CHAPTER 1

POWERS OF ATTORNEY FOR PROPERTY

LEARNING OBJECTIVES

1.1 INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-5

1.1.1 Definition of Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-5
1.1.2 Terminology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-5
[Link] Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-5
[Link] Enduring Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . 1-6
[Link] Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-6
[Link] General Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . 1-6
[Link] Grantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-6
[Link] Guardian for Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-6
[Link] Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-7
[Link] Specific Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-7
[Link] Springing Power of Attorney. . . . . . . . . . . . . . . . . . . . . . . . . 1-7
1.1.3 Origin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-7
1.1.4 Common-law Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-8
1.1.5 Provincial Variation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-9
1.1.6 Springing Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-9
1.1.7 Power of Attorney Distinguished from a Trust . . . . . . . . . . . . . 1-10
1.2 WHY AN ATTORNEY FOR PROPERTY IS NEEDED . . . . . . . . . . . . . . . . . 1-11
1.2.1 Providing for Incapacity and Enduring Powers of Attorney . . .1-11
1.2.2 Where There Is No Power of Attorney. . . . . . . . . . . . . . . . . . . . . . 1-11
1.2.3 Disadvantages of Court Appointed Guardian . . . . . . . . . . . . . . 1-11
1.2.4 Misconceptions about the Need for a Power of Attorney . . . 1-13
[Link] Joint Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-13
[Link] The Family Home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-13
[Link] The Existence of a Will . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-13

1-1
 [Link] Trading Authorisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-14
[Link] Bank Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-14
[Link] Attorney’s Power Is Not Exclusive . . . . . . . . . . . . . . . . . . . 1-15
1.3 REQUIREMENTS FOR A VALID POWER OF ATTORNEY . . . . . . . . . . . . 1-15
1.3.1 Formalities: Execution and Witnesses . . . . . . . . . . . . . . . . . . . . . . 1-15
1.3.2 Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-16
1.4 CHOICE OF ATTORNEY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-17
1.4.1 Who Is Eligible?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-17
[Link] Who Can Be Appointed to Be an Attorney?. . . . . . . . . . 1-17
[Link] Appointing More than One Attorney . . . . . . . . . . . . . . . 1-17
[Link] Persons Who May Not Be Appointed . . . . . . . . . . . . . . . . 1-18
[Link] Alternate Attorneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-18
1.4.2 Who Is Appropriate? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-18
[Link] Investment Knowledge and Financial
Management Skills. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-19
[Link] Nature and Complexity of the Assets of the Grantor . . .1-19
[Link] Family Situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-19
[Link] Appointing Children . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-20
[Link] Location of the Attorney. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-20
[Link] Income Tax Considerations for Canadian
Controlled Private Corporations . . . . . . . . . . . . . . . . . . . . 1-20
[Link] Age of the Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-21
[Link] Corporate Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-21
[Link] Consider Appointing Several Attorneys Acting
Together . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-21
[Link] Avoiding Conflicts Among Attorneys . . . . . . . . . . . . . . . 1-22
[Link] Is the Attorney Willing to Act? . . . . . . . . . . . . . . . . . . . . . . 1-22
[Link] Consider Powers of Attorney with Different
Attorneys for Separate Property . . . . . . . . . . . . . . . . . . . . 1-22
1.5 ATTORNEY’S POWERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-23
1.5.1 Limitation of Attorney’s Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-23
1.5.2 Personal Acts or Appointments . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-24

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1.6 ATTORNEY’S DUTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-25
1.6.1 Mandatory or Voluntary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-25
1.6.2 Duties and Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-25
1.6.3 Accountability and Keeping Accounts . . . . . . . . . . . . . . . . . . . . . 1-26
1.7 REMOVAL AND TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-26
1.7.1 Revocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-26
1.7.2 Effect of Separation or Divorce on Appointment of
Spouse or Common-law Partner . . . . . . . . . . . . . . . . . . . . . . . . . . 1-27
1.7.3 Renunciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-27
1.8 OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-27
1.8.1 Assets Outside the Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-27
1.8.2 Multiple Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-28
1.8.3 Dealing with Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-29
1.8.4 Status Indians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-29
1.8.5 Using a Trust as an Alternative to the Power of Attorney . . . 1-29
1.8.6 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-30
1.8.7 Judicial Power for Removal of Attorneys . . . . . . . . . . . . . . . . . . . 1-30
1.9 DRAFTING AND TAKING INSTRUCTIONS FOR POWERS
OF ATTORNEY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-31
1.9.1 Donor’s Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-31
1.9.2 Powers of Attorney to Deal with Land . . . . . . . . . . . . . . . . . . . . . 1-32
1.9.3 Consent and Direction to Obtain Information. . . . . . . . . . . . . . 1-32
1.9.4 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-32
1.9.5 Dealing with the Family Home . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-33
1.9.6 Special Instructions Regarding Gifts and Dependants . . . . . . 1-33
1.9.7 Effect upon Separation or Divorce. . . . . . . . . . . . . . . . . . . . . . . . . 1-33
1.9.8 Accounting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-34
1.9.9 Reciting Duties of Attorneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-34
1.9.10 Consider Extra-Provincial Requirements . . . . . . . . . . . . . . . . . . . 1-34
1.10 ESTATE PLANNING UNDER A POWER OF ATTORNEY . . . . . . . . . . . . . 1-34
1.10.1 Advance on Inheritance Not Permitted . . . . . . . . . . . . . . . . . . . . 1-35

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 1.10.2 Gifts to Reduce Value of Estate and Reduce U.S. Estate
Tax Not Permitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-35
1.10.3 Estate Freeze Permitted Where It Would Not Reduce
the Value of the Grantor’s Estate During His Lifetime . . . . . . . 1-35
1.10.4 Transfer to Inter Vivos Trust to Preserve Assets of
an Incapable Grantor Not Permitted Because Trust
Benefitted the Attorneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-35
1.10.5 Where Estate Planning Is Permitted Under a Power of
Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-36
1.11 SUBSTITUTE DECISION MAKERS BY JURISDICTION . . . . . . . . . . . . . . 1-37

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 Chapter 1
Powers of Attorney for Property

Learning Objectives

Knowledge Objectives
• Understand the purpose of a Power of Attorney for Property and how it is
created and utilised

Skills Objectives
• Explain the need for substitute decision making for property
• Identify the duties and powers that can be exercised by an attorney for property

1.1 INTRODUCTION

1.1.1 Definition of Power of Attorney

A power of attorney for property is a written document by which one person (the
“grantor”) appoints another person (the “attorney”) to act (as a substitute decision
maker) on the grantor’s behalf with respect to the grantor’s property or financial
affairs.

1.1.2 Terminology

[Link] Attorney

The person who is appointed to act on the grantor’s behalf is called the
“attorney,” and this should not be confused with the other meaning of
“attorney” (particularly in the U.S.) referring to a lawyer. An “attorney”
under a power of attorney for property and for personal care is called a
“substitute decision maker” in Ontario but generically is still referred to as

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[Link] CHAPTER 1 — POWERS OF ATTORNEY FOR PROPERTY

an attorney. The person appointed need not have any special qualifications
except as noted below at 1.4.1, Who Is Eligible?

[Link] Enduring Power of Attorney

This refers to a power of attorney that is valid during any period of

subsequent mental incapacity on the part of the grantor. It is also called a
“continuing power of attorney.” However, the grantor must have capacity
at the time the power of attorney is made.

[Link] Estate

The use of the word “estate” is not restricted to property that is transferred
on the death of an individual. It also refers to the property owned by an
individual during his or her lifetime. At common law, “estate” generally
referred to real property, but in the context of modern usage, it can
refer to the entire wealth of an individual. Thus in discussing powers of
attorney one might refer to the management of the “estate” of the grantor
by the attorney even though the grantor is not deceased. However, this
is not to be confused with “estate planning” that may include preparing
powers of attorney but usually primarily refers to planning for the orderly
management of one’s property and financial affairs upon death.

[Link] General Power of Attorney

This is a power of attorney that permits the attorney to do anything the

grantor can do, subject only to the restrictions imposed by law. At common
law, a general power of attorney is not valid during any subsequent
incapacity of the grantor unless specifically stated.

[Link] Grantor

The individual who gives the power of attorney is called a “grantor” or

sometimes a “donor.”

[Link] Guardian for Property

If an individual becomes unable to manage his or her financial affairs,

provincial law provides a mechanism for someone to be formally appointed
by the court to act on his or her behalf in respect of financial matters.

1-6
INTRODUCTION 1.1.3

This person may also be called a “guardian,” “guardian for property,” a

“committee,” or in the province of Alberta a “trustee.”

[Link] Power of Attorney

A power of attorney is a written document that authorises an attorney to

manage the financial affairs of the grantor. It may be called a power of
attorney or in the province of Quebec a “mandate.” In Ontario, there is a
distinction between the term “power of attorney for property” and “power
of attorney for personal care.” The latter is discussed in Chapter 2. In this
chapter,“power of attorney” refers to a power of attorney for property.

[Link] Specific Power of Attorney

This is a power of attorney that exists for a specific purpose or for a limited
time period, such as for a specific transaction when the grantor is ill or
absent, or dealing with a specific type of property such as all interests in
a business or corporation, or for a specified period when the grantor will
be out of the country. It is sometimes referred to as a “limited power of
attorney.”

[Link] Springing Power of Attorney

This is a power of attorney that is subject to a condition precedent to be of

effect. For example, a power of attorney could be subject to the condition
that it has effect when the grantor is out of the country on military service
or only after two medical doctors have certified the grantor to be mentally
incapable of managing property.

1.1.3 Origin

The origin of powers of attorney is based on the common law, mostly the law of
principal and agent, although certain aspects of other legal concepts (including that
of contract and fiduciary duty) are also relevant. Every province and territory in
Canada has legislation creating statutory powers of attorney that in effect codify and
expand the common-law principles and requirements. To the extent that legislation
deals with a particular aspect of powers of attorney, the common law will have been
replaced. A few common-law principles are worth reviewing, however, as they have
not been supplanted by legislation, or most frequently the legislation articulates the
common-law principle.

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1.1.4 CHAPTER 1 — POWERS OF ATTORNEY FOR PROPERTY

1.1.4 Common-law Principles

At common law, no specific statutory authority was required to create a power of

attorney, which has its origin in the law of agency. The term “power of attorney”
was not necessarily used to describe the relationship. Powers of attorney could be
created by contract — written or oral — and the law of principal and agent was
generally applicable to the relationship in addition to the law of contract. In addition
at common law:

• a power of attorney terminates on the death, bankruptcy, or

subsequent mental incapacity of the grantor,

• a power of attorney can be granted only in respect of financial

matters,1

• a power of attorney can be revoked at any time by the grantor

providing there is capacity,

• the grantor’s duties cannot be delegated to another person unless the

contract creating the power of attorney provides for delegation,

• the authority granted is strictly interpreted and the language used will
not be broadly construed,

• the attorney has a fiduciary duty to act in good faith and must avoid
any act that conflicts with the interest of the grantor,

• the attorney has a duty to account to the grantor, and

• the attorney has a right to remuneration and reimbursement of

expenses.

A few of these common-law principles have been specifically altered by statute. For
example, a power of attorney may “continue” during incapacity if the provincial
legislation provides, and personal directives and living Wills (described in Chapter
2) are a form of non-financial powers of attorney. Most of the other common-law
principles noted above, especially those relating to the duties of the attorney, continue

1 Other powers of attorney for personal matters relating to the individual’s physical well-being are purely of
[Link] are discussed in Chapter 2.

