The Probate System and Small Estates
- Probate is a court process that validates a deceased’s will (where there is a will) and confirms or establishes the authority of the estate representative to act on behalf of the estate. Probate is intended to protect against unauthorized persons misappropriating estate assets.
- A non-contentious probate application involves several elements. Where there is a will, it may require filing several affidavits attesting to the condition of the will. Where there is no will, it requires obtaining the consent of some beneficiaries and posting an administration bond. In both cases, notice of the application must be provided to all those interested in the estate and an Estate Information Return must be filed detailing the location and value of estate assets.
- Estate representatives typically hire a lawyer to file for probate. Legal fees for a straightforward application range between $1,000 and $5,000. Fees are higher where difficulties arise such as where the will has no Affidavit of Execution or there is difficulty locating beneficiaries. Estate representatives also must pay estate administration tax (0.5 per cent of estate value up to $50,000 and 1.5 per cent of estate value exceeding $50,000).
- Where probate costs are disproportionately high relative to the value of the estate, some estate representatives choose not to apply for probate. Where estate assets are not accessible without probate, this means that the assets are abandoned.
- There is anecdotal evidence that bereaved family members are sometimes told by financial institutions that they must obtain probate in order to access the deceased’s assets but the total value of the assets is nowhere near sufficient to cover the cost of a probate application.
- Some estate representatives file for probate without legal assistance. This can be challenging due to the number and complexity of the forms involved and the technical terminology employed as well as the lack of public information about the process.
Administering Small Estates Without Probate
- Institutions holding a deceased’s assets have a legal duty to safeguard those assets on behalf of the deceased. They may release the assets only to a legally authorized estate representative. Generally speaking, institutions require probate as evidence of the estate representative’s legal authority.
- Institutions may waive the probate requirement in certain cases, such as where the estate representative has been appointed by will or where the estate is very small. This practice varies among different institutions, making it difficult for estate representatives to predict whether probate will be required in any particular case.
- Without probate, there is little to prevent an imposter from taking control of the estate. There is no assurance that the will is the true and final will, that beneficiaries will become aware of their entitlement or that the estate representative will not abscond with the money.
Small Estates Procedures Elsewhere
- British Columbia and the Law Reform Commission of Nova Scotia have rejected the idea of a small estates procedure but in the context of broader probate reform initiatives. On the other hand, both Saskatchewan and Manitoba have small estates procedures in place and the Northwest Territories is considering a small estates process based on the Saskatchewan model. Small estates procedures are also available throughout the United States and in Australia.
- Small estates procedures in other jurisdictions vary widely in the degree of court supervision, eligibility criteria and application requirements. The value cut-off for small estates procedures ranges anywhere from $5,000 to $275,000.
- The small estates process that we recommend would be court supervised like those in Saskatchewan and Manitoba but, unlike in those jurisdictions, would result in a Small Estates Certificate with equivalent legal effect to a grant of probate (although limited to the assets listed in the application).
LCO’s Final Report: Small Estates Procedure Recommended for Ontario
- The LCO’s final report, Simplified Procedures for Small Estates, recommends the creation of a small estates procedure in Ontario.
- The final report is the product of extensive research and consultations. A consultation paper, released in September 2014, set out options for reform. Stakeholder responses were gathered throughout Ontario in a series of focus groups, interviews, written submissions and responses to a plain language questionnaire.
- Recommendations include:
- a court-supervised small estates procedure available to estates worth up to $50,000 and with the same legal effect as probate except that the estate representative’s authority is limited to the estate assets listed on the application,
- a much simpler procedure that may be navigated without legal assistance but which retains essential legal protections of the regular probate stream,
- a broader range of legal supports for small estate representatives that can be tailored to the value and relative complexity of particular estates.