Modest or Insolvent Estates
- Sharing that banks will often release accounts without requiring probate if the balance is less than $25,000.00
- Sharing that ICBC will also transfer vehicles without probate for estates less than $25,000.00
- Explaining that an estate must be properly administered even if it’s modest
- Explaining that a creditor can be required to commence a proceeding within 180 days or their claim will be extinguished
- Reminding that an “estate” doesn’t include assets that pass outside the estate such as jointly held assets with the right of survivorship and registered assets with a named beneficiary
I often get calls from folks asking for help with modest or insolvent estates. I can usually help them along their way with a quick chat. This column will cover some common points.
One is that an estate grant, which is usually required to transfer assets that are registered solely in the deceased’s name, is often not required with an estate valued less than $25,000.00.
This thing I’m referring to as an “estate grant” is a court order granting a representative (executor or administrator) authority to step into the shoes of the deceased when it comes to dealing with the deceased’s assets.
It’s like a power of attorney but is obtained after death.
The legal process of achieving an estate grant is commonly referred to as “probate”.
If your dad passes away with $75,000.00 in a bank account that is solely in his name, you will need to go through the probate process to satisfy the bank that you have the authority to access those funds.
But if your dad’s account balance is less than $25,000.00, the bank will likely release those funds if you satisfy them that you are the proper person to deal with the estate. This will include swearing a statutory declaration containing an agreement to take financial responsibility if someone claims against the bank for improperly releasing the funds to you.
Each bank has their own policies, but this has become an industry standard. There is also some flexibility, so it’s possible that a bank will release accounts exceeding $25,000.00.
ICBC has similar policies for the transfer of a vehicle. Use “ICBC Checklist for Estate Transfers” as a browser search term for an informative chart explaining what documentation ICBC needs to transfer title to a vehicle for different estate circumstances.
The ICBC checklist refers to estates less than $25,000.00, though I know of situations where vehicles have been transferred without the need for probate in estates exceeding $25,000.00.
Whether or not an estate grant (probate) is required doesn’t change the requirement to properly administer the estate.
Consider an estate where the deceased has thousands of dollars of debt. As the named beneficiary, you expose yourself to personal liability if you take (or give to other beneficiaries) any of the estate assets before paying the estate debts.
I’ve written previously about the option of leaving an estate alone if debts exceed assets. E-mail me for a link if you have difficulty finding it.
So long as you don’t take estate assets or otherwise muck with (intermeddle) an estate, there is no obligation on a named executor, spouse or child to do anything. Creditors can be left hanging, furnishings can be left in an apartment and tax returns can be left unfiled.
Are you unsure if a creditor will go to the expense of taking legal action to pursue payment of a debt? Section 146 of the Wills, Estates and Succession Act (WESA) allows an estate representative to give notice to a creditor requiring them to commence a legal proceeding to collect their debt within 180 days or their claim will be extinguished.
Note that estate assets can be used for the deceased’s funeral even if there are unsecured creditors circling. Section 170 of WESA provides a priority list of where funds can go with an insolvent estate. Reasonable funeral expenses are at the top of that list.
I’ll end with a reminder of the puzzling reality that a deceased’s “estate” does not include assets that pass directly to beneficiaries such as jointly held assets with the right of survivorship and registered accounts (TFSAs, RRSPs, RRIFs, etc.) where a beneficiary has been named. I’ve written about this a number of times. E-mail me for help finding those columns.
Also e-mail me with any other questions you might have about administering a modest estate.
Unless I’m delayed with an intervening column answering those questions, my next column will be about helping folks navigate an application for an estate grant without a lawyer.
Please be cautious about acting on the legal information I am providing in my columns. There are a dizzying number of circumstances that can arise in an estate and it is always best to get legal advice from a lawyer who is fully informed about your particular circumstances.