1-8
INTRODUCTION 1.1.6

to apply either as part of the common law or because they have been specifically
embodied into the particular statutory regime.

1.1.5 Provincial Variation

As the legislation governing powers of attorney is provincial, the specific rules vary
from one province to another. In some cases the differences are minor, but in others
critical. For example, some provinces require two witnesses, others only [Link] age
the grantor must have obtained to make the power of attorney valid is generally the
age of majority,2 which itself varies by province. The legislation of some provinces
provides for a mechanism to make decisions where there is more than one attorney
and they do not agree, whereas others do not.

A list of the relevant legislation is included at the end of this chapter.

1.1.6 Springing Powers of Attorney

A power of attorney is generally effective immediately unless it specifies otherwise.

If the power of attorney is subject to a condition before it is effective, it is known
as a springing power of attorney. Many jurisdictions specifically authorise springing
powers of attorney, and others — such as New Brunswick, Prince Edward Island,
Nova Scotia, and Newfoundland and Labrador — are silent. For example:

• British Columbia: Subsection 10 of the legislation provides that

an enduring power of attorney is one “that continues to have effect
while, or comes into effect when, the adult is incapable.”

• Alberta: Subsection 5(1) of the Alberta legislation provides, “An

enduring power of attorney may provide that it comes into effect at a
specified future time or on the occurrence of a specified contingency,
including, but not limited to, the mental incapacity or infirmity of the
donor.”

• Saskatchewan: Section 9 of the legislation provides, “An enduring

power of attorney may provide that an appointment comes into
effect on a specified future date or on the occurrence of a specified
contingency, including the lack of capacity of the grantor.”

2 However, the statute for Newfoundland is silent on this point.

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1.1.7 CHAPTER 1 — POWERS OF ATTORNEY FOR PROPERTY

• Manitoba: The legislation provides for “springing powers of attorney”

as defined by subsection 6(1), which reads, “A donor may provide in
the power of attorney that it comes into force at a specified future
date or on the occurrence of a specified contingency.”

• Ontario: Subsection 7(7) of the Ontario legislation provides, “The

continuing power of attorney may provide that it comes into effect
on a specified date or when a specified contingency happens.”

• Quebec: A mandate given in anticipation of incapacity is the

equivalent to an enduring power of attorney in the common-law
provinces, but it is only effective once the grantor is incapable and
after being homolgated by a prothonotary or judge of the Superior
Court.

1.1.7 Power of Attorney Distinguished from a Trust

While an attorney has fiduciary obligations both at common law and under statute
similar to those of a trustee, there are important differences. Figure 1.1 pinpoints
these differences.

Figure 1.1: Differences Between Power of Attorney and Trust

Attribute Power of Attorney Trust

Legal Title to Property No Yes
Authority From grantor or power of From trust document
attorney document
Revocation By grantor at any time Generally settlor cannot
providing there is revoke unless trust
capacity document provides
Amendment By grantor providing Only if provided for in
there is capacity trust document
Death of settlor/grantor Terminates the power of Does not automatically
attorney terminate trust although
this may be a term of the
trust

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WHY AN ATTORNEY FOR PROPERTY IS NEEDED 1.2.3

1.2 WHY AN ATTORNEY FOR PROPERTY IS NEEDED

1.2.1 Providing for Incapacity and Enduring Powers of Attorney

The creation of a power of attorney to manage the financial affairs of an individual

during any period of incapacity is a standard component of estate planning today.

Each jurisdiction in Canada has enacted legislation to authorise a power of attorney

that survives the subsequent mental incapacity of the grantor. As noted above, this is
only possible by statute since under the common law the authority would otherwise
terminate. A power of attorney that continues during mental incapacity is called an
enduring power of attorney or a continuing power of attorney.

Generally the provincial legislation provides that a power of attorney will be

enduring if the document granting the power of attorney contains a statement that it
may continue during the subsequent incapacity of the grantor. However, in Quebec,
a mandate given in anticipation of future incapacity will take effect only after a court
process called “homologation.”

1.2.2 Where There Is No Power of Attorney

If an individual is unable to make financial decisions or manage his or her financial

affairs, the power of attorney will permit continuation of financial management by
the attorney. In the absence of such a document, there may be a vacuum of decision-
making authority and no one will be legally able to make financial decisions unless
or until the public trustee becomes involved. It is possible for family members
or other persons to make an application to be appointed as the guardian for the
financial affairs of the individual. The formal application process will be discussed
in Chapter 12. Being a court appointed guardian is not exactly the same as being an
attorney under a power of attorney. The duties and powers are similar, but additional
requirements and restrictions may be imposed.

1.2.3 Disadvantages of Court Appointed Guardian

There are numerous disadvantages to this guardianship [Link] include:

• Delay: Significant time may lapse before the appropriate person

comes forward to make the application and it is granted.

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1.2.3 CHAPTER 1 — POWERS OF ATTORNEY FOR PROPERTY

• Cost: In addition to legal fees to make the application, there may be

a requirement to post a bond, which may be very costly, and other
factors may increase costs as noted below.

• Risk of Litigation: It is not unusual for family members and/

or business associates to quarrel over who should have financial
control. A dispute over who should be appointed can poison family
relationships, lead to litigation, and add to the cost and delay.

• Financial Loss: During the period when no one has authority to

manage financial affairs, opportunities may be missed or the value of
assets may dissipate.

• Emotional Stress: The individual and other family members may

experience extreme anxiety if no one can manage the individual’s
financial affairs.

• Financial Hardship for Dependants: Those who are dependent

on the individual for financial support will be without access to
financial assistance if the individual has not made a power of attorney
permitting dependants to be supported.

• Onerous Conditions for Court Appointees: The law in each

province sets out requirements that a court appointed guardian of
property must meet. These vary but may include the obligation to
account or make reports at regular intervals, to file and comply with
a management plan, and to obtain a bond. While these requirements
are intended to provide protection for the individual who has lost
capacity, they add to the cost and may not be necessary or appropriate
where a trusted friend or family member, or other suitable person,
could have been appointed in a power of attorney without such
safeguards, and their costs, being mandated and subject to review.

• Loss of Choice: The court may appoint a person who the individual
would not have chosen. For example, where there is family conflict,
the choice of attorney is crucial to preserving family harmony, or
the individual may prefer a particular family member whose values
and financial management style are similar to his or her own. The

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WHY AN ATTORNEY FOR PROPERTY IS NEEDED [Link]

individual, not the court, is usually in the best position to determine

the best person to manage his or her financial affairs.

• Limited Powers of Guardian: The courts may limit the powers of a

court appointed guardian. For example, relatives appointed by a court
may be prohibited from selling certain assets.

1.2.4 Misconceptions about the Need for a Power of Attorney

[Link] Joint Accounts

Married couples often hold the majority of their assets jointly and assume
that a power of attorney for property is not needed to deal with financial
affairs in the case of incapacity. However, this is not the case. Without a
power of attorney, a husband or wife could find him- or herself without
the power to manage the affairs of the other spouse, even where property
is held in joint names. If the public trustee becomes involved, for example,
accounts can be severed or frozen and mail redirected. This can be
extremely distressing for the capable spouse, who may at the same time be
trying to cope with the demands of caring for the other spouse.

Failure to obtain a power of attorney could also restrict the ability to deal
with or manage property held jointly with any person, not just a spouse.
For example, it is common for brothers and sisters to hold a family vacation
property inherited from their parents in joint names. If one of the siblings
becomes incapable, problems could arise in dealing with the property
without a power of attorney.

[Link] The Family Home

In addition, in most provinces, the family home, sometimes called the

“matrimonial home” or the “homestead,” or other property protected under
family law may not be sold or otherwise dealt with by the other spouse
even if it is in joint names unless there is a valid power of attorney that
authorises the attorney to provide the required consent.

[Link] The Existence of a Will

An individual may have a Will. It is not uncommon to confuse the purpose

of a Will and the role of the executor appointed under the Will with a

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[Link] CHAPTER 1 — POWERS OF ATTORNEY FOR PROPERTY

power of attorney and the attorneys appointed under it. A Will has effect
only after an individual has died. A power of attorney (with very limited
exceptions) terminates on death. Thus, both are necessary.

[Link] Trading Authorisation

Many investment firms will allow their clients to execute a trading

authorisation that permits another person to give instructions regarding
the sale and purchase of securities in an investment account. These trading
authorisations are a limited form of power of attorney but, like bank
powers of attorney, these powers of attorney are for a specific purpose and
a general enduring power of attorney is still needed. Although a trading
authorisation will permit dealing with investments in an investment
account, trading authorisation does not provide the authority to make
withdrawals from the investment account. Accordingly, if the investor’s
funds are needed for the support of the investor or another family member
during a period of incapacity, a trading authorisation is not sufficient.

[Link] Bank Powers of Attorney

It is common for individuals to execute power of attorney documents

supplied by their bank. Generally these are not a substitute for a general
power of attorney since they typically grant authority to the attorney only
to deal with bank [Link] is an additional danger with bank powers of
attorney as they may contain a revocation clause that revokes other powers
of attorney. If an individual has an existing general power of attorney
prepared with the benefit of legal advice but subsequently executes a
bank power of attorney just for bank assets, care must be taken to ensure
that the prior power of attorney is not inadvertently revoked, leaving the
individual with no substitute decision maker for his or her other assets.

In Ontario, a subsequent power of attorney will revoke any previous one

unless the subsequently executed one specifically permits multiple powers
of attorney. For this reason, bank powers of attorney may revoke previous
powers of attorney even if they have no revocation clause.

Notwithstanding the above comments, bank powers of attorney can

be very convenient for the attorney and the grantor since the financial
institution will more readily accept them without additional review by

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REQUIREMENTS FOR A VALID POWER OF ATTORNEY 1.3.1

the bank’s legal or compliance department and requests for additional

information and authentication. However, the grantor should be cautioned
against executing such powers of attorney without reading it carefully and
checking with his or her legal advisor.

[Link] Attorney’s Power Is Not Exclusive

As long as the grantor is capable, the grantor can continue managing his
or her own financial affairs, notwithstanding the existence of a power of
attorney. Similarly, an attorney may not prevent the grantor from dealing
with his or her own assets at any time providing the grantor has capacity.
In situations where the grantor has a medical condition that diminished
his or her capacity gradually, such as certain forms of dementia, this may
cause problems as the attorney and the grantor may at times work at cross-
purposes unknowingly. See also 1.5.1, Limitation of Attorney’s Powers.

1.3 REQUIREMENTS FOR A VALID POWER OF ATTORNEY

1.3.1 Formalities: Execution and Witnesses

Provincial legislation requires a power of attorney to be in writing, signed by the

grantor, and witnessed by one or two3 persons, depending on the province. Some
provinces prohibit the attorney and the attorney’s spouse from being a witness. Since
this is consistent with the common law, it is probably best to ensure the witness
is not the attorney or their spouse (as defined in the relevant legislation) even in
jurisdictions where this is not specifically prohibited. Some provinces also prohibit
other family members from being a witness.

In Manitoba, the witness must have special qualifications.4 In Quebec, a mandate

need not be witnessed if made by a notary. Two witnesses are not required in British
Columbia if the witness is a lawyer or a member in good standing of the Society of
Notaries Public of British Columbia and in Saskatchewan if it is witnessed by a lawyer
and accompanied by a witness certificate in the prescribed form.

3 British Columbia, Saskatchewan, Ontario, and Quebec require two witnesses.

4 A person who can solemnise marriages, a justice of the peace, notary public, or lawyer licensed to practice in
Manitoba, member of the RCMP, or police officer.

