Probate is the legal process by which a court verifies that a deceased person's will is valid and that their assets are distributed according to the will or the laws of intestacy if there is no will. Estate administration is managing and distributing a deceased person's assets and settling their debts after death.
The process of probate and estate administration varies by province but generally involves obtaining a grant of probate (a court order that confirms the validity of the will) and then using that grant to transfer ownership of the deceased person's assets to their beneficiaries.
The process of probate in Canada varies by Province, but below are some of the ways the process of probate plays out in Canada:
The executor or administrator of the estate must obtain a death certificate before they can begin the probate process.
The executor or administrator must identify and inventory all of the assets that are part of the deceased person's estate.
The executor or administrator must apply to the court for a grant of probate, which is a court order that confirms the validity of the will and confirms the executor's authority to manage and distribute the assets of the estate.
The executor or administrator must notify the deceased person's creditors and settle any outstanding debts before distributing the assets to the beneficiaries.
The executor or administrator must ensure that all taxes, including income taxes and estate taxes, are paid before distributing the assets to the beneficiaries.
The executor or administrator must distribute the assets of the estate according to the terms of the will or, if there is no will, according to the laws of intestacy.
Once the probate process is completed and the court is satisfied that the estate has been administered properly, it will issue a release and discharge to the executor or administrator, which releases them from further liability and concludes the probate process.
Bank accounts with beneficiaries do not have to go through probate in most cases. This is because the account is considered to be a "non-probate asset" which means that it passes directly to the beneficiary, bypassing the probate process.
It's worth noting that this only applies to the funds in the POD account and does not include other assets of the deceased person's estate such as real estate, investments or other bank accounts that are not set up as POD.
It's important to note that, while probate is required for these assets, the executor or administrator of the estate can still distribute these assets to the beneficiaries according to the will or the laws of intestacy, once they have obtained a grant of probate.
The value of an estate that triggers the need for probate varies by the province in Canada. In some provinces, there is a monetary threshold below which an estate does not have to go through probate, this is known as a "small estate" or "summary administration" and the threshold can be as low as $10,000 or as high as $50,000.
However, in other provinces, there is no monetary threshold, and all estates, regardless of their value, must go through probate. Additionally, even if an estate falls below the threshold, probate may still be required if the estate includes assets such as real property, or if there are disputes among the beneficiaries.
It's important to note that even if probate is not legally required, the executor or administrator of the estate may choose to go through the probate process, especially if there are any uncertainties or disputes that need to be resolved by a court.
It's also important to consult with a legal professional in your Province, as the rules and process can vary.
After probate is granted, the executor or administrator of the estate is authorized by the court to manage and distribute the assets of the estate according to the terms of the will or, if there is no will, according to the laws of intestacy.
The first step the executor or administrator will take is to notify creditors and settle any outstanding debts of the estate. This is important because the executor or administrator is personally liable for the debts of the estate, and therefore, it's important to make sure that all debts are paid before the assets are distributed to the beneficiaries.
The next step is to pay taxes, including estate taxes, income taxes, and any other taxes that might be due. The executor or administrator must ensure that the taxes are paid before distributing the assets to the beneficiaries, as taxes must be paid from the estate's assets and not from the beneficiaries' shares.
Finally, the executor or administrator must distribute the assets of the estate according to the terms of the will or, if there is no will, according to the laws of intestacy. This includes transferring ownership of the assets to the beneficiaries, as well as providing them with any documents or information they need to take possession of their inheritance
After all these steps are completed and the court is satisfied that the estate has been administered properly, it will issue a release and discharge to the executor or administrator, which releases them from further liability and concludes the probate process.