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Wills and probate
What rules and restrictions (if any) govern the disposition of and succession to an individual’s property and assets in your jurisdiction?
An individual’s property generally vests in the individual’s personal representatives on death. If the individual has made a will and appointed an executor, the executor is the personal representative and the disposition of the property is governed by the terms of the will. If the individual dies without a will, the personal representative is the estate administrator appointed by a court of competent jurisdiction and the disposition of the property is governed by provincial and territorial intestacy rules. Under Quebec civil law, the administrator of the property of the deceased is called a liquidator, regardless of whether the deceased died testate or intestate. The liquidator is seized with the task of liquidating the succession, which is the civil law equivalent to the common law concept of the estate. In practice, the role of a liquidator closely approximates that of an executor or estate administrator.
Individuals with the requisite mental capacity are generally free to dispose of their property as they determine by will. However, if an individual does not make adequate provision for their dependants (including a spouse), these can claim financial support from the estate. In British Columbia, children who are not dependants can also make a claim for support. In some provinces, a spouse can also seek a division or equalisation of property in a similar manner to marriage breakdown, in lieu of the gifts provided under the will.
Certain property does not vest in an individual’s personal representative on death. If an asset permits a beneficiary designation (eg, life insurance, pension plans, certain registered savings vehicles), the asset passes directly to the designated beneficiary. Property held in joint tenancy with right of survivorship will generally pass directly to the surviving joint tenant by operation of law. However, joint tenancy does not exist under Quebec civil law.
What rules and procedures govern intestacy?
In the event of a full intestacy (an individual dies without a valid will) or a partial intestacy (an individual dies with a will that is valid but does not dispose of all of the individual’s estate), the distribution of the estate is governed by the applicable provincial statute. Provincial intestacy statutes generally divide the estate among the surviving spouse and issue of the deceased, or to the closest next-of-kin if there is no spouse or issue.
What rules and restrictions (if any) apply to the governing law of a will?
The construction of a will is generally governed by the law of the place where the testator is domiciled at the time the will is made.
Under common law, the formal validity of a will as it relates to moveable property is governed by the law of the testator’s domicile when the will is made; the formal validity of a will as it relates to immoveable property is governed by the law of the location of the immoveable property. In some Canadian jurisdictions, the common law has been amended by statute so that the law where the will was made or the law of the testator’s domicile, habitual residence or nationality may govern the formal validity of a will as it relates to both moveable and immoveable property.
The essential validity and effect of a will, and succession to property, is generally governed by the law of the testator’s domicile in the case of moveable property, and by the law of the location of the property in the case of immoveable property.
What are the formal and procedural requirements to make a will? Are wills and other estate documents publicly available?
A will (or codicil) must be in writing, signed by the testator at the end of the document and executed in the presence of two witnesses who are both present at the same time. An exception to this rule is the holograph will, which is a will entirely in the testator’s own handwriting and is valid in most provinces and territories. In all cases, the testator must have the requisite mental capacity, must have knowledge of the contents of the will and approve them, and must not have executed the will as a result of undue influence. In Quebec, a will can also be a notarial will, which must be signed before a notary and one witness.
Wills are not publicly available until they are probated. When a will is probated it becomes part of the public record unless the court seals the court file. A sealing order is the exception rather than the rule. A notarial will does not need to be probated – it is deemed authentic and is recorded in a public register.
Validity and amendment
How is the validity of a will established in your jurisdiction?
If a will meets the requirements of a valid will in the relevant Canadian jurisdiction, it is valid in its own right. However, the validity of the will can be confirmed by ‘probating’ the will. ‘Probate’ is a judicial process in which the original will is submitted to a court of competent jurisdiction by the executor named in the will (or the person seeking to be appointed as the executor if the person named in the will is unable or unwilling to act). In Quebec, a notary can also probate a will unless the will is being challenged. Although the requirements vary by province, the person propounding the will must generally submit an application in the prescribed form and give notice of the application to persons with a financial interest in the estate. If there are minors or persons who are mentally incapacitated, notice must generally be given to the appropriate government agency (eg, Children’s Lawyer, Public Guardian and Trustee).