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1.3.2 CHAPTER 1 — POWERS OF ATTORNEY FOR PROPERTY

1.3.2 Capacity

At common law, a grantor has to have attained the age of majority and have the required
mental capacity to understand the nature and effect of the power being granted.5 In
the English case of Re K.,6 Hoffmann J. set out a four-part test for continuing powers
of attorney. Under this test the grantor must have the mental capacity to understand
the following in order to grant a valid enduring power of attorney:

1. the attorney will have the power to take complete control of the
grantor’s financial affairs;

2. during the lifetime of the grantor, the attorney will be able to do

anything the grantor could do with the grantor’s property;

3. the authority granted will continue in the event the grantor

subsequently becomes mentally incapable, and

4. once the grantor becomes mentally incapable, the power of attorney

will be irrevocable.

In the Canadian case of Godielie v. Pauli (Committee of),7 an additional test was
added:

5. the grantor must understand the nature and extent of his or her
property and financial affairs existing at the time the document is
executed over which the attorney will be entitled to exercise control.

Many of the provincial statutes contain their own specific requirements regarding
capacity to grant a power of attorney,8 but in general a review of these specific
requirements reveals that they are not inconsistent with the principles set out in
these two cases.

In some provinces, the legislation requires that the power of attorney contain
prescribed information about the nature and effect of the power of attorney to ensure
that the grantor fully understands the power that is being granted to the attorney.
And in provinces where specific capacity requirements are set out in the statute, the

5 See M. Jasmine Sweatman, Guide to Powers of Attorney (Aurora: Canada Law Book, 2002) 9-11.
6 Re K, [1988] All E.R. 358 (Ch. D.).
7 Godelie v. Pauli (Committee of), (1990), 39 E.T.R. 40 (Ont. Dist. Ct.).
8 British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Newfoundland and Labrador, Yukon, and
Northwest Territories.

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CHOICE OF ATTORNEY [Link]

power of attorney or another document accompanying it may set out a declaration

that the grantor has the required understanding.

The degree of capacity required to grant a power of attorney for property is not
necessarily the same degree of capacity required to manage one’s financial affairs.
Indeed a person may be incapable of managing one’s financial affairs and still be
capable of granting or revoking a power of [Link] test is not as rigorous as that
of testamentary capacity, which is discussed in Chapter 3, The Law of Wills. This is in
keeping with the more limited power — to manage the financial affairs of the grantor
— contained in a power of attorney as opposed to disposing of one’s entire estate in
a Will.

With respect to capacity, generally at common law there is a presumption of capacity

that may or may not be reflected in provincial legislation.

1.4 CHOICE OF ATTORNEY

1.4.1 Who Is Eligible?

[Link] Who Can Be Appointed to Be an Attorney?

Generally, an attorney must be capable of acting. This means that he or she

must have reached the age of majority and have the mental capability to
manage one’s financial affairs.

While the common law requires the donor to have capacity, there are no
rules prohibiting the appointment of a minor as the attorney. However, a
minor will not be able to act until reaching the age of majority.

In addition to individuals, corporate trustees may be appointed. In some

jurisdictions the Public Trustee (also known as the Public Guardian
and Trustee, or Public Curator in Quebec) may be permitted to accept
appointments. However, they may not be compelled to accept the
appointment, so approval should be sought in advance.

[Link] Appointing More than One Attorney

A donor may also wish to appoint more than one person to be attorney.
While this can provide some safeguards for the donor, the arrangement
must be workable in practice. For example, unless the document provides

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[Link] CHAPTER 1 — POWERS OF ATTORNEY FOR PROPERTY

otherwise, attorneys must act together. Note also that when there are two
or more attorneys, the power of attorney will terminate if one dies or
becomes incapable unless legislation or the document permits the survivor
to continue.

[Link] Persons Who May Not Be Appointed

Donors must also be careful to not appoint anyone who is prohibited from
acting. Prohibitions generally seek to ensure the attorney will not have
an inherent conflict of interest. The rules may be in the relevant power
of attorney legislation or legislation governing service providers, such as
residential care facilities and hospitals.9

[Link] Alternate Attorneys

There may be many personal or practical reasons why an attorney cannot

act when the time comes. Or the attorney may begin to act but be unable
to continue. Legislation might also prohibit an attorney from acting or
continuing to act. Or the attorney could become incapable or die.

A power of attorney document can provide for an alternate attorney. The

successor will need to prove that his or her authority is now effective. In
the absence of an alternate attorney, unless the legislation allows the court
to appoint a new attorney, it may be necessary to have a property guardian
appointed.

Third parties will require evidence that the alternate has authority to act. As
with springing powers of attorney, there may be legislation that sets out the
requirements for an alternate to prove his or her authority to start acting.

1.4.2 Who Is Appropriate?

The decision with respect to the appointment of an attorney under a power of

attorney is an important one. An attorney must be trustworthy; a power of attorney
is akin to writing a blank cheque for the grantor’s entire estate. However, more is
required. It will also be important to ensure that the potential attorney has the time,

9 For example, in British Columbia, s. 18 of the Power of Attorney Act prohibits those who provide personal care or
health care services to the adult for compensation, as well as employees in a facility where the donor resides if the
facility provides those [Link] Hospital Act, R.S.B.C. 1996, c. 200, and the Community Care and Assisted Living
Act, S.B.C. 2002, c. 75, also prohibit staff and volunteers from accepting such appointments.

1-18
CHOICE OF ATTORNEY [Link]

skill, and inclination to carry out his or her duties diligently. With respect to making a
choice, other criteria as outlined below should be considered.

[Link] Investment Knowledge and Financial Management Skills

An individual may be completely trustworthy but may not have the

experience or knowledge sufficient to manage the financial affairs of the
grantor.

[Link] Nature and Complexity of the Assets of the Grantor

If the grantor owns a business, has a large diversified portfolio, or has assets
outside the jurisdiction, a greater degree of skill and knowledge on the part
of the attorney may be required to manage the grantor’s financial affairs.

Typically the grantor will want to appoint his or her spouse, assuming there
is confidence that the spouse will be capable of managing the grantor’s
financial affairs. However, if the spouse does not have knowledge of all the
financial affairs of the grantor, this may not be appropriate. This may be
the case, for example, where the grantor has significant business interests.
It may be appropriate to appoint more than one attorney acting jointly in
such a case so that, for example, the spouse and another individual with
business acumen can assist each other. Alternatively it may be possible to
grant limited powers of attorney so that separate powers of attorney are
created for certain assets with different attorneys appointed.

[Link] Family Situation

The grantor’s particular family situation should be considered. If children

or other family members are estranged or do not get along with each other,
the choice must be considered carefully. A neutral person from outside
the family may be best. Appointing family members jointly may result in
a deadlock and strain family relations even further. Or appointing some
family members may cause other family members to become suspicious or
jealous and lead to further conflict or litigation.

In the situation of a second marriage, there may also be considerable

conflict of interest between the spouse and other family members, such as
the grantor’s children from a first marriage. Appointing the spouse as the
sole attorney in the case of a second marriage may cause dissension.

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[Link] CHAPTER 1 — POWERS OF ATTORNEY FOR PROPERTY

[Link] Appointing Children

Where the grantor wishes to appoint his or her children, often it seems
easiest to appoint all of them acting jointly. However, should the children
not all agree on every decision, of which there may be many, this can
become extremely cumbersome and may cause dissension or become
completely impractical. At the very least, a majority clause should be
included, where permitted by statute, or some other method of breaking
a tie or deadlock should be provided. For example, a mediation clause or
dispute resolution clause may be appropriate.

[Link] Location of the Attorney

Ideally the attorney should be in the jurisdiction in which the grantor is

resident. While this is not legally required, it is desirable that the attorney at
least be a resident of Canada. Difficulties may arise if the attorney is a non-
resident, particularly with respect to investment accounts.

A Canadian investment advisor, for example, is prohibited under Canadian

securities regulation from taking instructions from a resident of the U.S.
Accordingly, if there are investment accounts with Canadian financial
institutions, it would be best to have resident Canadian attorneys.

Having an attorney resident in the same province as the grantor may also
be practical as the attorney will find it more convenient to manage the
grantor’s financial affairs, the grantor’s property, and, where necessary,
communicate with the grantor’s advisors and family members. See also tax
considerations discussed at [Link].

[Link] Income Tax Considerations for Canadian Controlled Private

Corporations

An attorney is considered to own the shares of the [Link] there are

holdings in private corporations, the existence of non-resident attorneys
causes the corporation to lose its status as a resident of Canada for tax
purposes. In addition the choice of a particular attorney may cause the
corporation to become “associated” for tax purposes with other Canadian
controlled private corporations. Both of these would result in adverse
income tax consequences.

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CHOICE OF ATTORNEY [Link]

[Link] Age of the Attorney

It may be advisable to appoint an attorney who is younger than the grantor.

If the grantor is incapable, it will not be possible to appoint another
attorney in the event the original attorney appointed is no longer capable
of carrying out the duties of the attorney, either because of illness, age,
or death. One remedy for this problem is appointing more than one
attorney, or appointing successive or alternate attorneys who will replace
an attorney who can no longer carry out his or her duties. However, it is
still advisable to appoint at least one attorney who is likely to survive the
grantor in good health and sound mind.

[Link] Corporate Attorney

If no suitable individual is available to act as an attorney, it is possible to

appoint a corporate attorney, being a trust company, as an attorney under
a power of attorney. Each trust company in Canada may have policies
as to whether or not they will accept an appointment under a power of
attorney and this should be investigated if a corporate attorney is to be
considered. A corporate attorney has many advantages, the primary one
being that it has perpetual existence so that it can be appointed if no one
else is available or if the original attorney and any alternate or successive
attorneys are no longer able to carry out their duties.

[Link] Consider Appointing Several Attorneys Acting Together

Granting a power of attorney permits the attorney to have complete

control over the grantor’s financial affairs. In effect, it is like writing a blank
cheque, or many blank cheques, and handing them over to the attorney.
Unfortunately in some cases, the attorney may not always manage the
property with the best interests of the grantor in mind. This may occur
when the attorney turns out to be dishonest and appropriates the grantor’s
property for his or her own benefit. More often, however, there is a gradual
pilfering of the grantor’s property over a long period of time.

Where one child is appointed as the attorney over a parent’s financial

affairs, sometimes that child develops a sense of entitlement to the parent’s
property because of the ability the attorney has to control it. Where the
attorney is not acting in the grantor’s best interests, and the value of the

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[Link] CHAPTER 1 — POWERS OF ATTORNEY FOR PROPERTY

grantor’s estate is diminished because of the attorney’s dishonesty or

by exercising poor or questionable judgment, the damage is often not
discovered until the grantor dies and the beneficiaries of the grantor’s
estate discover what has happened. One of the best ways to prevent the
possibility of this situation occurring is to appoint more than one attorney.
Even honest individuals are more likely to act cautiously when forced to
make decisions in concert with another person.

Where one child is appointed, it may be wise to appoint at least one other
child, if only to alleviate the apprehension that the other children may
have with respect to suspicion of the child who has the sole control of the
parent’s assets. Knowledge that two attorneys can look over each other’s
shoulders may provide other family members with some assurance that
the grantor’s affairs are being managed appropriately.

[Link] Avoiding Conflicts Among Attorneys

The benefit of the check-and-balance aspect of appointing more than one

attorney may be lost if the attorneys appointed are in constant conflict
with each other. So the choice of attorney will typically be a compromise
between the competing objectives of the grantor, and the appropriate
choice must always take into consideration the unique circumstances of
the grantor, including his or her family, assets, and personal wishes.

[Link] Is the Attorney Willing to Act?

