This project considers whether there is a need in Ontario for a simplified administration process for small estates and, if so, what that process should look like. Currently, most estates are, as a matter of practice, even if not by law, subject to probate regardless of size. Probate is a court process that is applicable when someone dies. Its purpose is to validate the deceased’s will (where there is one) and establish the legal authority of the applicant to administer the estate. In Ontario, a successful probate application results in the issuance of a Certificate of Appointment of Estate Trustee (COA) which acts as proof of the estate representative’s authority. The estate representative may show the COA to financial and other institutions as necessary in order to collect the deceased’s assets and otherwise represent the estate.
Probate is an important part of Ontario’s estate administration regime. It protects the beneficiaries and others with an interest in the estate from loss resulting from fraud or improper administration by an unauthorized estate representative. It protects the testator’s wishes as expressed in his or her will. It protects the estate trustee from liability for acting in accordance with a will that is later revoked. It protects third party institutions from liability for releasing assets or confidential information to anyone other than the deceased’s legal representative. From a societal perspective, probate brings certainty to, and thereby facilitates, commercial transactions transferring wealth after death. It also acts as a public record of estates allowing those with potential interests in an estate to pursue their claims.
However, in the current probate system, the costs involved in a successful probate application are not necessarily proportional to the value of the estate. The concern in this project is that, for some small estates, the cost of probate, including both the estate administration tax and legal fees, may be so high relative to the estate value that the estate representative will decide that it is not worth accessing probate. In some cases, this may mean that the estate representative will not administer the estate at all or, at least, will abandon assets that are not available without probate. Even if the estate representative does undertake probate, the estate available for distribution may be unduly diminished.
Some jurisdictions, including some provinces in Canada, have adopted simplified procedures for administering small estates. Small estates have been defined as a monetary value ranging anywhere from $5,000 to $275,000. There are a variety of different approaches, but they typically provide for relaxed procedural or evidentiary requirements or both for estates valued at less than the designated amount. Their goal is to strike a balance between the legal protections of a full probate process and the affordability and accessibility necessary to ensure that small estates will, in fact, be administered. To date, Ontario has not adopted a simplified procedure for small estates.
This project was approved by the Board of Governors on February 28, 2012. Between September 2013 and February 2014, the Law Commission of Ontario (LCO) engaged in a substantial process of preliminary research and interviews in order to identify the subject matter of the project and determine where the LCO can best contribute to the issues. An expert Project Advisory Group was established, the members of which are listed at the beginning of this Report. They have been of assistance at every stage of the project up to the draft final report, prior to approval by the Board of Governors. The issues to be addressed and the project methodology were established in June 2014. The intensive, pro-active consultations phase of the project began with the release of the Consultation Paper in September 2014 and broad consultations took place until January 2015.
The LCO consulted with identified stakeholders including the Ministry of the Attorney General (MAG), The Ministry of Finance, the Ontario Public Guardian and Trustee (OPGT), the Office of the Children’s Lawyer (OCL), the Superior Court of Justice, court staff, estates lawyers and clerks across Ontario, the Canada Revenue Agency, several banks, , as well as organizations representing credit unions, insurance companies and bonding agencies. A particular effort was made to reach out to individuals who have acted as estate representatives in Ontario. The LCO contacted numerous community organizations. It also developed a plain-language questionnaire directed at individuals and made this available online, in court offices, libraries and elsewhere throughout Ontario.
Five focus groups were held with different stakeholder groups, including one focus group with individual estate representatives. Participants hailed from both urban and rural communities including Thunder Bay, Sault Ste. Marie, Windsor, Haileybury (Temiskaming Shores), Hamilton, Pembroke, Toronto, Ottawa, St. Catherines, Kingston, Nipigon, Jackson’s Point, Oshawa, Parry Sound, London and Essex County. A list of institutions participating in the project is included as Appendix B to this Report. Individuals are not identified for confidentiality reasons.
We received 24 responses to the questionnaire and had 9 members participate in the individuals’ focus group. In addition, both estate practitioners and court staff spoke about the experiences of their clients and this has also been helpful in formulating the recommendations below. Although the evidence of individual estate representatives cannot be said to be fully representative of this stakeholder group as a whole, other sources provide support for what we heard, as well as insight into other experiences.
It is also important to point out that there is a dearth of empirical evidence available on the functioning of the probate system in Ontario. There is no breakdown of the different values of estates being probated from year to year, nor any correlation of estate value with whether or not the estate has a will. There is no way of determining how many probate applications are filed without legal assistance or the likelihood of these being rejected by court staff. It is certainly not possible to determine how many estate representatives administer estates outside the probate system, nor how many estates are abandoned altogether. Expanding the collection of probate statistics would be valuable for any future reform efforts involving the probate system.
The LCO is grateful for the feedback it received over the course of the consultations period and has carefully considered every contribution in formulating its recommendations, even though we may not refer to any particular contribution explicitly.
In considering the options for reforming the administration of small estates, the LCO has been governed by a number of principles. Underlying this Report is the tenet that estate administration is a social value that should be promoted and, in doing so, testator intentions should generally be respected. Furthermore, the probate system is a valuable tool in furthering these underlying goals. Probate provides legal protection for beneficiaries, creditors, the estate representative and others interested in estates. However, the legal protection afforded by probate is directly related to the rigour of the application process. And the cost of navigating a more rigorous process creates a barrier for some small estates and may prevent them from accessing probate altogether. Therefore, these two goals of legal protection and accessibility must be balanced so that the burden of administration involved in applying for probate is proportional to the value of the estate. Together the recommendations below reflect what we have concluded is an appropriate balance between these two goals of legal protection and accessibility. The interplay among these principles is further discussed throughout the Report, particularly in chapter VI.
This Report begins in chapter II by setting the context as to the purpose and features of Ontario’s probate system generally and the problem being addressed in this project. Chapter III discusses the definitional issue key to any small estate process, that is, what is a small estate or, more accurately, what eligibility criteria reflective of small estates should be adopted in a possible small estates process in Ontario. For reasons we explain in this Report, we have determined that an appropriate cut off for designating a “small” estate is that it be worth no more than $50,000. Chapter IV turns to a discussion of the difficulties currently experienced by estate representatives in the probate system and considers the extent to which these difficulties are dependent on the value of the estate being probated. An overarching issue here is whether or not legal representation, with its attendant costs, is or should be practically necessary in order to probate a small estate in Ontario. Having examined potential obstacles in probating a small estate in Ontario, chapter V considers the feasibility of the alternative option to administer small estates without probate. In chapter VI, the Report looks at the relationship between two key principles underlying this project, accessibility and legal protection, and considers whether there are analogous legal processes in Ontario that inform how these principles should be balanced in a small estates process.
These first six chapters all contribute to an understanding of the nature and degree of the problems currently experienced by small estates within the probate system. In chapter VII, we recommend that these problems be addressed by creating a small estates procedure available to estates worth up to $50,000. We conclude that, given the purpose and benefit