a quick phone call to any organization to determine the proper name.
You may need to fill three different roles in your will. First, you name a Personal Representative (PR) and at least one alternate. The PR will call in all your assets, pay your debts and taxes and then distribute all your assets. If you have any trusts, such as for minor children, you can have the PR act as Trustee or you can appoint a separate Trustee. Finally, you can name a Guardian for any children in the event that both parents die.
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What About Property Outside of Alberta?
Take note of any property held outside Alberta. Some property may require special treatment. Property in some areas, such as the U.S.A., may trigger a large tax bill on death. Take steps to avoid the tax where possible or make sure there is money to pay the tax. Property in other jurisdictions may require a separate will.
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Marriage, Divorce and New Spouses
The only event in life that automatically renders a will void is marriage. When you say "I do" any existing will is invalid unless you state in the will that it is made in anticipation of your marriage to your new spouse. You cannot make a will until you are 18 years old unless you are married, in the armed forces or at sea.
Divorce does not invalidate your will. If you are separated and do not have a will, your spouse is entitled to a large share or perhaps all of your estate. Carefully review your situation to ensure that your current estate plan does not produce unintended results.
Children from a previous marriage, children from a new marriage and a new spouse all require special attention. The consequences of your estate plan are often complex in these types of situations. Most people want to ensure that a new spouse does not lose the enjoyment of the estate during their lifetime while treating all children fairly. This may require some special provisions.
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Wills – How Can We Help?
Galbraith Law can give you the advice and assistance you need to plan your Will. We will review your situation, discuss your wishes and make recommendations on the best way to structure your Will.
A Will must be properly drafted and signed in the correct manner. We make sure the clauses in your Will carry out your true wishes. You can be confident that every Will signed at Galbraith Law satisfies all legal requirements.
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Enduring Powers of Attorney
For many people, the primary purpose of a Power of Attorney is to appoint someone to look after their financial affairs if they are incapable of doing so. A regular Power of Attorney is automatically null and void if you become infirm. Now it is possible to prepare a document called an Enduring Power of Attorney that is still valid after infirmity.
An Enduring Power of Attorney only provides your attorney the ability to look after your financial affairs including your real estate. To appoint someone to look after your personal care and make health care decisions on your behalf you require a Personal Care Directive.
An Enduring Power of Attorney can take effect immediately or it can become effective only after infirmity. Your Attorney can have unlimited power or you can include restrictions and conditions.
Without an Enduring Power of Attorney, someone (not always your choice) will have to make a time-consuming and expensive court application in order to look after your affairs. Your Enduring Power of Attorney allows you to make a choice and lessen the burden on your family at an already difficult time.
An Enduring Power of Attorney is a very powerful document. It allows your attorney the ability to deal with your estate while you are incapacitated and not able to supervise or direct what they are doing.
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Springing or Immediate
Your Enduring Power of Attorney can take effect when you sign it (immediate). If you do not need to use it you can simply keep it in storage until required. When a situation arises where you need to use it for any reason it is available and easily used.
You can also provide that your Enduring Power of Attorney only takes effect on the happening of a specific event (springing). A typical condition for use is: On the written advice of a licensed medical doctor that I am incapacitated. You can use other conditions such as naming the specific doctor who is consulted. However the more restrictive the conditions are, the more likely your attorney will have difficulties making the document effective.
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Restrictions or Conditions
You can expand or restrict the powers of your attorney. For example, you can state that the attorney can only act for the benefit of you and your spouse and not any grown children. You can restrict the ability to sell land or other specific assets. Restrictions can also cover the range of investments allowed.
You can also provide specific extra powers so your attorney has greater certainty in doing their job. For example, you can ask your attorney to continue making gifts to your favorite charities or to certain family members.
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Enduring Power of Attorney – How Can We Help?
Talk to us about preparing your Enduring Power of Attorney. We can answer any questions you might have. In most cases, we can meet with you, answer your questions, take your instructions, prepare the documents and meet with you to sign the documents in one office visit. Where circumstances warrant we will attend at your residence or health care facility to complete these documents. There is an extra fee for this additional service.
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Personal Care Directive
A Personal Care Directive allows you to appoint a person (called an agent) to make decisions regarding your body and your health care in the event of your incapacity. An Enduring Power of Attorney is restricted to your estate or financial affairs.
Without a Personal Care Directive, someone (not always your choice) will have to make a time-consuming and expensive court application in order to look after you. Your Personal Care Directive allows you to make a choice and lessen the burden on your family at an already difficult time.