It is wise to discuss the appointment of an attorney with the prospective

attorney and the expectations and responsibilities involved before
executing a power of attorney. Obviously if the attorney is not willing to
act, another person should be chosen.

[Link] Consider Powers of Attorney with Different Attorneys for

Separate Property

The grantor may want to appoint different attorneys to manage particular

property such as the family cottage, a business, or the shares of a private
corporation that carries on a business controlled by the grantor or in
which the grantor is a significant shareholder. It is possible to have more
than one power of attorney dealing with separate assets. For example, in

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ATTORNEY’S POWERS 1.5.1

one document a spouse or other close family member may be given the
power of attorney to manage all assets except the shares of the business,
with another person being appointed in a separate document to manage
the business assets of the grantor.

Sometimes the grantor’s lawyer or accountant is chosen or a business

partner or other shareholder of the business. If the attorney is to be a
business partner or a shareholder, the grantor should carefully consider
whether this is appropriate as there may be a conflict of interest with
respect to the attorney’s personal interests in the business vis-à-vis the
grantor’s interest in the business. In such a case, it may be appropriate to
appoint co-attorneys along with the business partner or shareholder.

1.5 ATTORNEY’S POWERS

1.5.1 Limitation of Attorney’s Power

At common law, an attorney does not have the power or authority to:

• make a gift or transfer the grantor’s property for the benefit of anyone
other than the grantor, unless the document otherwise provides,

• make a Will or other testamentary disposition on behalf of the grantor,

• delegate his or her authority unless specified otherwise,

• perform acts that are personal to the grantor, or

• act in his or her self-interest or in any way that presents a conflict of

interest with the grantor.

Generally these principles are carried forward in power of attorney legislation,

although some statutory exceptions exist.

The grantor may continue dealing with his or her property. The only way in which
the attorney may stop the grantor from acting on his or her own behalf is to obtain a
judicial finding of incompetence.

Generally under the statutory provisions of each jurisdiction, an attorney may do

anything that the grantor can do except make a Will or other testamentary disposition.

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1.5.2 CHAPTER 1 — POWERS OF ATTORNEY FOR PROPERTY

Since an attorney is also a fiduciary, the attorney cannot use the power granted
under a power of attorney to benefit him- or herself (as this would be a conflict of
interest) or give away the grantor’s property to another person since this would not
be considered in the grantor’s best interests.

It is generally accepted that the act of designating a beneficiary designation for a life
insurance policy or a registered plan, such as a Registered Retirement Savings Plan
(RRSP) or Registered Retirement Income Fund (RRIF) or, more recently, a Tax-Free
Savings Account (TFSA), is a testamentary disposition and therefore may not be made
by an attorney under a power of attorney.

The various provincial statutes provide specific conditions under which an attorney
can make gifts to family members or charity, transfer property to the attorney, and
use the grantor’s assets to support the grantor’s dependants to whom he or she had a
legal obligation to provide support.

In taking instructions for preparing a power of attorney, it is imperative to ensure

that the grantor has considered whether the attorney should have the power or
discretion to provide support or financial assistance for family members, such as
making loans or gifts, and whether the attorney will be permitted, if allowable under
provincial law, to exercise his or her power for the benefit of the attorney him- or
herself. Where any of these are permitted, the power of attorney may need to contain
specific provisions, dictated by the provincial statute, and in exercising his or her
power under the power of attorney, the attorney must adhere to these restrictions.

1.5.2 Personal Acts or Appointments

There are some actions that are personal to an individual that cannot be performed
by an attorney under a power of attorney. For example, if the grantor has been elected
as an officer or director of a corporation, the attorney may not exercise the grantor’s
duties or powers as a director or officer of the corporation since these positions are
personal to the individual grantor. Similarly, an attorney may not take over the role of
an executor or trustee, or as attorney for another person in place of the attorney. And
although an individual may be permitted to represent him- or herself in a legal action,
instead of being represented by a lawyer, an attorney may not stand in the grantor’s
place with respect to the grantor’s self-representation.

An attorney may make an election for the grantor while he or she is alive in respect
of equalization of net family property under the family law legislation in Ontario.

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ATTORNEY’S DUTIES 1.6.2

1.6 ATTORNEY’S DUTIES

1.6.1 Mandatory or Voluntary

In some jurisdictions there is a positive obligation for the attorney to act: Alberta,
Manitoba, Quebec, Yukon, Northwest Territories, and Nunavut. Each jurisdiction
provides for how and when this duty arises. Generally the duty to act arises once the
attorney has accepted the appointment or has acted pursuant to the appointment
and the duty exists during any period the attorney knows, or ought to know, that the
grantor is incapable of managing his or her financial affairs. A person who has agreed
to become an attorney or who has acted as an attorney should be particularly aware
of his or her obligations in these jurisdictions.

In Manitoba, the attorney may be held liable for any loss resulting from the failure
to act. The attorney may avoid such obligation if there is no acceptance of the
appointment or the attorney has not commenced to act.

In Quebec, a person acting under a mandate has an obligation to fulfill the mandate
and this obligation arises when the person accepts the appointment.

In Yukon, one of the execution requirements is that the attorney must sign an
acknowledgement and acceptance of his or her appointment and the resulting
responsibilities.

1.6.2 Duties and Powers

Once the donor is incapable, the attorney has a number of fiduciary duties. Subject
to the terms of the power of attorney document itself, and any duties set out in
legislation, the common law applies. In her text Powers of Attorney and Capacity,10
Sweatman identifies the following nine common-law duties.

The attorney has the duty to:

a) Stay within the scope of the authority delegated;

b) Exercise reasonable care and skill in the performance of acts done

on behalf of the donor (if acting gratuitously, the attorney is held to
the standard of a typically prudent person managing his or her own

10 M. Jasmine Sweatman, Powers of Attorney and Capacity: Practice and Procedure (Toronto: Canada Law
Book, 2014) at 17-18.

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1.6.3 CHAPTER 1 — POWERS OF ATTORNEY FOR PROPERTY

affairs; if being paid, the attorney is held to the standard applicable to

a professional property or financial manager);

c) Not make secret profits;

d) Cease to exercise the authority if the power of attorney is revoked;

e) Not act contrary to the interests of the donor or in conflict;

f) Take no compensation unless agreed on or granted by the court;

g) Account for dealings with the affairs of the donor when lawfully
called on to do so;

h) Not make, change, or revoke a will on behalf of the donor; and

i) Not exercise the power of attorney for personal benefit unless

authorized to do so by the document, or unless the attorney acts with
the full knowledge and consent of his or her principal.

1.6.3 Accountability and Keeping Accounts

With respect to the duty to account, the attorney must keep records of all transactions
and be prepared to account for every transaction from the time the attorney started
acting as an attorney. Generally once the attorney has commenced exercising his or
her powers, the duty to account for all transactions starts whether or not the grantor
is capable. It is important, therefore, that the attorney keep meticulous records from
the outset, not just commencing at the time the grantor becomes incapable. The
attorney may be required to formally “pass accounts” before the court, as discussed in
Chapter 13, Estate and Trust Accounts.

In Manitoba, an attorney must provide an annual accounting to the person named in

the power of attorney or, if no one is named, to the grantor’s “nearest relative.”

1.7 REMOVAL AND TERMINATION

1.7.1 Revocation

At common law, a grantor may revoke a power of attorney at any time assuming the
donor has the requisite capacity to do so. This common-law rule is carried over into
the provincial statutes. In addition, at common law, a power of attorney is terminated

1-26
OTHER MATTERS 1.8.1

on the subsequent incapacity of the grantor. However, this has now been altered
by statute since all provincial statutes provide for enduring powers of attorney,
which remain valid during the subsequent incapacity of the grantor. In addition it is
possible to have a springing power of attorney that is effective only upon subsequent
incapacity (see 1.1.6, Springing Power of Attorney).

In Ontario, a revocation must be in writing and executed in the same way the power
of attorney is required to be executed (i.e., in the presence of two witnesses).

In some jurisdictions, the legislation specifically makes it possible to grant an

irrevocable power of attorney, namely Manitoba, Quebec, New Brunswick,
Newfoundland and Labrador, and Yukon.

1.7.2 Effect of Separation or Divorce on Appointment of Spouse or Common-

law Partner

Some provinces provide that separation or divorce revokes the appointment of the
spouse or common-law partner as attorney. Under Saskatchewan law, an appointment
of a spouse or common-law partner in a power of attorney for property is revoked
upon separation or divorce of both common-law and married couples.

1.7.3 Renunciation

In provinces where there is a positive duty on the attorney to act,11 the attorney is not
permitted to renounce his or her appointment without permission from the court.
In other provinces, generally an attorney may renounce his or her appointment by
giving notice.

1.8 OTHER MATTERS

1.8.1 Assets Outside the Jurisdiction

Generally, a power of attorney is governed by provincial law where the grantor is

resident. Where the grantor has assets outside the province, particularly real property,
it may not always be possible or practical to deal with those assets with the power of
attorney created in the grantor’s province of residence. If an individual has property
outside the province (particularly real property), it may be prudent to have a power
of attorney prepared in accordance with the laws of the jurisdiction where the

11 See 1.6.1., Mandatory or Voluntary.

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1.8.2 CHAPTER 1 — POWERS OF ATTORNEY FOR PROPERTY

property is located, preferably by a lawyer who practices law in that [Link]

is especially true if the property is located outside Canada.

Many of the jurisdictions in Canada make specific provision for recognising powers
of attorney made in other jurisdictions (British Columbia, Alberta, Saskatchewan,
Manitoba, Ontario, Quebec, Yukon, Northwest Territories, and Nunavut). Most of
these recognise enduring powers of attorney made in other jurisdictions if they are
valid in the jurisdiction where they were made and specify that they are enduring
powers of attorney (i.e., that they survive the subsequent incapacity of the grantor).
Other jurisdictions are silent with respect to recognition of powers of attorney made
elsewhere (New Brunswick, Prince Edward Island, Nova Scotia, and Newfoundland
and Labrador are silent).

For a power of attorney from another jurisdiction to be valid in Quebec in the event
of incapacity of the grantor, the homologation process is required in the same manner
as for Quebec mandates.

1.8.2 Multiple Powers of Attorney

Multiple powers of attorney may be desirable where there are assets in another
jurisdiction such that a separate power of attorney is granted limited to assets in that
jurisdiction. Separate powers of attorney may also be granted to different persons
to deal with specific assets. For example, family members may have authority over
personal assets while another power of attorney may appoint non-family members
to have authority to deal with business assets, such as shares of an owner-managed
business or a partnership interest.

Whenever multiple powers of attorney are drawn up, it is imperative that they be
permitted to operate concurrently, or sequentially if that is intended, and that they
not inadvertently revoke each other. While it is standard to include a revocation
clause in a general power of attorney, this is not appropriate where multiple powers
of attorney are intended to operate.

In Ontario, particular care must be taken as under the Substitute Decisions Act a
power of attorney revokes any previous power of attorney even if there is no
revocation clause, unless the document specifically permits multiple powers of
attorney.

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OTHER MATTERS 1.8.5

1.8.3 Dealing with Real Property

Many jurisdictions have specific requirements with respect to the execution or

validation of a power of attorney used to deal with real property. Alberta, Ontario,
Quebec, and Newfoundland and Labrador have no such specific requirements.

Non-statutory requirements may be encountered in dealing with property under a

power of attorney, particularly with respect to real property imposed by lenders or
other third parties. Recently a number of highly publicised cases have come to light
where powers of attorney that were fraudulently prepared and used by imposters
to deal with real property resulted in innocent property owners losing title to their
property. As a result, the standard of care for transactions in real property under
powers of attorney has changed, making the requirements more onerous. These
generally were enacted for the protection of the grantor.

