How Long Does An Executor Have To Settle An Estate?
Let us introduce you to a new term: the executor’s year.
The executor’s year is a special time for executors—it’s the time they’re granted to fulfill their fiduciary duties to the estate, including the collection of assets, the payment of all taxes and debts, and the distribution of entitlements to beneficiaries.
While the rule isn’t set in stone, the executor’s year applies to your “average” estate. For a simple estate, the executor is granted one year from the date of death or one year from probate (more on that later) to distribute assets such as property, gifts, and cash to beneficiaries.
What happens beyond the first year?
After one year, if the executor doesn’t complete their duties, beneficiaries may demand payment (possibly with interest) by taking the executor to court.
Of course, if the estate is particularly complex, the courts may accept that the executor needs more time.
But, as with most Wills, the answer to “how long” depends on a variety of factors. In this case, probate court and taxes related to the administration of the estate play a large role in determining how long it takes for an executor to complete their duties.
Want a full checklist of executor duties? Get it here → Executor Checklist
Keep reading to find out more about the nuances of probate and estate administration tax (known as “EAT”) in Ontario.
First, what is probate?
Probate is a court order that happens before an executor is granted permission to administer an estate. The executor, also known as an “estate trustee”, may need to apply for probate. Not all Wills require probate, but most do.
Here’s what happens when a Will passes through probate:
The court gives the Will’s named executor permission to act as the authority of the estate
The court confirms that the Will is the last valid Will from the deceased
If there is no Will or the Will does not name an executor, the probate court is in charge of appointing someone to administer the estate
How do you apply for probate?
When an executor applies for probate and the application is successful, they will receive a legal document called a Certificate of Appointment of Estate Trustee. This is a document that confirms the executor as having legal authority to manage the estate.
But how do you know if you need to apply for probate? Here’s how:
There is no Will
The Will doesn’t name an executor, and you would like to take on the role
You need proof of your executor authority for a financial institution asking whether you’re authorized to receive estate assets
Assets include property that doesn’t automatically transfer to a person by right of survivorship
Your role as executor is being disputed
You’re not totally sure the Will is valid
Some beneficiaries aren’t able to provide legal consent (say, if they are a minor or a person who is incapacitated)
If you’re unsure about whether or not you need to apply for probate, please contact an estate lawyer who can provide professional advice. Find out more about applying for probate in Ontario here.
How long after probate can funds be distributed in Ontario?
After probate has been granted, it usually takes 6-12 months to settle the estate and distribute property, gifts, and other entitlements to beneficiaries.
But the actual probate process can take some time. The executor first needs to gather all financial documentation related to the estate, usually for an estate lawyer, including:
Bank account statements
Investment portfolio statements
Real estate records
Life insurance policies
Records of debt
Company share ownership records
What can also take a long time is obtaining original signed consents and/or renunciations required from all beneficiaries to include with the probate application. Each beneficiary needs to be located, sent hard copy forms, and return signed documents before the application can move forward. An estate lawyer can help with this part of the process.
After the application is filed, the time it takes to grant probate can vary by the court—it just depends on how busy they are. In rural areas, the process can take days or weeks. In urban centres like Toronto, the process can take many months.
Can you sell a property before probate is granted in Ontario?
You can start the process of selling an estate property before probate is granted, but you can’t finalize the sale.
It’s all about timing. Probate isn’t a quick process, nor is selling property. An executor might be eager to get the ball rolling before probate is granted, and that’s okay.
So an executor can list the property, but they must also add a condition to the sale agreement that probate needs to be granted before the sale is finalized. Some buyers may not want to accommodate this condition, and the executor should be prepared for this reality.
Before you list a property for sale, check how long it usually takes a home to sell in your area versus how long it takes for your court registry to grant probate. If you’re in Toronto, for instance, it’s not uncommon to see a five-month waiting period for probate, whereas it may take just 20 days to sell a home.
What is the EAT in Ontario?
The EAT is a probate fee that must be paid to the Ontario provincial government when an estate is probated. The fees are paid from the estate, not the executor.
EAT is calculated on the value of the estate at a rate of $15 per $1,000 of estate assets over $50,000.
In layman’s terms, this is equal to 1.5% on every dollar above $50,000. As of January 2020, there is no EAT on the first $50,000 in value.
What is part of the estate administration tax in Ontario?
Before applying for probate, the executor must complete a full assessment of the value of the estate. Here’s what this includes as it relates to EAT:
All real estate in Ontario, minus the outstanding value of any mortgage, HELOC, or lien or charge registered against land in Ontario
Investments that don’t have named beneficiaries, such as pensions, RRSPs, TFSAs, etc.
Bank accounts that are not in joint ownership
Other personal property like jewels, coins, furniture, etc.
What is not part of the estate admin. tax in Ontario?
Here’s what’s not taxed:
Property outside Ontario
Jointly owned property
Life insurance that has a named beneficiary of a death benefit
RRSPs, TFSAs, and RRIFs that have a named beneficiary
Joint bank accounts
As of January 1, 2020, the executor of the Will must file an Estate Information Return with the Ontario government within 180 days after their estate certificate has been issued as part of the probate process.
But you may not need to file. An Estate Information Return isn’t required if the court has issued:
A Certificate of Appointment of Succeeding Estate Trustee with a Will
A Certificate of Appointment of Succeeding Estate Trustee with a Will Limited to the Assets Referred to in the Will
Certificate of Appointment of Succeeding Estate Trustee without a Will
Certificate of Appointment of Estate Trustee During Litigation
If you’re still confused about the taxes related to the administration of estates or other questions about tax returns, consult with an estate lawyer who can clarify some of the nuances of probate fees and other fees related to estate law.
Can an executor be a beneficiary in Ontario?
Yes, it’s legal and normal that an executor is also a beneficiary of a Will.
Most people choose a close loved one whom they trust to be the executor of their Will. Oftentimes they are also a direct descendent of the person who died, and they stand to receive a large portion of the estate. In that case, they’ll likely want the process to go as quickly as possible!
Don’t forget to breathe
If you’ve been appointed as the executor for someone’s estate, take a breath. You have some time to complete your legal duties.
And if you’re especially overwhelmed, make sure to ask for help. While you are the primary authority on the Will, there’s nothing that says you can’t ask for help.