Estate 4

Question 1

Estate administration tax exception

Answer 1

• applicant must file an affidavit as to the estimated value, and the tax is based on the estimate
• applicant must give an undertaking to file a sworn statement as to the value of the estate and to pay the tax within six months of giving that undertaking

Question 2

If there is any doubt at all as to the value of certain property comprising the estate, the application should indicate that the value of the personal property or real property, as the case may be, is an
…..
Absent the above, the court office will likely refuse to

Answer 2

estimate, and the undertaking noted above should be filed
….

grant a request for a refund in the event that the actual value as subsequently determined turns out to be lower than the original declared value, leaving the only avenue to the applicant to seek the requested refund in court

Question 3

certificate of appointment will not be issued unless
….
Exception for above

Answer 3

deposit equal to the estate administration tax has first been paid
….
authorizes a court to make an order that the certificate be issued without payment of the deposit if the court is satisfied, based upon the applicant’s affidavit and upon other material that the court requires,
▪ that the estate certificate is urgently required;
▪ that financial hardship would result from not issuing the estate certificate before the deposit is made; and
▪ that sufficient security for the payment of the estate administration tax has been furnished to the court.

Question 4

It has long been considered by estates practitioners that insurance proceeds without a designation in favour of a living or existing beneficiary are part of the

Answer 4

estate value for purposes of calculating estate administration tax

Question 5

that insurance money paid under a contract of insurance without a beneficiary designation is to be included in

Answer 5

the calculation of estate administration tax

Question 6

CPP death benefit does not have to be included in

Answer 6

determining the value of the estate because that benefit is paid out after death

Question 7

only the value of the assets in Ontario is included when calculating the tax amount when the application is for

Answer 7

(i) a certificate of ancillary appointment, (ii) a confirmation by resealing of appointment, or (iii) a certificate of appointment of a foreign estate trustee’s nominee as estate trustee without a will

Question 8

Where there are multiple wills and the one being submitted for probate governs only some of the estate assets, the estate administration tax is calculated based only on

Answer 8

the value of the assets governed by that will

Question 9

form used to apply for a certificate of appointment of a foreign estate trustee’s nominee as estate trustee without a will, still requires the value of the

Answer 9

entire estate to be declared

Question 10

Until the court certificate is issued, one requests a refund in the

Answer 10

court office where the application for the court certificate was submitted

Question 11

To determine which of the approximately 20,000 applications for a certificate of appointment of estate trustee (also known as an “estate certificate” under the Estate Administration Tax Act, 1998) ought to be selected for a closer review, the estate trustee must submit an

Answer 11

estate information return

Question 12

the Minister is not obliged to issue

Answer 12

any notice of assessment at all

Question 13

Despite the assurance in the Estate Administration Tax Act, 1998 that estate administration tax is payable “in a representative capacity only,” the Ministry of Finance is aware that there are concerns over a lack of any clearance certificate mechanism. In that regard, the Ministry has stated that, upon request, it will provide a

Answer 13

comfort letter to an estate representative who has received a CRA clearance certificate.

Question 14

that the estate trustee would not be personally _________ for ________________

Answer 14

that the estate trustee would not be personally liable for estate administration tax

Question 15

where the Minister issues an assessment for additional estate administration tax after the estate has been distributed, collection of the tax owing must be sought from

Answer 15

the persons to whom the estate was distributed

Question 16

an estate trustee must pay, or make provision for, the estate’s creditors before

Answer 16

distributing the estate to the persons entitled

Question 17

It is particularly important that the client recognize that any fines imposed will not be recoverable from the estate if they were

Answer 17

unreasonably incurred

Question 18

bequest to a witness or spouse of a witness is void, unless

Answer 18

the court is satisfied that neither the witness nor the spouse exercised any improper or undue influence upon the testator

Question 19

all testamentary gifts to the former spouse under the will, as well as the former spouse’s appointment as estate trustee, if any, are

Answer 19

Revoked

Question 20

For former spouse to take part in the determination of the validity of the appointment of the former spouse as estate trustee and of the testamentary gifts

Answer 20

Need order

Question 21

If the bond is a personal bond,

Answer 21

usually two individuals bind themselves, along with the applicant, to the judge of the Ontario Superior Court of Justice

Question 22

where the bond is obtained from a licensed insurer, the amount of the bond need be

Answer 22

equal only to the value of the assets in the estate being administered

Question 23

Application bond - Where a trust company is appointed as estate trustee, what is not required

Answer 23

no security is required

Question 24

To obtain an order at the outset dispensing with the necessity of a bond

Answer 24

an affidavit by the estate trustee must be filed with the other documentation included in the application process

Question 25

A bond is not required where all of the following are met

Answer 25

▪ the administration is a result of an intestacy; ▪ it is granted to the surviving spouse of the deceased; ▪ the net value of the estate is $350,000 or less for the purposes of the SLRA; and ▪ an affidavit of debts is filed with the application for administration.