1.8.4 Status Indians

The Minister of Indian Affairs and Northern Development has the exclusive right to
manage the property of a status Indian who has become mentally incompetent.

1.8.5 Using a Trust as an Alternative to the Power of Attorney

A trust is sometimes used in the place of a power of [Link] powers of a trustee

may be better understood and more clearly defined under trust law, and the grantor,
in this case the “settlor,” will have more freedom to direct how his or her property is
to be managed than is possible in a power of attorney. For example, under a power
of attorney the power granted is discretionary, permitting the attorney to act. Under
a trust, the trustee must follow the terms of the trust. The settlor can make specific
provision regarding gifts and loans to family members and charities, and these will
not be subject to the more onerous restrictions that apply to a power of attorney
either under common law or in the applicable provincial statute.

A trust may be particularly suitable in cases where the grantor has a diagnosis that
results in diminishing capacity over time, such as Alzheimer’s. The individual can
establish the trust and act as a trustee or co-trustee along with another trusted
individual. Once the individual is no longer capable, the remaining or successor
trustee can step in.

Not all assets can or should be transferred to a trust. For example, registered assets,
such as RRSPs and RRIFs, cannot be owned by a trust (except in circumstances

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1.8.6 CHAPTER 1 — POWERS OF ATTORNEY FOR PROPERTY

not discussed here). In addition, there may be significant tax disadvantages that
recommend against using a trust. Unless the trust qualifies as an alter ego or joint
partner trust, transfers of property to the trust will trigger a deemed disposition at
fair market value for tax purposes. There may also be legal and accounting fees to
create, settle, and maintain the trust, and transfer taxes incurred upon transfer of
property to a trust.

A trust may also result in probate fee savings and may provide privacy with respect to
the disposition of the settlor’s assets on death.

1.8.6 Compensation

While at common law there is uncertainty as to whether or not there is compensation

for an attorney, most of the provincial statutes provide authorisation for compensation
for the attorney. Some provinces permit compensation only if specifically authorised
in the document (British Columbia, Saskatchewan, Yukon, Northwest Territories, and
Nunavut — or if court approved, Alberta and Manitoba). Ontario is unique, providing
for a prescribed fee schedule. If an attorney takes compensation, he or she may be
held to a higher standard of care in the management of the grantor’s assets. This is
specifically provided for in the legislation in Manitoba and Ontario.

1.8.7 Judicial Power for Removal of Attorneys

An attorney’s responsibility is similar to a trustee. An attorney is a fiduciary (i.e.,

in a position of trust with respect to the grantor) and the grantor is extremely
vulnerable to misconduct by the attorney. As fiduciaries, attorneys are held to a very
high standard of conduct. If this standard is breached, the courts have the power to
remove the attorney from his or her role. However, courts are extremely cautious
when asked to consider requests for the removal of an attorney. This is because the
courts do not wish to interfere with the appointment of an attorney made by a fully
capable grantor. As a result, it is extremely difficult to successfully remove an attorney
through the courts.

In general, a court will only remove an attorney where there is strong and convincing
evidence of misconduct or neglect. An attorney may be removed where conduct
clearly demonstrates an inability to understand and perform the duties diligently.
Furthermore, the court must also be satisfied that it would be in the grantor’s
best interests to remove the attorney. The courts will not exercise its discretion
if it is presented only with conjectures and mere speculation by the applicant. In

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DRAFTING AND TAKING INSTRUCTIONS FOR POWERS OF ATTORNEY 1.9.1

Schaefers,12 the attorney was removed after numerous failures to properly carry out
his duties in spite of two court orders. It was also found that the attorney was acting
in the best interests of family members and not the grantor.

1.9 DRAFTING AND TAKING INSTRUCTIONS FOR POWERS OF ATTORNEY

A general discussion regarding taking instructions for Wills is included at 4.1, Duty
of Solicitor, and 4.2, Taking Instructions. Much of that discussion is also relevant for
powers of attorney.

For example, the solicitor has a duty to ensure the client has capacity and is free
from undue influence, and that the document gives legal effect to the instructions,
is validly signed and witnessed, and suitable arrangements are made for custody and
safekeeping of the signed documents.

The client should also be advised regarding accidental revocation. In addition the
solicitor must make proper inquiries into the financial and family circumstances of
the client to properly advise with regard to the choice of attorney and any particular
issues that might be addressed to properly administer the “estate” or assets of the
client. “Estate” is used generically to describe the assets of an individual, not just the
assets owned by a deceased individual.

The following are some specific issues relating to the instructions and content of
powers of attorney.

1.9.1 Donor’s Name

Generally, the full legal name of the grantor should be used. Problems may arise if
the grantor uses different versions of his or her name in various legal documents,
deeds, contracts, and identification documents such as passports and the like. It may
be prudent to include all the names used by the grantor and identify him or her as
accurately as possible along with place of residence to further identify the grantor if
possible. However, this may not be acceptable with respect to registering land under
a power of attorney.

Most jurisdictions have specific requirements for registering an interest in land under
the authority of a power of attorney. The name of the grantor under the power of
attorney may be required to be identical to that registered in the Land Titles Office and

12 Re Schaefers Estate (2008), 93 O.R. (3d) 447, 2008 CanLII 46929 (S.C.).

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1.9.2 CHAPTER 1 — POWERS OF ATTORNEY FOR PROPERTY

alternative names in a power of attorney may not be acceptable. Each jurisdiction’s

requirements should be investigated if the power of attorney will be used to deal
with real property in the province.

1.9.2 Powers of Attorney to Deal with Land

Many of the provinces have specific requirements for powers of attorney to be valid
for transactions in real property. Reference to the specific details of the relevant
provincial statute should be made.

1.9.3 Consent and Direction to Obtain Information

A power of attorney typically may contain a specific direction and consent for the
attorney to obtain information from third parties, such as government tax authorities,
and other third parties in the possession of documents or information that pertains
to or belongs to the grantor, such as the grantor’s Will. In Ontario, for example, the
attorney has a duty to obtain a copy of the grantor’s Will.

1.9.4 Effective Date

Except where noted otherwise under provincial rules, a power of attorney for
property is effective immediately upon execution. However, the grantor may specify
that the power of attorney only becomes valid upon the occurrence of some event.
Careful consideration should be made with respect to this [Link] parties relying
on a power of attorney such as financial institutions may have stringent requirements
with respect to validating the power of attorney if it is subject to a condition
precedent. It may also be necessary to prove that the condition precedent exists each
time the power of attorney is used to communicate instructions.

If the condition precedent relates to incapacity, it is best to specify how incapacity

is to be determined and to make inquiries as to whether or not this method for
determining incapacity is practical. For example, in the past it was common for
powers of attorney to include a requirement that one or two medical practitioners
certify that the grantor is incapable. In practice, this may be very difficult to obtain
without significant delay and cost. In practice doctors have become increasingly
reluctant to provide such verification where the mental capacity of the grantor might
be subject to opinion. This may be particularly difficult where the grantor has a form
of dementia where his or her mental capacity may vary from time to time depending
on unpredictable factors, including the time of day, emotional state, the task at hand,
and effect of medication.

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DRAFTING AND TAKING INSTRUCTIONS FOR POWERS OF ATTORNEY 1.9.7

If the grantor is not comfortable with the power of attorney being effective
immediately, he or she might rethink his or her choice of attorney. If there is
apprehension that the attorney will use his or her power inappropriately, perhaps
another attorney should be chosen.

It has become common in the legal profession to have the lawyer drafting the power
of attorney to retain signed originals of the powers of attorney with instructions as to
their [Link] this may be an additional safeguard on unauthorised or premature
use of the document, the terms required to release the document must still be
considered and should be set out in a document prepared at the time of execution.
One advantage of this strategy is that in the event the grantor becomes incapable, the
lawyer has instructions that may require some lesser test of incapacity than would
satisfy a financial institution or other third party. In addition, the power of attorney
is without a condition precedent on its face, so once released, it does not have to be
revalidated each time a decision is to be made or each time the document is used.

1.9.5 Dealing with the Family Home

Specific legal rights may attach to the family home if it is a matrimonial property.
It may be necessary to provide specific authorisation in the power of attorney to
permit the attorney to deal with this asset.

1.9.6 Special Instructions Regarding Gifts and Dependants

If the grantor wants to provide that the attorney may make gifts or continue to
provide support to family members (whether or not they have a legal obligation to
do so), this should be clearly set out in the document and structured to comply with
any provincial requirements. Since the courts are particularly adverse to permitting
attorney’s from benefitting themselves,13 if this is to be permitted it must be set out
in the clearest of terms. If this is of significant importance to the grantor, the grantor
should consider appointing another attorney to make such decisions.

1.9.7 Effect upon Separation or Divorce

Does the grantor want to make specific provision for revoking the power of attorney
in the event of separation or divorce? Note that in jurisdictions where this is
already provided for there may be an exception if the grantor specifies otherwise

13 Banton v. Banton (1998), 164 D.L.R. (4th) 176 (Ont. Gen. Div.).

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1.9.8 CHAPTER 1 — POWERS OF ATTORNEY FOR PROPERTY

(as discussed in 1.7.2, Effect of Separation or Divorce on Appointment of Spouse or

Common-law Partner).

1.9.8 Accounting

The grantor may wish to indicate who the attorney should account to and at what
intervals. This may avoid the cost and delay required for a formal passing of accounts
before the courts (see 1.6.3, Accountability and Keeping Accounts).

1.9.9 Reciting Duties of Attorneys

While not legally necessary, a wise practice may be to include a list of the attorney’s
obligations and duties in the document granting the power of attorney. This list
should be drafted to make it clear that the listed matters are not exhaustive and are in
addition to any other obligations or duties the attorney may have under the statutory
regime or at common law. Including such a list will put the attorney on notice with
respect to his or her obligation to act with the utmost good faith and honesty and
to exercise his or her authority strictly for the benefit of the grantor except where
otherwise specifically directed or permitted.

Even where not required, the attorney may be asked to accept his or her appointment
and sign an acknowledgement of the appointment as an additional safeguard. This
request can often preclude any honest misunderstandings about the role of the
attorney.

1.9.10 Consider Extra-Provincial Requirements

If real property or other assets are located outside the province or in another country,
it may be appropriate to have a separate power of attorney prepared conforming to
the law in that other jurisdiction. This may be particularly appropriate for countries
where English is not the official language or the formal requirements for a valid
power of attorney are different (see 1.8.1, Assets Outside the Jurisdiction).

1.10 ESTATE PLANNING UNDER A POWER OF ATTORNEY

There have been a number of court decisions relating to an attorney’s ability to

engage in estate planning on behalf of the grantor after the grantor has become
incapable. While it is clear that the attorney may not alter or make a Will or any other
act that is testamentary in nature on behalf of the grantor, there are some other estate
planning strategies that fall short of an actual testamentary disposition or document.