Without a Personal Care Directive your physician cannot turn to any specific person for advice and direction. They will consult family members and then take the course of action they deem appropriate. This may not accord with your personal wishes. Various family members may have different views and this only complicates matters even further.
A Personal Care Directive removes the conflict and uncertainty. You can direct who is responsible for making decisions. Your physician must listen to the appointed person. Your family members have direction and certainty.
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Living Wills
The legislation in Alberta states that any Personal Care Directive or Living Will prepared before the new law took effect (December 1, 1997) are not valid. We can help you prepare a new valid Personal Care Directive.
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Health Care Directions
In your Personal Care Directive you can provide directions to your agent regarding your wishes should you become very ill. This can include directions that you do not want your life prolonged by aritificial means if you are in a persistent vegetative state or coma. This will give your family the reassurance that they need to act on your behalf and carry out your wishes.
You can also specify that you do want all steps taken to prolong your life with the hope of eventual recovery. Or you can leave out this section entirely and rely on your previous verbal statements to family members.
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Responsibilities
Your agent will typically have a wide range of power and responsibility to act on your behalf and make decisions that affect your life. Since the Directive is only effective when you lack capacity to make decisions on your own, you will not be in a position to monitor or supervise the actions of your agent.
The powers and responsibilities of your agent include the ability to decide where you should live, what health care you require and your participation in social, recreational, educational and employment activities.
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Personal Care Directive – How Can We Help?
Talk to us about preparing your Personal Care Directive. We can answer any questions you might have. In most cases, we can meet with you, answer your questions, take your instructions, prepare the documents and meet with you to sign the documents in one office visit. Where circumstances warrant we will attend at your residence or health care facility to complete these documents. There is an extra fee for this additional service
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Dependent Adults
The Dependent Adult's Act is provincial legislation. It provides a means of obtaining a Court Order that allows an applicant the power to assist another adult make decisions on their behalf and control many aspects of their life.
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When is a Dependent Adult Order necessary?
An Order under the Act is required to assist in caring for adults that are unable to care for themselves. The most common situations where an Order is obtained are as follows. When a handicap child reaches the age of 18 the parents no longer have any legal authority to act on behalf of the child. They must apply to the Court for an Order under the Dependent Adults Act. When an adult becomes disabled or incapacitated by injury or disease an application may be required. Finally, Orders are obtained on behalf of many seniors who have lost the ability to properly care for themselves. In most cases, a physician will ask family members to apply for an Order.
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How am I appointed?
An appointment is obtained by application to the Court of Queen's Bench for a Court Order. The application must include a written statement from a physician verifying that the adult is unable to care for themselves. It also must include an assessment from the caregiver that provides details as to the extent of disability. The application must also include personal information about the dependent adult and the applicant. All documents must be served on the dependent adult, the caregiver, the Public Trustee, the Public Guardian and another relative. You will obtain a Court Order appointing you as Guardian, Trustee, or both.
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What is a Guardian?
A person appointed as guardian has power over the personal affairs of the adult. This includes the responsibility to make health care decisions and provide advice and directions to healthcare providers. It also includes the ability to make decisions about personal living arrangements such as place of residence. It may include several other powers including the power to decide whether the adult works or socializes and the form of recreational activities.
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What is a Trustee?
A person appointed as trustee has control over the adult's finances. This person will look after all of the property of the adult including land, money and personal belongings. The trustee has a duty to account to the Court and must keep detailed records of all transactions. Where the only income of the adult is minimal, such as Old Age Security, and there are minimal assets, a person can look after the finances without a Court Order.
Most times, the same person is appointed as both guardian and trustee.
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When do I Report Again?
In the role as trustee, the applicant must present their accounts to the Court every two years. The Court will then review the accounts and issue a Court Order approving the accounts.
Once every six years the applicant must apply to have the role as guardian or trustee or both reviewed by the Court and renewed for a further term of six years.
On the death or recovery of the adult, the guardian or trustee must apply to the Court to be discharged from their duties.
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Dependent Adults - How Can We Help?
Galbraith Law can assist you with all the stages of any dependent adult matter. We can assist you in preparing the application form, obtaining the reports from the physician and caregivers and preparing all of the Court documents. We will then prepare all of the documents and assist you in serving them. We will then make the Court appearance on your behalf. After you have been appointed we will assist you with preparing the application to the Court for the passing of accounts. When a review is necessary we will prepare the paperwork and once again make a Court appearance on your behalf.
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For further information call one of our friendly staff at 780.483.6111 or toll free at 866.483.6111 or click here to send us an e-mail.
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