VI. Small Estates Procedures in Other Jurisdictions

VI. Small Estates Procedures in Other Jurisdictions2017-03-03T18:35:36+00:00

Small estate procedures in other jurisdictions vary widely which makes a comparative evaluation of them somewhat difficult. Canadian approaches to this issue are also distinct from American approaches.

A. Small Estate Procedures in Other Provinces

Canadian provinces generally take one of four approaches to the problem of probating small estates. 

1. Specialized Court Procedures Alternative to a Formal Grant

Two provinces have created specialized court procedures that authorize representatives to administer small estates without a formal grant. In Saskatchewan, the Administration of Estates Act and accompanying regulations provide for a simplified procedure for estates valued at less than $25,000 and consisting only of personal property. The estate representative may bring an ex parte motion to a judge who may order the property to be transferred to the representative without a grant. Unlike a grant of probate, the order applies only to the particular assets listed in the motion. The representative becomes liable to pay reasonable funeral expenses and the debts of the deceased and to distribute the remainder to the beneficiaries or next of kin. The order authorizes financial institutions to release assets to the representative and protects them from the risk of liability. [85]

Manitoba has a similar provision that provides for a court order transferring a deceased’s property to an estate representative without a grant. In Manitoba, the estate may include real property but must have a value of less than $10,000.[86] Again, there is no requirement to give notice to beneficiaries or creditors.

 

2. Administration by the Public Trustee Without a Grant

In some provinces, there is legislation that either simplifies or eliminates the probate process where the public trustee assumes the administration of small estates where no one else is available to do so. There is no obligation on the public trustee to undertake small estate administration under these provisions. Therefore, they are only effective to the extent that public trustees choose to exercise their discretion. 

For example, in Alberta, the Public Trustee Act contains two different options for the administration of small estates which apply both to testacies and intestacies. Section 13, titled “Summary disposition of small estates”, provides that, where no one has been granted probate, the Public Trustee may take possession of and administer an estate consisting only of personal property valued at less than the prescribed amount (currently $5,000).[87] There is no need for the Public Trustee to obtain probate under this provision. Instead, there is a prescribed form for the Public Trustee to complete which is to act as conclusive proof of the Public Trustee’s authority.

Section 16 of the Alberta Public Trustee Act applies in relation to somewhat larger estates (currently less than $50,000). Again, the Public Trustee may elect to administer the estate where no one else has been granted probate. But there are incrementally greater procedural requirements under this provision. The Public Trustee must file an election and affidavit disclosing the value of the estate and the names and interests of anyone who may have an interest in the estate. This must be certified by the court and, on completion of the administration, the Public Trustee must file an account of the administration.[88] These small estates provisions are in addition to the more general provision granting the Public Trustee authority to apply under the usual process to administer an estate where no one else has done so.[89]

In Saskatchewan, the official administrator may choose to administer estates valued at less than $25,000 without a grant even where the estate contains real property.[90] New Brunswick provides that the public trustee may administer estates valued at less than $3,000 on filing an affidavit with the Registrar.[91] Northwest Territories has a similar provision for estates valued at less than $10,000.[92]

Nova Scotia similarly provides the public trustee with discretion to administer estates valued at less than $25,000 but only in the case of intestacies.[93] The Law Reform Commission of Nova Scotia considered the possibility of creating a small estate procedure in its 1999 Final Report, Probate Reform in Nova Scotia. It rejected the idea, expressing concern that this could result in a third kind of estate and make the system too complex. The Commission preferred the status quo in which representatives either choose to apply for formal probate or, alternatively, bypass the system altogether.[94]


3. Assistance from Court Staff in Completing the Application for a Grant

Another option for reducing the cost of administering small estates is to require court staff to complete the necessary paperwork on behalf of the applicant. In Alberta, court staff have the discretion to prepare application materials for estates consisting of personal property only that is valued at less than $3,000.[95] However, this provision will disappear when Alberta’s new Estate Administration Act comes into force, likely in the spring of 2015.[96]

In Saskatchewan, the Registrar is required to prepare grant applications for applicants in estates worth up to $15,000.[97] Ontario once had a similar provision in the Estates Act for estates valued at less than $1,000 but this was repealed in 1998.[98]

Under the Saskatchewan model, court staff assist applicants in completing the application materials but applicants must still meet all of the same evidentiary and procedural requirements for obtaining probate.