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ESTATE PLANNING UNDER A POWER OF ATTORNEY 1.10.4

1.10.1 Advance on Inheritance Not Permitted

The attorney who was the son of the grantor was prevented from transferring
property to himself and his sister even though the property was bequeathed to
them under his mother’s Will. The transfer was characterised as an “advance on the
inheritance,” which was prohibited under the power of attorney since it was not for
the sole benefit of the grantor.14

Note that under the Substitute Decisions Act in Ontario, an attorney may accelerate a
gift that is made in the Will in certain circumstances.15

1.10.2 Gifts to Reduce Value of Estate and Reduce U.S. Estate Tax Not
Permitted

An attorney was prevented from making gifts to the grantor’s spouse and children to
reduce exposure to U.S. estate tax on the basis that the proposed gifting plan would
significantly reduce the value of the grantor’s estate notwithstanding the potential
significant tax benefits.16

1.10.3 Estate Freeze Permitted Where It Would Not Reduce the Value of the
Grantor’s Estate During His Lifetime

The attorney was permitted to undertake an estate freeze of the grantor’s property
where the freeze was structured through a trust and where the grantor was to be the
sole beneficiary during his lifetime. The court permitted the freeze notwithstanding
that it was not necessary for the benefit of the grantor on the basis that there would
be no reduction in the value of the grantor’s assets during his lifetime and that a
freeze would result in a benefit to the grantor and his family.17

1.10.4 Transfer to Inter Vivos Trust to Preserve Assets of an Incapable Grantor

Not Permitted Because Trust Benefitted the Attorneys

In the case of Banton v. Banton,18 the grantor became incapable of managing his
property but had sufficient capacity to marry. After marriage, the grantor made a new
Will making his new wife (a waitress he met at his retirement home who was 57

14 Re Goodman (1998), 24 E.T.R. 194 (B.C. S.C.).

15 Section 35.1(3).
16 Re Bradley Estate (2000), 31 E.T.R. (2d) 16.
17 O’Hagan v. O’Hagan (2000), 31 E.T.R. (2d) 3.
18 Supra note 12.

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1.10.5 CHAPTER 1 — POWERS OF ATTORNEY FOR PROPERTY

years his junior) the beneficiary and granting her a power of attorney. Prior to the
marriage, the grantor’s two sons used the power of attorney to transfer a sum of
money to an irrevocable trust for the benefit of their father with the sons being the
residual beneficiaries after their father’s death.

The court found that

• the father had the capacity to marry,

• the father did not have the capacity to make a new Will or a new
power of attorney, and

• the powers granted in the power of attorney document did permit

the attorneys to create the trust.

Notwithstanding the power to create the trust in the document, the court concluded
that the attorneys breached their fiduciary duty in the creation of the trust by giving
an irrevocable remainder interest to themselves since:

• attorneys are not authorised to make gifts to themselves, and

• the effect of the transfer of the property to the trust denied the
grantor the right to revoke his Will by marrying and deprived his new
wife of any right to make a claim for division of family property under
provincial law.

1.10.5 Where Estate Planning Is Permitted Under a Power of Attorney

Based on the above decisions, it appears that the courts will be reluctant to permit an
attorney to do any type of estate planning that potentially diminishes the value of the
property that is available to the grantor during the lifetime of the grantor or restricts
control of or access to the property. At a minimum, any estate planning by the power
of attorney must be for the grantor’s benefit and must be capable of being revoked
by the grantor should he or she regain capacity, and the ultimate disposition of the
property upon the death of the grantor should remain undisturbed by any planning
undertaken.

Where a grantor’s affairs are complex and it can be anticipated that there may be a
significant benefit at some future time from complex planning (such as that involving
trusts, probate fee planning, transfers of property into or out of joint names, corporate

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SUBSTITUTE DECISION MAKERS BY JURISDICTION 1.11

reorganisations, or other transactions to implement tax planning), the power of

attorney should be cast in the broadest of terms and the grantor should address the
principles that would govern whether or not such planning would be authorised.
The appointment of family members who would be the sole beneficiaries of such
planning might also be reconsidered in the light of the conflict of interest that would
exist and the court’s reluctance to approve a course of action that would appear to
be for the benefit or appear to be implemented for the attorney.

1.11 SUBSTITUTE DECISION MAKERS BY JURISDICTION

The legislation governing this field is usually found in a number of statutes. Some
statutes provide detailed definitions for the terminology used. Some clearly distinguish
decision making for financial and legal matters and decision making for personal
care and/or health care. Some do not. The table below is offered to assist students to
locate the primary legislation that applies. It cannot capture all details and nuances.
Students are encouraged to review the legislation and speak to mentors to learn the
unique details for their jurisdiction. Note generally that authorities to make health
care decisions are only effective when the adult is not capable of consenting to the
health care treatment. See legislation for details. This table only captures directives
where the legislation also deals with the proxy or the proxy’s role in ensuring the
directive is followed.

Substitute’s Legislation2 Substitute’s Name Maker’s Name of Document

Role1 Name Appointing Substitute
(Adult)3 Decision Maker
British Columbia
Attorney Power of Attorney Attorney Adult Enduring power of
Act, R.S.B.C. 1996, attorney4
c. 370 (Part 2)
Attorney Representation Representative Adult Representation agreement
Agreement Act, for routine management
R.S.B.C. 1996, of financial affairs (s.
c. 405 7 RA). Note: A s.7 RA
may authorize the
representative to:
• help the adult make
decisions, and/or
• make decisions on
behalf of the adult.
See regulation for detailed
list.

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1.11 CHAPTER 1 — POWERS OF ATTORNEY FOR PROPERTY

Substitute’s Legislation2 Substitute’s Name Maker’s Name of Document

Role1 Name Appointing Substitute
(Adult)3 Decision Maker
Proxy Representation Representative Adult Representation agreement.
Agreement Act, (RA)
R.S.B.C. 1996, (Personal and health care)
c. 405 s. 9 RA–Broad authority
s. 7 RA–Limited authority
Directive Health Care n/a Adult Advance directive. (Health
(Consent) and Care care only) See s. 19.3 for
Facility (Admission) rules when there is an
Act, R.S.B.C. 1996, advance directive and a
c. 181 representation agreement.
Guardian Patient’s Property Committee of Estate Patient Court order
Act, R.S.B.C. 1996, and/or Person
c. 349
Alberta
Attorney Powers of Attorney Attorney Donor Enduring power of
Act, R.S.A. 2000, c. attorney 4
P-20
Proxy Personal Directives Agent Maker Personal directive.
Act, R.S.A. 2000, Includes a directive and/or
c. P-6 a proxy.
(Personal and health care)
Property Adult Guardianship Trustee Represented Trusteeship order (court)
Guardian and Trusteeship adult
Act, S.A. 2008,
c. A-4.2
Personal Adult Guardianship Supporter Supported Supported decision-
Guardian and Trusteeship adult making authorization
Act, S.A. 2008, signed by adult
c. A-4.2 (Personal and health care)
Co-decision-maker Assisted adult Co-decision-making order
(court)
(Personal and health care)
Guardian Represented Guardianship order (court)
adult (Personal and health care)
Saskatchewan
Attorney Powers of Attorney Property Attorney Grantor Enduring power of
Act, S.S. 2002, c. attorney (property)4
P-20.3
Proxy Powers of Attorney Personal Attorney Grantor Enduring power of
Act, S.S. 2002, c. attorney (personal)
P-20.3 (Personal affairs only)

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SUBSTITUTE DECISION MAKERS BY JURISDICTION 1.11

Substitute’s Legislation2 Substitute’s Name Maker’s Name of Document

Role1 Name Appointing Substitute
(Adult)3 Decision Maker
Proxy Health Care Proxy Grantor Directive. (Health care
Directives and only). Includes a directive
Substitute Health and/or a proxy.
Care Decision
Makers Act, S.S.
2002, c. H-0.001
Guardian Adult Guardianship Property/Personal Adult Court order
and Co-decision- co-decision-maker;
making Act, S.S. Property/Personal
2000, c. A-5.3 guardian; Temporary
property/personal
guardian
Manitoba
Attorney Powers of Attorney Attorney Donor Enduring power of
Act, C.C.S.M., c. P97 attorney for property4
Proxy Health Care Proxy Maker Health care directive.
Directives Act, (Health care only). Includes
C.C.S.M., c. H27 a directive and/or a proxy
Guardian Vulnerable Persons Substitute decision Vulnerable Court order. See definition
Living with a maker for personal person of vulnerable person
Disability Act, care and/or for and mental disability
C.C.S.M., c. V90 property (manifested prior to age of
18).
See s. 4 for conflict
between Health Care
Directives Act and this Act.
Guardian Mental Health Act, Committee of Incapable Court order.
C.C.S.M., c. M110 property; Committee person (Includes personal and
of property and health care, subject to
personal care Health Care Directives Act).
See also Vulnerable Persons
Living with a Disability Act.
Ontario
Attorney Substitute Decisions Attorney Grantor Continuing power of
Act, 1992, S.O. attorney for property4
1992, c. 30
Proxy Substitute Decisions Attorney Grantor Power of attorney for
Act, 1992, S.O. personal care
1992, c. 30
Guardian Substitute Decisions Guardian of Property Incapable Court order
Act, 1992, S.O. and/or Person person (Personal and health care)
1992, c. 30
Statutory guardian Incapable Public Guardian and
of property person Trustee (PGT) appoints
applicant to replace PGT
as statutory property
guardian.

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1.11 CHAPTER 1 — POWERS OF ATTORNEY FOR PROPERTY

Substitute’s Legislation2 Substitute’s Name Maker’s Name of Document

Role1 Name Appointing Substitute
(Adult)3 Decision Maker
Quebec
Attorney Civil Code, R.S.Q. Mandatary Mandatory Mandate in case of
1991, c. 64 (Attorney) incapacity4
Proxy Civil Code, R.S.Q. Mandatary Mandatory Mandate in case of
1991, c. 64 (Attorney) incapacity4
Guardian Civil Code, R.S.Q. Curator (arts. 281- Protected Court order: Full
1991, c. 64 284 CCQ) person; administration over
Person of full property and/or person
age (under (Personal care and health
protective care)
supervision)
Tutor to the person Court order: Limited
and/or property administration (time or
(arts. 285-290 CCQ) decisions) over property
and/or person (Personal
care and health care)
Adviser (arts. 291- Court order: Appoint
294 CCQ) advisor to assist with
administration of property
New Brunswick
Attorney Property Act, Attorney for Donor Power of attorney (not
R.S.N.B. 1973, property terminated by mental
c. P-19 incompetence)
Proxy Infirm Persons Act, Attorney for Principal Power of attorney for
R.S.N.B. 1973, c. I-8 personal care personal care
Guardian Infirm Persons Act, Committee of estate Mentally Court order
R.S.N.B. 1973, c. I-8 and/or person incapable
person
Newfoundland and Labrador
Attorney Enduring Powers Attorney Donor Enduring power of
of Attorney Act, attorney for property
R.S.N.L. 1990,
c. E-11
Proxy Advance Health Substitute decision- Maker Advance health care
Care Directives maker directive. May include
Act, S.N.L. 1995, instructions, general
c. A-4.1 principals, and/or appoint
a substitute decision
maker. (Appears to be
limited to health care.)
Guardian Mentally Disabled Guardian Mentally Court order
Persons’ Estates disabled
Act, R.S.N.L. 1990, person
c. M-70

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SUBSTITUTE DECISION MAKERS BY JURISDICTION 1.11

Substitute’s Legislation2 Substitute’s Name Maker’s Name of Document

Role1 Name Appointing Substitute
(Adult)3 Decision Maker
Nova Scotia
Attorney Powers of Attorney Attorney Donor Enduring power of
Act, R.S.N.S. 1989, attorney
c. 352
Proxy Personal Directives Delegate Maker Person directive (Personal
Act, S.N.S. 2008, care and health care).
c. 8 May include instructions,
general principals, and/or
appoint a delegate.
Guardian Incompetent Guardian of estate Incompetent Court order
Persons Act, S.N.S and/or person person
1989, c. 218
Prince Edward Island
Attorney Powers of Attorney Attorney Donor Power of attorney (during
Act, R.S.P.E.I. 1988, legal incapacity)
c. P-16
Proxy Consent to Proxy Maker Health care directive.
Treatment and May include instructions,
Health Care general principals, and/or
Directives Act, appoint a proxy.
R.S.P.E.I. 1988, (Appears to be limited to
c. C-17.2 health care)
Property Public Trustee Act, Committee Incompetent Court order. See also
Guardian R.S.P.E.I. 1988, c. person personal guardian.
P-32.2
Personal Mental Health Act, Guardian Incapable Court order.
Guardian R.S.P.E.I. 1988, c. person (Personal care and health
M-6.1 care)