In most cases, probate is granted on the basis of the written application without a formal hearing. A hearing may be required where an individual seeks to probate a copy of a will or a lost or destroyed will, and will be required if a person objects to the appointment of the applicant or challenges the validity of the will.
A tax or fee is generally charged when an application is made to probate a will. The fee may be a fixed amount or a percentage of the value of the estate, and is generally referred to as a ‘probate fee’ or estate administration tax.
In some Canadian jurisdictions, marriage revokes an existing will unless the will is specifically made in contemplation of that marriage. This is not the case in Quebec.
To what extent are foreign wills recognised? Do any special rules and procedures apply to establishing their validity in your jurisdiction?
A foreign will (including wills made in other Canadian provinces and territories) is generally recognised as a valid will and admissible to probate if, at the time the will was made, it complied with the requirements for a valid will under the law where:
- the will was made;
- the testator was domiciled;
- the testator had their habitual residence; or
- the testator was a national.
If a foreign will has been probated in a jurisdiction other than the relevant Canadian jurisdiction (including other Canadian provinces and territories), the foreign probate can be recognised by the relevant Canadian jurisdiction in a process that is similar to probating the will in the relevant Canadian jurisdiction in the first instance. As part of that process, the foreign executors must submit copies of the foreign probate that are certified by the issuing authority in the foreign jurisdiction. There may also be a requirement to post a bond as security.
How can the validity of a will be challenged? Can the will be amended after the decedent’s death?
An individual who has a financial interest in an estate, including an individual who would inherit in the event of an intestacy, can initiate a court application to challenge the validity of a will on the basis of:
- lack of testamentary capacity;
- invalid execution;
- absence of knowledge or approval of the contents of the will; or
- undue influence.
If an individual makes a valid will but does not make adequate provision for their dependants (including a spouse), they can claim financial support from the estate. In British Columbia, children who are not dependants can also make a claim for support.
A trust, including a trust in a will, can be varied under the applicable provincial statute governing the variation of trusts. Generally, a court can consent to the variation of a trust on behalf of classes of beneficiaries who cannot themselves provide consent, such as minors, unborn or unascertained beneficiaries and beneficiaries who are not mentally competent, if the variation benefits that class of beneficiaries.
In most provinces the beneficiaries of a trust can terminate the trust if they are all adults, mentally competent and together represent the entire beneficial interest in the trust.
What rules and procedures govern:
(a) The appointment of estate administrators?
The process for appointing an estate administrator (ie, where there is an intestacy) is similar to the process for probating a will. The individual (or individuals) who wish to be appointed as the estate administrators submit an application in the prescribed form to the court of competent jurisdiction and give notice of the application to persons with a financial interest in the estate. If there are minors or persons who are mentally incapacitated, notice must generally be given to the appropriate government agency (eg, Children’s Lawyer, Public Guardian and Trustee).
Provincial and territorial law generally sets out an order of priority for who may be appointed as estate administrator, with a spouse and next-of-kin having priority over persons who are not related to the deceased. The applicants may be required to post a bond and must generally reside in the jurisdiction.
Upon an intestacy in Quebec, the process for appointing a liquidator of a succession – the Quebec equivalent to both an estate administrator and executor – differs substantially from the process for appointing an estate administrator in the common law provinces. The sole heir of a succession is bound to accept the office of liquidator of the succession. If the succession has multiple heirs, the heirs can designate a liquidator by majority vote. These heirs are determined by a comprehensive scheme set out in the Civil Code of Quebec.
A tax or fee is generally charged when an application is made to appoint an estate administrator. The fee may be a fixed amount or a percentage of the value of the estate, and is generally referred to as a ‘probate fee’ or estate administration tax.
(b) Consolidation and administration of the estate?
The executor (in the case of a testate estate) or estate administrator (in the case of an intestate estate) is responsible for ascertaining the assets of the deceased, taking appropriate steps to secure them and, subject to contrary directions in a valid will, liquidating and investing the estate assets. The executor or estate administrator is required to keep adequate records of all dealings with the estate assets and to account to the beneficiaries of the estate.