 

4. No Specialized Small Estate Procedure

British Columbia, like Ontario, has no legislation specifically addressing small estate administration.[99] However, British Columbia has made this choice intentionally by deciding not to bring into force a small estate process included in its new Wills, Estates and Succession Act (WESA).[100]

Small estate administration was identified as a reform priority during the three year review of British Columbia wills and estates law that preceded the enactment of WESA. The British Columbia Law Institute (BCLI) recommended in an interim report that a process of administration by statutory declaration be available for estates valued at less than $50,000 with no real property.[101] This recommendation was adopted in Part 6, Division 2 of WESA entitled Small Estate Administration. However, the Ministry of the Attorney General later announced that Division 2 would not be brought into force. In drafting the new Probate Rules, the Ministry determined that a separate small estate procedure was no longer necessary. Instead, the Probate Rules provide two options for filing an application for estate grant where there is a will: a short-form affidavit for simple estates and a long-form affidavit for more complex estates. Applicants are entitled to use the short form if the application meets a list of criteria indicating that the estate is a “simple” one. Some attributes of simplicity include the following: the executor is named in the will, there is evidence that there is no later will, there are no known issues respecting execution of the will and there are no apparent modifications to the will. The value of the estate is not relevant to the choice between the short-form or long-form affidavit.[102]

Although the B.C. government decided against bringing into force WESA’s small estate procedure, BCLI’s Interim Report on Summary Administration of Small Estates remains valuable as a discussion of the various small estates models proposed or adopted in other jurisdictions.[103] BCLI considered the option common in the rest of Canada and the Commonwealth of giving the public trustee responsibility for administering small estates. However, BCLI rejected this approach as inconsistent with the evolution of the public trustee’s role in British Columbia.[104] Instead, BCLI favoured a summary procedure that would allow estate representatives to distribute small estates by way of statutory declaration. 

BCLI’s proposal would allow a limited class of declarants to assume responsibility to administer a small estate by completing a statutory declaration in a prescribed form. Eligible declarants would include the executor, beneficiaries, a spouse or another entitled in an intestacy, another person with the consent of all persons entitled to a share of the estate or the official administrator.[105] The declaration would include a number of questions about the estate including facts about the deceased, the basis for the declarant’s entitlement to act, the value of the estate and the list of persons interested in the estate. The declaration would also contain information about the declarant’s legal obligations. Copies of the declaration would be sent to persons interested in the estate and, in some circumstances the Public Trustee. After a waiting period, the declaration would be filed with the court registry. There would be no scrutiny of the declaration by court officials.

BCLI’s statutory declaration procedure would be available to estates with a gross value of less than $50,000 and containing only personal property. BCLI found that this figure best represented “the value of a typical small estate in which the assets might consist of a motor vehicle, a modest bank account, some personal property of relatively negligible value”.[106] Estates containing real property would be excluded from the procedure since, under B.C.’s Land Titles Act, the transfer of real estate on death required proof of probate. BCLI suggested that this exclusion should be revisited if the legislation were amended to give the land title registrar some discretion in this requirement. There would be a statutory release from liability for anyone releasing assets to the estate in reliance on the declaration.

 

B. Small Estate Procedures in the United States

The U.S. approach to probate is quite different from that in Canada. U.S. courts have traditionally played a relatively intensive role in supervising the estate administration process.[107] This court-based formal probate model can be costly and creates delay in the settlement of straightforward estates.[108] This has sparked much criticism over the years. A first-hand critique of U.S. probate as applied to small estates was offered by an Alabama probate judge:

The judge of probate…comes in contact with the people of his county and hears a great many of their problems. One of the greatest hardships witnessed in the field of small estates occurs when probate proceedings are necessary to perfect the title to property in a decedent’s beneficiary or heir at law….

