Administration of an Intestacy
Jun 7, 2017
Dying without a Will in Ontario (also known as tying “intestate”) does not make an estate impossible to administer. It does, however, present an extra set of challenges that must be addressed at two stages: The Application for the Certificate of Appointment (also known as the “probate application”) and the distribution of the estate.
The first consideration that arises at the probate stage of an intestacy in Ontario is determining who is going to apply to be the estate trustee of the estate (also known as the “administrator”). Because there is no Will, it is the beneficiaries of the estate who are responsible for appointing the estate trustee. There are, however, some restrictions on who can act as an estate trustee in an intestacy. First, the estate trustee must be resident in Ontario. Second, the estate trustee (if not a trust company) must obtain a bond from an insurance company as a condition of his or her appointment, unless the estate trustee obtains an order from the Court dispensing with this requirement. This bond is intended to protect the beneficiaries and the creditors of the estate, and can be difficult and expensive to obtain.
In most intestacies that arise in my practice, getting the beneficiaries to agree on who will be the estate trustee, and getting the beneficiaries to agree that a bond is not required, is not difficult. This is generally because the beneficiaries are usually motivated to have an estate trustee appointed as quickly as possible so that the estate can be administered and distributions made. However, there are circumstances in which beneficiaries disagree as to who should be the estate trustee, particularly if there are underlying tensions in the family. Also, if one or more of the beneficiaries are minor children or incapable adults, a potential estate trustee must seek the consent of a government office (the Office of the Children’s Lawyer, or the Office of the Public Guardian and Trustee, respectively) to any appointment. These offices are more likely to raise objections, and are more likely to require a bond.
Note as well that when someone dies with a Will, the estate trustee named in the Will has standing to begin administering the estate even prior to probate. He or she may not be able to take big steps like liquidating assets, but there are certain smaller logistical tasks he or she can accomplish with just a notarial copy of the Will. Conversely, when someone dies intestate, there is nobody with any standing to represent the estate before a Certificate of Appointment of Estate Trustee Without a Will is issued to the estate trustee. This can lead to delay in dealing with those logistical estate issues relative to an estate in which there is a Will.
Another major consideration when dealing with an intestacy is how the estate is divided among the beneficiaries. As there is no Will, legislation in Ontario (know as the Succession Law Reform Act) effectively writes a Will for the deceased. This legislation divides the estate of the deceased among specified family members. Exactly which family members benefit depends on what sort of family the deceased had on his or her death.
One issue to bear in mind when dealing with the distribution on an intestacy is how the shares of minors are managed. Without a Will, the share of a minor is usually “paid into Court”. Once paid into Court, the minor’s guardian can access the funds for the minor’s benefit by making applications to Court. When the minor turns 18, he or she can request that the full amount be paid out to him or her. This is certainly not the most efficient way to handle funds set aside for a minor, nor would most parents want their children to inherit directly at age 18. The solution, of course, is to make sure you have a properly drafted Will in place.
In the end, although having a Will in place is generally a better scenario, administering an estate on an intestacy is not an impossible task for an estate trustee, particularly if that estate trustee seeks out the advice and assistance of an experienced estate lawyer