Question 26

In all of the situations where an estate trustee is required to post security, when the administration is ended, the bondsmen must be

Answer 26

released from the obligation

Question 27

The court itself does not cancel the bond but only

Answer 27

surrenders it up for cancellation

Question 28

securities are under whose control?

Answer 28

the estate trustee’s care and control

Question 29

It is also wise to advise the estate trustee to transfer security certificates from investment firms and other institutions to

Answer 29

the estate trustee’s own safekeeping facility

Question 30

If the securities are to be an asset of the estate

Answer 30

these securities or investment accounts should be registered in the estate trustee’s name, and this requires a transmission

Question 31

If the securities are to be sold, or if the money is needed to pay debts and provide cash bequests

Answer 31

a transfer is also needed requiring a transmission

Question 32

Where the testamentary document directs a sale or where a sale becomes necessary, the residence and other real property (such as a farm, summer residence, and commercial or apartment buildings) should be

Answer 32

sold or conveyed

Question 33

It is generally necessary to apply for a certificate of appointment of estate trustee with a will when the main asset is

Answer 33

real estate that has been devised in the will, unless the property is in the registry system

Question 34

land titles and will

Answer 34

- transmission application must be made - certificate of appointment of estate trustee is necessary for properties having a value in excess of $50,000

Question 35

The estate trustee should give a notice to creditors requesting them to submit claims before

Answer 35

any debts or legacies are paid or, in the case of an intestacy, before any distribution is made

Question 36

where an estate trustee has given appropriate notice to creditors, the estate trustee may

Answer 36

distribute the assets in the estate at the expiration of the time specified in the notice or the last of such notices for sending in claims against the estate

Question 37

The estate trustee is not liable for any person’s claim that

Answer 37

has not been received at the time of distribution

Question 38

The Trustee Act refers only to the liability of the

Answer 38

estate trustee and not to the liability of the beneficiary

Question 39

If a creditor with a valid claim appears after the estate trustee distributes to a beneficiary

Answer 39

the claim can be successfully asserted against the beneficiary or beneficiaries, as long as the claim is brought within the statutory limitation period.

Question 40

Giving notice to creditors does not, in and of itself, extinguish any

Answer 40

debts

Question 41

A prudent estate trustee should give notice to creditors when

Answer 41

soon as possible after the deceased’s death

Question 42

When notice of claim to creditors received, the estate trustee ought not to

Answer 42

proceed to pay the legatees without making due provision for all legitimate claims of which notice has been received

Question 43

Unless a notice to creditors as required by the Trustee Act has been given, no distribution of an intestate’s estate should be made until ... If the distribution is made re above

Answer 43

the expiration of one year after the death ..... the beneficiaries (or heirs) are bound to refund amounts received to pay creditors’ claims.

Question 44

notice to creditors publish

Answer 44

Newspaper and Ontario Gazette publishing the notice once a week for three successive weeks, with at least one month between the first publication and the time fixed for distribution

Question 45

Where there is an administration bond, notice to who should always be given

Answer 45

notice to creditors should always be given

Question 46

Where there is no administration bond and notice

Answer 46

notice should be given if the Ontario Superior Court of Justice must pass the accounts or if the deceased was active in business

Question 47

if the claim cannot be settled, the lawyer should explain the procedures under

Answer 47

the Estates Act (ss. 44–45), such as the contestation of a claim and the alternative approach of requiring that the claimant commence an action in the normal manner

Question 48

In the case of an insolvent estate, “the contest is between

Answer 48

creditors inter se as to priority in which their debts are to be paid”

Question 49

In case of a deficiency of assets, debts are to rank

Answer 49

pari passu (subject to the prior claims of any secured creditors)

Question 50

Why would a person be prepared to accept appointment as estate trustee for an insolvent estate?

Answer 50

- The person may be unaware at the time of accepting the appointment that the estate is actually insolvent. - An insolvent estate may have significant assets - The person may be a creditor of the deceased, having an interest in seeing that the estate assets are allocated properly among the creditors and in an expeditious manner

Question 51

Where the estate is solvent, the creditors are paid how?