Mrs. Elenor Grigg, my chief officer in the probate court division, served under three probate judges prior to my election. Through the years she has witnessed the frustration and anger generated by the present system. When she has informed the beneficiary or heir of a small estate of the legal procedure necessary to obtain letters testamentary or letters of administration, the response has generally been: “It’s just not worth fooling with.”[109]

The Uniform Probate Code (UPC) is one reform introduced to offer a variety of non-judicial alternatives to the formal probate process.[110] The prevailing philosophy behind the UPC (and much state legislation) is to leave probate in the private sphere to the extent possible and have the court assume authority only where an interested person petitions the court to do so.[111]  

Small estate procedures in the United States have developed in response to this probate tradition and, as a result, are, themselves, quite distinct from those available in Canada. Canadian small estate processes tend to rely on public officials (the court or the public trustee) to assume responsibility for, or at least supervise, the application process. U.S. small estate procedures vary in their requirements but some popular models involve little or no contact with the courts. 

Therefore, it is important to consider to what extent particular U.S. small estate processes are appropriate models for Ontario reform. What might be termed a small estate process in the United States may not be all that different from Ontario’s usual probate process. For example, some common features of U.S. small estate procedures were summarized by John H. Martin: 

Despite their variety, [small estate procedures] exhibit common features. Generally, they shorten the settlement period, accelerate distribution of assets to the beneficiaries, and place liability for the decedent’s debts on the distributees. When an inventory is required, it occurs at the opening step, and may be needed solely to show the estate is qualified to use the small estate mechanism. Accountings are not required unless demanded by a beneficiary, and there are no closing procedures to satisfy. Some of the procedures allow for settlement without the use of a personal representative. Some also address concerns that use of the shortened process will be abused. Overall, privacy for beneficiaries is increased, because an alternative procedure results in briefer encounters with the court.[112]

Several of the features listed here as attributes of small estate procedures (no inventory requirement, no mandatory accounting and no closing procedures) are already common features of Ontario probate practice. It is important, then, to evaluate U.S. small estate processes on their specific requirements in relation to those required in Ontario.

The UPC provides three distinct options for administering small estates with little or no court involvement. The states have adopted these options to varying extents and have developed a myriad of other options. Wisconsin, for example, has seven different small estate procedures.[113] For present purposes, the small estate options contained in the UPC are generally representative of this broader array of options.

1. Universal Succession

First, the UPC provides an option known as universal succession (or succession without administration) which is available regardless of the value of the estate. As of 2008, these provisions had not been adopted by any states but they remain in the UPC.[114]  Universal succession would permit the deceased’s successors to consent to accept estate assets directly by also assuming responsibility for discharging estate obligations.[115] Successors would file a joint application with the Registrar stating, among other things, that they represent all of the competent heirs or competent residuary devisees of the estate and assuring the Registrar that there are no probate or appointment proceedings pending. They would also assume personal responsibility for (i) taxes, (ii) debts of the deceased, (iii) claims against the deceased and the estate and (iv) distribution of the estate. The Registrar would review the application for completeness and issue a statement of universal succession. There would be no court scrutiny and no appointment made. Nor would there be any obligation for applicants to give notice of the application. However, once a statement was issued, successors would have 30 days to provide notice to heirs or devisees not included in the application (due to incapacity).[116]

 

2. Collection by Affidavit

The UPC also has options specifically directed at small estates. Where an estate is valued at less than $25,000, a successor (that is, someone entitled to money or personal property of the deceased other than a creditor) may seek the release of a particular estate asset from any person or institution holding it on the authority of a special affidavit that protects the person or institution (although not the successor) from liability.[117] Some states require that the affidavit be filed with the court and others do not. No notice is required but the procedure may not be invoked until 30 days after the deceased’s death.

The collection by affidavit option is popular and has been widely adopted in state legislation. In some states, the threshold amount for invoking this option has been increased to amounts as high as $150,000 (California) and $275,000 (Oregon).[118] The requirements for invoking the procedure vary widely from jurisdiction to jurisdiction. For example, some states require court authorization while others do not.[119] Certain states make the procedure available only to intestacies. And some states make the procedure available to estates containing both personal and real property.[120]

 

3. Summary Administration

Another option is directed at estates valued at less than the total of certain statutory allowances for the surviving spouse or minor, dependent children, funeral expenses and medical expenses of the deceased. This procedure requires the appointment of a personal representative and probate of the will if there is one. The personal representative may then invoke summary administration in order to distribute the estate to those entitled without notice to creditors.[121] Again, there is much variation among the procedures adopted by different states. However, summary administration procedures generally contain some protections for beneficiaries and creditors and tend to proceed as a mini probate proceeding.[122]

The UPC small estate provisions emphasize reduced court involvement in the administration of small estates where possible. It is possible that Ontario might learn something from the U.S. system in spite of the very different probate tradition here. The small estate process recommended by BCLI was adapted from the U.S. administration by affidavit option.[123] However, it is important to keep in mind differences in the American estate administration process generally and to question the effectiveness and fairness of these summary procedures.