Yukon5
Attorney Enduring Powers of Attorney Donor Enduring power of
Attorney Act, R.S.Y. attorney
2002, c. 73
Adult Protection Representative Adult Representation agreement.
and Decision- See regulation for
Making Act, definition of financial
S.Y. 2003, c. 21. affairs.
Schedule A–Part
2 – Representation
Agreements
Proxy Adult Protection Representative Adult Representation agreement.
Proxy and Decision- (Personal care and health
Making Act, care)
S.Y. 2003, c. 21. See regulation for limits.
Schedule A–Part
See also Care Consent Act.
2 – Representation
Agreements

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1.11 CHAPTER 1 — POWERS OF ATTORNEY FOR PROPERTY

Substitute’s Legislation2 Substitute’s Name Maker’s Name of Document

Role1 Name Appointing Substitute
(Adult)3 Decision Maker
Decision Making Proxy Maker Directive. Appoints proxy.
Support and (Personal care and health
Protection of Adults care)
Act, S.Y. 2003, S. 29 provides for a
c. 21–Schedule B directive to contain
Care Consent Act information and wishes.
Guardian Adult Protection Guardian Adult Court order. Roles may
and Decision be limited to specific
Making Act, areas of decision making,
S.Y. 2003, c. 21. or assigned to different
Schedule A– guardians.
Part 3–Court
Appointed
Guardians
Northwest Territories
Attorney Powers of Attorney Attorney for Donor Enduring power of
Act, S.N.W.T. 2001, Property attorney
c. 15
Proxy Personal Directives Agent Director Personal directive.
Act, S.N.W.T. 2005, Appoints agent.
c. 16 (Personal care and health
care).
S. 5 provides for a directive
to contain information and
wishes.
Property Guardianship and Trustee Represented Court trusteeship order
Guardian Trusteeship Act, person
S.N.W.T. 1994, c. 29
Personal Guardianship and Guardian; Temporary Represented Court guardianship order.
Guardian Trusteeship Act, guardian person Identifies area of decision
S.N.W.T. 1994, c. 29 making covered.
Nunavut
Attorney Powers of Attorney Attorney Donor Enduring power of
Act, [Link]. 2005, c. 9 attorney
Proxy No legislation – – Health care directive
Property Guardianship and Trustee Represented Court trusteeship order
Guardian Trusteeship Act, person
Personal S.N.W.T. 1994, c. 29, Guardian; Temporary Represented Court guardianship order
Guardian as amended guardian person

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SUBSTITUTE DECISION MAKERS BY JURISDICTION 1.11

Footnotes:
1 This list includes attorneys under an enduring power of attorney, proxies under a personal directive, directives where
applicable, and guardians (property and personal) where appointed by the court. This table does not include guardians
appointed through “statutory guardianship” processes that provide for the Public Trustee or Public Guardian and Trustee to
become guardian through a non-court process.
2 See related regulations for further details.
3 “Maker” refers to a person who makes a document. “Adult” refers to a person who has been declared incapable of managing
his or her affairs and someone has been appointed to make decisions on behalf of that adult. Where possible, defined terms
are indicated. Where terms are not defined, the terminology is taken from the language of the legislation.
4 Except for Quebec, an enduring power of attorney is effective when it is made unless there is a provision that states the
circumstances (when and how) the enduring power of attorney becomes effective (springing clause). The legislation in
these provinces include a provision that specifically permits the maker to set the condition for when the enduring power
of attorney comes into effect (springing) and/or sets out requirements. The relevant sections are: BC (s. 26); AB (s. 5); SK (s.
9 Contingent appointment); MN (s. 6); ON (s. 7); QUE (art. 2166 requires the mandate to be homologated and incapacity
confirmed before the court before it is effective); NFLD (s. 2 if for legal incapacity); YK (s. 6); NWT (s. 13); NU (s. 3).
5 See Adult Protection and Decision-Making Act, S.Y. 2003, c. 21. Schedule A – Part 1 for supported decision-making agreements
and associate decision makers.

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 CHAPTER 2
PERSONAL CARE AND HEALTH CARE DECISIONS

LEARNING OBJECTIVES

2.1 INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-3

2.2 TERMINOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-5

2.2.1 Personal Directive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-5
2.2.2 Maker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-5
2.2.3 Proxy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-6
2.2.4 Living Will . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-6
2.2.5 No Heroic Measures Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-6
2.2.6 Personal Care and Health Care Decisions . . . . . . . . . . . . . . . . . . . 2-6
2.2.7 Ulysses Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-7
2.3 WHY REQUIRED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-8

2.4 HEALTH CARE ONLY DECISIONS IN SOME JURISDICTIONS . . . . . . . 2-8

2.5 VALIDITY OF INSTRUCTIONS WITHOUT THE PROXY CONSENT . . . 2-9

2.6 ENFORCEABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-9

2.7 CAPACITY TO MAKE A PERSONAL DIRECTIVE . . . . . . . . . . . . . . . . . . . . . 2-9

2.8 FORMALITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-10

2.9 RESULT WHERE NO DIRECTIVE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-10

2.10 CHOICE OF PROXY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-11

2.10.1 Who Is Eligible?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-11
2.10.2 Who Is Appropriate? Choosing a Proxy . . . . . . . . . . . . . . . . . . . . 2-11
2.10.3 Multiple Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-12
2.11 SPECIFIC DIRECTIONS AND INSTRUCTIONS . . . . . . . . . . . . . . . . . . . . . 2-12
2.11.1 Medical Directions: Specific versus General Directions
and Advance Health Care Directives . . . . . . . . . . . . . . . . . . . . . . . 2-12

2-1
2.11.2 No Heroic Measures “Right to Die”. . . . . . . . . . . . . . . . . . . . . . . . . 2-13
2.11.3 Values and End-of-Life Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . 2-13

2-2
 Chapter 2
Personal Care and Health
Care Decisions

Learning Objectives

Knowledge Objectives
• Understand the rules and requirements relating to Personal Directives and
Living Wills

Skills Objectives
• Explain the need for substitute decision making for the person
• Identify the duties and powers that can be exercised by the person appointed to
make decisions for the person

2.1 INTRODUCTION

This chapter will discuss the right of an individual to determine how and by whom
personal care and health care decisions may be made if the individual is unable
to make such personal decisions. There is no basis in the common law for such
instructions or decision making so the subject matter of this chapter is solely based
on the statutory provisions of each jurisdiction.

Since the 1990s, Canadian jurisdictions (except Nunavut) have enacted legislation
permitting such decisions or instruction. Unfortunately the legislation varies
considerably across Canada and it will be necessary to observe the requirements in
the relative province or territory. See 1.11, Substitute Decision Makers by Jurisdiction.

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2.1 CHAPTER 2 — PERSONAL CARE AND HEALTH CARE DECISIONS

Personal and health care directives (called “personal directives” in this chapter)
must be distinguished from powers of attorney for property. While both provide for
substitute decision making, they deal with different types of decisions or subject
matter and are different with respect to when they can be effective.

Powers of attorney for property:

• deal only with the assets and financial affairs of an individual and

• may be exercised (if permitted in the document) even if the grantor is

capable of managing his or her financial affairs.

Personal directives:

• deal only with the person’s physical environment and physical body
and

• can never be exercised if the individual is capable of making personal

or health care decisions him- or herself.

Both powers of attorney for property and personal directives are alike in that they
are only effective during the lifetime of the individual grantor or maker. Once the
individual dies, all decisions relating to the body and assets of the deceased are made
under the authority of the executor or administrator of the estate.

There are two components to personal directives.

1. A “directive” component records the individual’s instructions or

preferences about personal decisions or health care decisions, usually
pertaining to advance (prior) instructions relating to what medical
treatment is to be administered or not administered in certain
circumstances (the “living Will” component).

2. An “appointment” component, whereby the individual appoints a

specific person to make personal decisions for the individual as a
substitute decision maker, is called a “proxy” in this chapter.

At common law, instructions for personal care or the appointment of someone to

make such decisions are not legally binding. Accordingly, the authority must be
granted in a provincial statute under the laws of the province or jurisdiction, and

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TERMINOLOGY 2.2.2

in order for a personal directive to be enforceable (if it is enforceable under the

legislation), it must adhere strictly to the statutory requirements.

As stated above, unlike a power of attorney, a personal directive may only be exercised
or take effect when the maker is incapable of making personal care decisions. If the
maker is capable of making personal care decisions, only the maker may make such
a decision.

2.2 TERMINOLOGY

The terminology listed below will be used consistently in this chapter as much as
possible. The alternate terms in different jurisdictions in Canada are shown in some
cases.

2.2.1 Personal Directive

A personal directive is the document executed or instructions given by an individual

(called a “maker” in this chapter) to provide instructions for personal care and/or
health care decisions in the future when that individual is incapable of making such
decisions and appoints a person (called a “proxy” in this chapter ) to make decisions
about his or her personal care when incapable. In some jurisdictions only the proxy
can make decisions. In other jurisdictions the instructions can be used without a
proxy making the decision, and in some jurisdictions it is not even necessary
or required to appoint a proxy. In addition, in some jurisdictions only health care
decisions are authorised and other personal care decisions are excluded. In this
chapter the term “personal directive” will be used generically to include both the
“directive” component and the “appointment” component of substitute decision
making for personal care and health care. The terms by jurisdiction are included in
1.11, Substitute Decision Makers by Jurisdiction.

2.2.2 Maker

The individual who makes a personal directive is the “maker.” Other terms include
“director,”“grantor,” and “principal.” In some jurisdictions, such as Ontario, there is no
defined term although “grantor” is commonly used to refer to such person in Ontario.
The term “grantor” may not be appropriate as a generic term for every jurisdiction
as an appointment is not always made; in some jurisdictions it is possible to give
advance health care instructions with or without appointing a proxy, and in some
cases treatment may be given in accordance with the advance instructions without
the consent of the proxy even where one has been appointed. “Grantor” is used in

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2.2.3 CHAPTER 2 — PERSONAL CARE AND HEALTH CARE DECISIONS

Chapter 1 to refer to the individual who makes a power of attorney for property,
but “grantor” is also sometimes used to refer to the maker of a personal directive;
however, it will not be so used in this material unless the context makes that clear.

2.2.3 Proxy

In this chapter references to “proxy” mean the person who is given the authority
to make personal care or health care decisions, although the specific term varies
by jurisdiction. Alternate terms are “agent,” “delegate,” “substitute decision maker,”
“attorney for personal care,” or “attorney.” In this chapter we will use the term “proxy”
to avoid confusion with the word “attorney” under a power of attorney in respect of
financial matters or property, as discussed in Chapter 1.