Property that passes directly to a designated beneficiary (eg, life insurance, pension plan survivor benefits, registered savings plans), and property that passes to a surviving joint tenant by right of survivorship, does not form part of the estate. The executor or estate administrator is not responsible for the administration of those assets.
(c) Distribution of the estate to heirs?
In the case of a testate estate, the executor is responsible for distributing the assets of the estate in accordance with the terms of the will after payment of the deceased’s debts. The terms of the will may require the executor to establish trusts for beneficiaries, and the executor will often be appointed as the trustee of those trusts. In the case of an intestate estate, the estate administrator is responsible for distributing the assets of the estate in accordance with the applicable provincial or territorial intestacy statute after payment of the deceased’s debts.
Distribution should not occur until the relevant limitation periods for spousal or dependant claims have passed or those claims have been waived or released. In addition, provincial and territorial law may preclude the distribution of an intestate estate for a period of time, such as the first year of the estate.
(d) Settlement of the decedent’s debts and payment of any taxes and fees?
The executor (in the case of a testate estate) or estate administrator (in the case of an intestate estate) is responsible for ascertaining the deceased’s debts and paying them from the residue of the estate. An executor or estate administrator should publicly advertise for creditors of the deceased according to the practice in the Canadian jurisdiction where the deceased resided. Online tools are now available, in addition to the traditional method of advertising in local newspapers.
The executor or estate administrator is responsible for filing the deceased’s final income tax return , prior year’s tax returns and the estate’s income tax returns. Any taxes owing are paid from the residue of the estate.
If the residue of the estate is insufficient to satisfy the deceased’s debts (including taxes), they are charged rateably to any specific gifts in the will (eg, cash legacies or gifts of specific property) according to an order of priority. If the estate is insolvent, the estate is generally distributed on a pro rata basis among the creditors.
Are there any special considerations specific to your jurisdiction that individuals should bear in mind during succession planning?
A tax or fee is generally charged when an application is made to appoint an executor or estate administrator. The fee may be a fixed amount or a percentage of the value of the estate and is generally referred to as a ‘probate fee’. In the Canadian jurisdictions where the probate fee is a percentage of the value of the estate, testators may implement planning to reduce the value of the estate that will be subject to the probate fee, such as, for example, using beneficiary designations (eg, pension plans, certain registered savings plans or life insurance) and holding property in joint tenancy with right of survivorship. In some Canadian jurisdictions, multiple wills are used to govern different classes of assets, with those assets that can generally be administered without probate governed by a separate will. Alter ego trusts, spousal or common law partner trusts and joint spousal or common law partner trusts (which are prescribed trusts under the federal Income Tax Act) are also used for probate fee planning.
Special planning may be required for individuals who have an interest in a private corporation. Multiple wills may be used for interest in private corporations in some Canadian jurisdictions with high probate fees. Wills should include the necessary powers to engage in post-mortem planning to mitigate double taxation on the same economic value (ie, at the corporate level and the shareholder level). An ‘estate freeze’ is an inter vivos transaction in which a shareholder of a private corporate exchanges common (participating) shares for preferred (fixed-value) shares to limit the income tax liability that will arise on death, with future growth in the value of the corporation accruing to new common shareholders, either directly or through a discretionary family trust.
If a beneficiary is receiving social assistance, including provincial or territorial disability benefits, special trusts may be used in some Canadian jurisdictions to preserve eligibility for benefits. The federal Income Tax Act contains prescribed trusts, tax deferral opportunities and tax elections that can be used for certain disabled beneficiaries.
In Canada, a person is deemed to have disposed of their property immediately before death, which triggers accrued but unrealised capital gains. The federal Income Tax Act provides for a deferral of that tax if the deceased’s property is transferred to a spouse or common law partner or qualifying spousal or common law partner trust (a prescribed trust). There are also income tax deferral opportunities for certain registered savings plans that are transferred to a spouse or common law partner or financially dependent child or grandchild.