 

C.    Small Estate Procedures in England

England has enacted a series of statutes that allow for certain types of assets of small value to be paid out to estate representatives without probate. These provisions are available to “a miscellany of assets including National Savings certificates, Government stock, building society funds, trade union, industrial, provident or friendly society funds, and certain pension and other payments to some public sector workers”.[124] They tend generally to be payments associated with past employment, particularly in the public service, and payments due from public institutions.[125]

Most of these provisions are listed in a schedule to a general statute, Administration of Estates (Small Payments) Act 1965 (U.K.).[126] They apply equally to estates with and without wills. Eligibility under the Act is typically determined in relation to the value of the individual asset being held rather than the value of the estate as a whole. Currently, that figure is £5,000 but this has not been updated since 1984.

In 2011, these small payment provisions were reviewed by the Law Commission of England and Wales as part of its project on Intestacy and Family Provision Claims on Death.[127] The Law Commission noted in its Report the importance of the role played by estate representatives and “the need to ensure that they are not subjected to undue burdens, whether in terms of cost or complexity”.[128] This was particularly the case for estate representatives of intestacies:

…[W]e have to bear closely in mind the fact that administrators are unlikely to be lawyers; those who can take out letters of administration of an intestate estate are essentially those entitled to the property. They will therefore be family members; few will be lawyers, and many will not take legal advice. Intestate estates tend to be of relatively low value, and there is much to be said for keeping administrative procedures as simple as possible in order to avoid unnecessary cost and worry.[129]

The Law Commission considered whether the value cut-off for these small payment provisions should be increased. During consultations, this proposal received mixed reviews from stakeholders. Some felt that updating the value cut-off was necessary since the provisions are important to reduce costs associated with probate. Others raised the possibility that an increased ceiling would lead to a greater risk of fraud. Others emphasized the importance of probate as a public record and as the relevant date for calculating the time for bringing a claim against the estate. There was also concern expressed about the different treatment of other assets not covered by the provisions. For example, banks sometimes released assets worth up to £20,000 without probate.[130]

The Law Commission itself noted that a Non-Contentious Probate Rules working group was separately examining ways of simplifying the probate process so that estate representatives of small estates may obtain probate without legal assistance.[131] The Commission concluded that there was “considerable dissatisfaction with the current law but also considerable disagreement as to any potential reform”.[132] Any reform of the small payment provisions would require more fundamental review and the Commission, therefore, recommended that the government commission such a review.[133] It does not appear that this has taken place as of yet.[134]

In addition to the small payments provisions in England, the Public Trustee also has authority and, indeed, a responsibility to administer estates of small value under the Public Trustee Act, 1906.[135] There are three different provisions here:

  • Under ss. 2(1)(a), the Public Trustee is authorized to act in the administration of estates of small value and, under ss.2(3) it may not decline to accept a trust on the ground only of its small value. The term “small” in this context is not defined by the Act.
  • Under ss. 3(1) of the Act, a family member may apply to the Public Trustee to take over the administration of an estate with a gross value of less than £1,000 and, where the beneficiaries are “persons of small means” and the Public Trustee shall administer the estate unless there is a good reason not to do so. (Apparently, estates that are solvent and worth less than £1,000 are rare enough now that this provision has fallen into disuse.[136])
  • Under ss. 3(5), where an estate of small value is before the court and the court is of the opinion that it could be more expeditiously administered by the Public Trustee, the court may order that the Public Trustee do so.