Answer 51

in full, and the contest is between the beneficiaries inter se, first, as to the order in which resort is to be had to the various parts of the estate for payment of the debts and liabilities, and second, what parts of the estate are charged with payment of the pecuniary legacies and in what order

Question 52

The estate trustee’s year does not apply to the payment of

Answer 52

debts. The estate trustee is liable to be sued for payment of debts the moment after the testator’s death

Question 53

administrator cannot be compelled to make a distribution within the _______ after the death of the deceased

Answer 53

first year

Question 54

intestate estate, subject to the provisions of the Trustee Act (s. 53) dealing with the liability of the estate trustee to creditors, in the absence of an advertisement for creditors, no distribution is to be made until after the

Answer 54

first anniversary of the death of the deceased

Question 55

Under s. 44 of the SLRA, if the spouse survives and there are no issue surviving, the spouse is entitled to

Answer 55

the entire estate

Question 56

Spouse’s preferential share

Answer 56

spouse is entitled to a “preferential share,” currently fixed by regulation at $350,000

Question 57

The spouse is entitled to the preferential share according to the following rules:

Answer 57

▪ If the net value of the estate is less than the preferential share, the entire estate passes to the spouse, whether or not there were surviving issue (SLRA, s. 45(1)). ▪ If the net value of the estate is greater than the preferential share, the preferential share passes to the spouse (SLRA, s. 45(2)). ▪ If there is a partial intestacy (i.e., when the will does not dispose of all of the property of the deceased), the benefits received by the spouse under the terms of the will are taken into account in computing the preferential share (SLRA, s. 45(3)(a)).

Question 58

After the spouse has received the preferential share, the balance, if any, of the estate, is shared between the spouse and issue according to the following rules:

Answer 58

▪ Where there is only one child surviving, the balance of the estate is shared equally between the spouse and the child (SLRA, s. 46(1)). ▪ Where there are two or more children, the spouse takes one-third of the balance of the estate, and the rest is divided equally among the children (SLRA, s. 46(2)).

Question 59

If a child has predeceased an intestate or partially intestate parent, the portion that would otherwise pass to the child, had the child survived the intestate parent, will not fail if

Answer 59

the deceased child has left issue. The spouse’s share remains the same as if the child had survived the deceased intestate parent

Question 60

The issue of an intestate person are dealt with by representation on a

Answer 60

per stirpes basis, subject to the rights of the spouse of the intestate The spouse of the deceased child does not share in the distribution

Question 61

This may be contrasted with the situation where a gift is left to a child in a will, no contrary intention is set out in the will, and the child predeceases the testator. In that case

Answer 61

the spouse of the deceased child would be entitled to the gift

Question 62

Issue and no spouse - Where there is no spouse but one or more issue (the deceased’s descendants of any degree), the estate will be distributed on a

Answer 62

modified per stirpes basis if at least one child is living, the estate will be distributed equally among the children, with the issue of any predeceased child standing in that child’s place. However, if the deceased has no spouse, no surviving children, but surviving grandchildren, the estate will be distributed equally among the grandchildren, with the issue of any predeceased grandchild standing in that grandchild’s place * Under a pure per stirpes regime, the share of each grandchild would be dependent on how many children his or her parent had

Question 63

Subsection 17.4 of the CLRA states that the clerk of every court in Ontario shall furnish the Registrar General with a statement respecting

Answer 63

each court confirmation or finding of parentage

Question 64

How to obtain a certified copy of a statement filed under this provision from the Registrar General.

Answer 64

upon application and payment of a prescribed fee

Question 65

If these inquiries fail to locate the missing heirs and it is felt that insufficient “reasonable inquiries” have been made, an application under the

Answer 65

Rules to the Ontario Superior Court of Justice may be made

Question 66

where a devise or bequest is made to a child, grandchild, or sibling of the testator who predeceases the testator and leaves a spouse or issue surviving the testator, under s. 31 of the SLRA, the devise or bequest does not lapse but

Answer 66

takes effect as if it had been made directly to the persons among whom, and in the shares in which, the estate of that person would have been divisible if that person had died intestate, without any debts, immediately after the death of the testator, with no preferential share being given to that person’s spouse

Question 67

where an interest in land is bequeathed, the land passes subject to

Answer 67

any mortgage thereon

Question 68

The person receiving the interest in land is not

Answer 68

entitled to have the mortgage discharged out of the personalty of the estate (SLRA, s. 32)

Question 69

where no special time is fixed for the payment of a legacy, it carries interest only from the expiration of .... To above rule there are, however, exceptions

Answer 69

one year from the testator’s death .... where a discretion as to time of payment is vested in an estate trustee by the testator

Question 70

expressions such as “as soon as possible” or “not to be payable until six months after my death” do not

Answer 70

alter the date from which interest will run

Question 71

The Court of Appeal for Ontario has had occasion to address this issue in Rivard v. Morris. At common law, the obligation to pay interest has been referred to as a

Answer 71

“rule of convenience.”