 

D.   Small Estate Procedures in Australia

Australian small estate procedures vary from state to state (with South Australia having no such procedures at all), but in many respects the jurisdictions are roughly similar.[137] Australia has also been active in law reform initiatives in estate administration law and most of these have addressed the issue of small estates. In 2009, the National Committee for Uniform Succession Laws (National Committee) produced a comprehensive report on the Administration of Estates of Deceased Persons.[138] That same year, the New South Wales Law Reform Commission (NSWLRC) provided its own commentary on the recommendations contained in the National Committee’s report.[139] The Victorian Law Reform Commission (VLRC) took the National Committee’s recommendations into account in preparing its 2013 report Succession Laws Report.[140] And, in early 2014, the South Australian Law Reform Institute (SALRI) released a discussion paper addressing small estates specifically.[141]

The discussion in each of these reports tends to be organized around existing and proposed models for small estate administration. These models are as follows:

1.     Election to Administer (by Public Trustee)

In most states, the public trustee or other approved representative may elect to administer small estates on filing some form of election or affidavit with the court. The election to administer option is seen as a means of avoiding the cost that would be incurred by relatively small estates if a grant were necessary.[142] The process is apparently well accepted in the different states.[143] Some states require that the public trustee give public notice of the election. However, in its Report, the National Committee suggested that this was not warranted given the small value of the estates involved (AU$100,000 was the figure proposed by the National Committee).[144]

The value ceiling for the election procedure varies from state to state. In 2009, the National Committee recommended that it be available in respect of estates that, in the opinion of the representative, have a net value of less than AU$100,000.[145] The Committee also recommended a safety net provision requiring the representative to obtain a formal grant if the estate is later found to exceed this amount by 150 percent.[146]

Victoria has in place a variant of this election procedure known as a “deemed grant”. In certain circumstances, the State Trustees may administer small estates by advertising this intention in a daily newspaper. No court filing is required. This is apparently a popular option, particularly for very small estates worth less than AU$10,000.[147] State Trustees receive a subsidy to cover the costs of this service.[148] In its report, the VLRC recommended an amalgam of the election procedure and deemed grant process. It suggested that the deemed grant process be amended to improve its procedural integrity and increase the value ceiling to AU$100,000 (with a safety net figure of 120 percent). The State Trustees would be required to file the will (if there is one) with the Probate Office and to advertise its intention to administer the estate in a searchable database on the Court’s website.[149]

 

2.     Assisted Grant (By Probate Office)

Victoria also provides for the probate office to assist estate representatives obtain a grant for small estates.[150] Eligibility for this service depends on the value of the estate but also on the relationship of the beneficiaries to the deceased. Estates valued at less than AU$50,000 qualify for assistance where the beneficiaries are limited to the deceased’s partner, children or a sole surviving parent or some combination of these. Where there are other beneficiaries entitled to a share of the estate, the estate must be worth less than AU$25,000 to qualify for assistance. There is a modest fee of AU$102.70 charged for this service in addition to the standard grant application fee.[151]

The intent of this provision is to reduce the legal costs otherwise associated with a probate application. The Supreme Court of Victoria website explains it as follows:

In eligible cases an officer of the Court (Small Estates Officer) obtains instructions from, prepares and lodges the application on behalf of the applicant. The assistance provided by the Court reduces the need for persons to retain a solicitor and acts as a legal aid service to the public.[152]

The probate office has the discretion to refer difficult applications to the Court or to a legal practitioner.[153]

In its Report, the VLRC recommended that the service be retained, reasoning as follows:

The service saves the applicant the time they would otherwise have spent preparing a grant application. It also saves them the money they might otherwise have spent engaging a solicitor to prepare the application. It encourages those in control of small estates to obtain a full grant rather than choosing informal administration, potentially avoiding some of the risks of liability that may arise with the informal process.[154]

However, VLRC found that the existing AU$25,000/$50,000 dual threshold for the service was too low.  It recommended eliminating the dual threshold (so that Victoria would be consistent with the other States) and choosing a single, higher threshold.[155] It ultimately chose a figure of AU$100,000, noting the State Trustees’ submission that estates worth less than AU$100,000 “are unlikely to include real estate or be subject to a family provision claim, and therefore ‘rarely involve administrative complexity’”.[156] Although the higher ceiling might result in more complex estates using the service, VLRC noted that these could be directed to the Court or a legal practitioner as is the current practice.

As a separate recommendation, VLRC advised that the probate office should offer a package of clearly written information, “a probate pack”, to assist individuals who apply for a grant without the assistance of a legal practitioner.[157]

 

3.     Informal Administration

Certain of the Australian law reform bodies have acknowledged and, indeed, encouraged the informal administration of small estates as a legitimate alternative to a formal grant. The National Committee addressed the issue of informal administration in its recommendations:

…the National Committee acknowledged that, in all jurisdictions, a significant number of estates are administered informally – that is, without a grant. It noted that this practice is facilitated by factors such as the joint ownership of property and the willingness of some financial organisations, such as banks, to release funds up to a specific amount without requiring the production of a grant of probate or letters of administration.[158]

The Committee determined that, given the high incidence of informal administration, it was better to address it in legislation. The Committee’s tacit acceptance of informal methods of administering small estates is illustrated by the title chosen for chapter 29 of its Report: “Mechanisms to facilitate administration and to minimize the need to obtain a grant”.[159]

In contrast, SALRI’s recent discussion paper on small estate administration is less approving of informal administration. It states,

In assessing each model it is important to reflect on the desirability of encouraging administration of small deceased estates by formal grant of representation, because a grant offers the best protection to beneficiaries, administrators, creditors and third parties, whatever the size of the estate.[160]

Several possible statutory mechanisms for facilitating informal administration are considered in the Australian law reform reports, including the following:

  • provisions codifying the common law that protects those informally administering an estate to the extent that they make payments that would properly have been made under a grant.[161]
  • provisions limiting the liability of asset-holders that release assets up to a particular value without requiring proof of a grant.
  • provisions allowing for the transfer of real estate without a grant where the property is of relatively small value and the land registrar considers that the representative would succeed in an application for a grant. In this case, the representative is given the same statutory protection that would be available under a formal grant.[162]

The National Committee approved of each of these forms of statutory protection for informal administration. In particular, it recommended the adoption of a general provision protecting from liability anyone who makes payments of less than AU$15,000 in respect of an estate without requiring a grant.[163] Four years later, VLRC concurred with this recommendation but suggested that the ceiling be increased to AU$25,000.[164] This value threshold should be applied to the amount held by the particular asset-holder rather than the overall value of the estate:

The National Committee was of the opinion that the value of the money actually held by the payer is a sufficient limitation, and that the payer should not need to ascertain the estate’s value, as this may well discourage them from releasing the funds. Removing this requirement means that the focus is on ensuring simple transactions can take place smoothly regardless of the size of the estate.[165]

 

4.     Administration by Statutory Declaration

This model is not currently used in Australia but was proposed by SALRI as an amalgam of several small estate models it studied, particularly BCLI’s proposal for administration by statutory declaration. SALRI’s model would permit estate representatives of small estates to file a statutory declaration in prescribed form of their intention to administer the estate. Instead of filing this declaration with the court, SALRI proposed that it be filed in an online government registry similar to existing licensing registries. The registry could be designed to reject the registration of estates valued at more than the threshold (which SALRI suggested should be AU$100,000). It might also be coordinated with the registry of deaths so that a small estate could not be registered until the death was registered. Third parties releasing assets in reliance on the declaration would be protected with a statutory provision limiting their liability. According to SALRI, this statutory declaration procedure would be very low cost to applicants. It would provide a public searchable record of small estates while freeing up court resources and the public nature of the declaration would offer some disincentive to maladministration.

 

E.               Developing the Best Model for Ontario

This review of small estate procedures and law reform proposals in other provinces, the United States, England and Australia offers several models that Ontario may look to for reform in this jurisdiction. However, it must be remembered that the legal context in which some of these small estate processes operate in their home jurisdiction may make it inappropriate to transplant them to Ontario. For example, Ontario does not have the treble damages awards that act as a disincentive to fraud in some states in the United States. And the estate administration tax payable in Ontario is much higher than in many of the jurisdictions discussed above.[166] Therefore, these models must be considered as a combination of elements, some of which might be useful to a small estate procedure in Ontario, rather than as fully formed models to be accepted or rejected as a whole.

 

 

 

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