Question 72

Where there is a specific legacy and the subject matter does not remain in specie or does not remain the property of the testator at the testator’s death, the legacy is said to have

Answer 72

adeemed (i.e., the subject matter having disappeared from the testator’s estate, the gift cannot be made)

Question 73

bequest of specific property may still take effect if it has merely

Answer 73

changed its form

Question 74

As well, the Substitute Decisions Act, 1992 provides an anti-ademption rule that applies where ... In above case, intended beneficiary will be entitled, absent a contrary intention contained in the will, to receive

Answer 74

property that is the subject of a specific bequest in the will of an incapable person has been disposed of by that person’s attorney pursuant to the authority under a continuing power of attorney .... from the residue of the estate the equivalent of a corresponding right in the proceeds of disposition of the property, without interest.

Question 75

all general legacies abate how

Answer 75

Rateably Priority will not be established by the fact that the will contains the legacy is to be paid “immediately” or “out of the first moneys” or that the words “in the first place,” “in the second place,” etc., are attached to the legacies

Question 76

To establish priority of Abatement of legacies

Answer 76

there must be an indication that the testator contemplated the possibility that the assets might be deficient and provided for the order of payment in that event

Question 77

Abatement of legacies

Answer 77

common law doctrine that states that when an estate doesn't have enough assets to pay all of the legacies in full, the legacies must be reduced in proportion. This happens in the reverse order of distribution

Question 78

“rule of convenience” principles

Answer 78

▪ The interest rate is not tied to any prevailing interest rates in the marketplace, but is a fixed 5% per annum. ▪ The rule is not predicated on the possibility of payment within the estate trustee’s year. ▪ Application of the rule is not grounded on the wrongful failure of the estate trustee to pay the legacy within that year. ▪ The rule is to be applied even if it is the legatee’s actions that have prevented the payment of the legacy within the year (by instituting litigation, for example).

Question 79

A residuary legatee has no right to call upon a

Answer 79

particular general legacy to abate

Question 80

The whole estate not specifically given must be exhausted before general legatees can be obliged to

Answer 80

contribute anything out of their bequests

Question 81

With regard to cash legacies, it is a common practice among estates practitioners to require a release from the

Answer 81

intended legatee prior to payment

Question 82

As a practical matter, however, a receipt (in the form of a cancelled cheque or otherwise) that evidences proof of full payment ought to be sufficient protection for

Answer 82

the estate trustee

Question 83

where, as a result of an abatement, the amount of the cash legacy to be paid is less than the amount set out in the will

Answer 83

it is conceivable that the legatee will allege either that ▪ the particular legacy ought not, according to the application of proper legal principles, to have been subject to abatement; or ▪ but for the estate trustee’s unreasonable acts or omissions in administering the estate, there would have been no abatement or the amount of the abatement would have been smaller

Question 84

Non-cash legacies - Where a specific asset is directed to be conveyed to a beneficiary, it is advisable to obtain from the beneficiary in advance an acknowledgment that

Answer 84

the asset intended to be conveyed is the one described in the will as the subject of the bequest

Question 85

The estate trustee must be advised that the estate trustee is not discharged by paying the legacy to

Answer 85

a minor, since the minor is unable to give a receipt unless the testamentary document specifically provides that the minor’s receipt shall be a sufficient discharge also not discharged by paying or transferring the legacy to the minor’s parent or other relative,

Question 86

A testator will often wish to establish a testamentary spousal trust so as to control the ultimate distribution of the trust capital. However, non-tax objectives (such as the desire to permit access to capital to persons other than the spouse during the spouse’s lifetime) may be at odds with the required parameters of a qualifying spousal trust that the testator will have to adhere to in order to obtain a rollover. To solve this problem

Answer 86

a testator will occasionally create both a qualifying spousal trust and a “tainted” spousal trust or a “family trust” and will give the personal representative the discretion to determine which assets are to be allocated to which trust.

Question 87

Where a spouse or a spousal trust acquires the ownership of property that was a deceased’s principal residence,

Answer 87

the recipient is deemed (s. 40(4)) to have owned the principal residence and designated it as such for the years in which the deceased so owned and designated the principal residence, thereby allowing the principal residence designation to run with the property rolled over.