2.2.4 Living Will

A living Will refers to the directive or instruction component of a personal directive

document. It sets out the directions with respect to the individual’s preferences,
wishes, and instructions regarding personal care decisions. It is not binding at
common law. In common usage, a living Will is often thought to be restricted to end-
of-life decisions, but it may be the subject of any personal care decision. An end-of-
life living Will usually deals with medical treatment and “extraordinary measures” in
which an individual makes a direction as to what type of care and life-sustaining
medical treatment should be administered or withdrawn in the case of a terminal
illness where such treatment would only prolong death and not provide any benefit
for the patient.

2.2.5 No Heroic Measures Clause

This is an end-of-life clause in the living Will component of a personal directive

expressing the wish of the maker that in the event the maker suffers from a terminal
illness or condition with no prospect of recovery or the resumption of any quality
of life, usually to be determined in the opinion of a medical practitioner, then
extraordinary or other life-sustaining medical treatments are to be withdrawn and
the maker is to be administered only “comfort care” for the alleviation of pain even if
such comfort care hastens death.

2.2.6 Personal Care and Health Care Decisions

These terms are confusing as personal care is the more generic term — to distinguish
personal decisions (relating to the physical person) from financial decisions, the

2-6
TERMINOLOGY 2.2.7

latter being authorised only under a power of attorney for property. “Personal care”
and “personal care decisions” may include health care, but the legislation of some
jurisdictions restricts the authority under a personal directive to health care and
medical-related matters.

In Ontario, “personal care” includes all types of non-financial decisions relating to

the person, including health care decisions as well as a number of non-medical
type decisions. In New Brunswick, “personal care” decisions are authorised with
no definition whatsoever, but presumably the broader meaning is intended. In
Saskatchewan, a personal attorney may be appointed with respect to the grantor’s
personal affairs but not health care decisions governed by the Health Care Directives
and Substitute Health Care Decision Makers Act.

These are the kinds of decisions that may be made by a proxy or that may be directed
under a personal directive in the form of advance instructions with respect to what
health care or medical treatment is to be given or withheld in the future. Each
jurisdiction sets out the types of personal decisions that may be authorised to be
[Link] these include:

• health care decisions, including medical treatment, and

• other “personal care” decisions, including living conditions,

accommodation, shelter, placement in a health care facility or long-
term care facility, personal conditions such as food, nutrition, clothing,
personal hygiene, social activities, and social contacts.

This list is not exhaustive and may or may not be included within the legislation in
each jurisdiction.

2.2.7 Ulysses Agreements

This is an advance instruction, typically given by a person with a known mental

illness, to prevent the maker from the consequences of expressing inappropriate
and unwanted instructions made subsequently when under the influence of mental
[Link] origin is from Greek [Link] songs of the Sirens were beautiful and
captivating but drove the listener to certain death. Sailors normally stopped their ears
when passing to avoid being dashed on the rocks or plunging to their deaths. Ulysses
wished to hear the music without the consequences and so had himself bound and
ordered his crew not to release him or obey his instructions.

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2.3 CHAPTER 2 — PERSONAL CARE AND HEALTH CARE DECISIONS

2.3 WHY REQUIRED

A personal directive permits an individual to ensure that his or her wishes expressed
while capable with respect to personal care are known, and (where enforceable)
respected, once he or she is no longer able to make these decisions for him- or herself.

If a proxy is appointed, the maker will know that the person he or she has chosen,
presumably someone whose judgment he or she trusts, will be authorised to
make personal care decisions and exclude those whom the individual considers
inappropriate. In addition, the appointment of a proxy permits the health care
professionals to respond more quickly to obtain consent or determine the maker’s
instructions where, in the absence of a personal directive, the default decision maker
must be (a) identified and verified and (b) located.

With a personal directive, physicians and other health care professionals will not
have to wait until a life-threatening situation arises in order to act in the absence
of instructions. Note that in life-or-death emergency situations, the courts have
recognised that a doctor may proceed with treatment if the patient’s instructions or
consent cannot be obtained.1

The appointment of a proxy can help to prevent disputes within families as to

what decisions should be made and who should make them. In the absence of the
appointment of a proxy, bitter disputes may develop that may end up in the courts,
often on an urgent basis. Few individuals would want their family fighting in a
courtroom over their intimate personal care and medical treatment, nor would they
want to leave such decisions to a judge or administrative tribunal who may have
little medical training and no familiarity with the family or the individual. Litigation
in these situations may be costly, raise issues that are difficult to resolve (i.e., medical
and philosophical issues), and cause extreme stress for the maker, caregivers, and
family. It can also tear families apart forever.

2.4 HEALTH CARE ONLY DECISIONS IN SOME JURISDICTIONS

In Manitoba, Prince Edward Island, and Newfoundland and Labrador, personal

directives are authorised only for health care or medical treatment decisions and
there is no provision for the broader type of personal decisions, such as personal
conditions listed under 2.2.6, Personal Care and Health Care Decisions.

1 M. Jasmine Sweatman, Guide to Powers of Attorney (Aurora: Canada Law Book Inc., 2002) at 38.

2-8
CAPACITY TO MAKE A PERSONAL DIRECTIVE 2.7

2.5 VALIDITY OF INSTRUCTIONS WITHOUT THE PROXY CONSENT

In Saskatchewan, Manitoba, Prince Edward Island, Newfoundland and Labrador, and

the Northwest Territories, advance health care directives can provide future consent
to treatment without the consent of a proxy. In the Northwest Territories, the care
provider must make efforts to obtain consent from the proxy before the directive
can be used to authorise specific treatment.

2.6 ENFORCEABILITY

The extent to which directions in a directive or the decisions of a proxy are legally
binding is not always clear. Some legislation provides that the decision of a proxy
will be treated as if it is the actual decision of the maker. However, such provisions
usually are restricted to application to particular types of health care decisions. Other
legislation says the directive will not be valid “unless” followed by a required formality
or required consent. The better opinion seems to be that, in general, even if the
legislation is silent, the directions as to personal care where permitted in the absence
of a proxy, and the decisions of the proxy or caregiver, will be legally enforceable:

• if the requirements for creating a valid directive have been satisfied,

• the maker is incapable of making personal care decisions, and

• the personal care provided is consistent with the direction or

authority given in the personal directive.

However, the directions in a personal directive are subject to any last known wishes
expressed by the individual with respect to any such decision while still capable.

Any other conclusion (i.e., that decisions or directions under personal directives are
not enforceable) would seem to obviate the existence of the legislation itself since
there is no such authority at common law.

In the Quebec court, approval may be required for certain treatment to be authorised
under a mandate.

2.7 CAPACITY TO MAKE A PERSONAL DIRECTIVE

Generally the maker must understand the nature, effect, and consequences of the
personal directive and that the proxy may be able to make personal care decisions on

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2.8 CHAPTER 2 — PERSONAL CARE AND HEALTH CARE DECISIONS

his or her behalf in the event of the subsequent incapacity of the [Link] individual
may have capacity to grant a personal directive even if incapable of making personal
care decisions. Some jurisdictions have no age requirement; some jurisdictions require
that the maker be an adult (i.e., attained the age of majority in that jurisdiction). A
maker need only be 16 years of age in Saskatchewan, Manitoba, and Ontario.

2.8 FORMALITIES

Generally a personal directive should be in writing and signed by the maker. While
not always required, it should also contain the maker’s full name and the date of
execution. Two witnesses are required in British Columbia, Ontario, Quebec (or one
notary), Newfoundland and Labrador, and Yukon. Other jurisdictions require only one,
although Saskatchewan and Manitoba have no requirements for witnesses unless the
document is signed by another person on behalf of the maker, in which case there
must be one witness.

Some jurisdictions have additional requirements regarding formalities and the

contents of the personal directive. For example, in the Northwest Territories, the
proxy must also sign and the document must contain a declaration that the proxy
understands any instructions in the document and accepts the obligations imposed
under the legislation. In British Columbia, the proxy (“representative”) and each
alternate proxy must also sign the document.

2.9 RESULT WHERE NO DIRECTIVE

Some jurisdictions have legislation providing for a default decision maker regarding
health care if no one is appointed. Typically the default decision maker is identified
in the legislation by the relationship to the incapable person with the ranking of
alternates given in the legislation. In some provinces a common-law spouse may not
be included in the list of default decision makers.

For example, in Ontario, the Health Care Consent Act, 1996, lists who may make
decisions about or give consent to medical treatment in an order of priority. These
include (in order) a court appointed guardian of the person, the proxy (i.e., the
attorney appointed under a power of attorney for personal care), a person specifically
appointed by a Capacity Consent Board, the spouse or partner, a child or parent,
followed by other family members. Only a court appointed guardian of the person
outranks an attorney for personal care under a valid power of attorney for personal
care in Ontario.

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CHOICE OF PROXY 2.10.2

2.10 CHOICE OF PROXY

2.10.1 Who Is Eligible?

The legislation may provide specific requirements for the age and capacity of
the proxy. The proxy may be required to have attained the age of majority in that
jurisdiction or may be permitted to act if even younger. Ontario permits a person to
act at age 16.

2.10.2 Who Is Appropriate? Choosing a Proxy

The legislation sets out the legal requirements for the proxy. The maker should
choose someone who has the following characteristics:

• shares (or understands and will respect) the values about health care
and personal care of the maker,

• trustworthy and diligent,

• able to make difficult decisions under pressure,

• can exercise sound judgment,

• able to understand advice of health care professionals,

• is accessible on short notice for emergency situations,

• is willing to act,

• will carry out the proxy’s instructions or last known wishes, and

• is someone who has the respect of other family members.

Since the proxy will not have management of financial affairs, it is not necessary to
appoint someone with financial expertise. In addition, a person who may not be good
at controlling his or her own finances may still be appropriate to make personal care
decisions. However, the person appointed should not be reckless with respect to the
cost of different care alternatives since it would be inappropriate to use up limited
financial resources on more costly care alternatives. The person who makes personal
care decisions must work with the attorney for property whenever decisions are
being made that have financial costs or consequences.

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2.10.3 CHAPTER 2 — PERSONAL CARE AND HEALTH CARE DECISIONS

Medical expertise is not necessary since a proxy will normally take advice from the
maker’s own health care practitioners. However, it may be helpful if the proxy does
have medical training.

Many of the considerations discussed in Chapter 1 regarding choosing an attorney

are relevant in choosing a proxy (see 1.4, Choice of Attorney). Where more than one
proxy is being appointed to act concurrently, the maker should choose persons who
will be able to co-operate effectively. It is also always wise to make sure the person
to be appointed as proxy is willing to act. Not all persons are comfortable making
personal care decisions particularly relating to palliative care, end-of-life decisions,
and administration or withdrawal of extraordinary measures. Note that corporate
trustees are not authorised to accept these appointments.

2.10.3 Multiple Proxies

It is always prudent to appoint an alternate proxy, or several successive alternate

proxies, in the event the proxy first appointed is not available. Where the maker
wishes to appoint more than one proxy, it may be appropriate to permit the proxies
to act alone or together with the other persons appointed to ensure someone is
available if an emergency situation arises. Similar to powers of attorney for property,
some legislation provides rules for tie breaking where there are multiple proxies who
do not agree. It may be appropriate to specify in the document how any disputes
among proxies are to be resolved or, if there is more than one appointed, whether
decisions are to be made unanimously or not.

2.11 SPECIFIC DIRECTIONS AND INSTRUCTIONS

2.11.1 Medical Directions: Specific versus General Directions and Advance

Health Care Directives

Specific directions or instructions with respect to medical treatment may be given in

a personal directive. However, such specific instructions can become very lengthy in
an attempt to anticipate a multitude of states of disease, injury, and physical ailments
and predict the medical treatments that might or might not be [Link] danger
of these detailed instructions is that they cannot anticipate all circumstances or the
advance of medical technology. In addition, they require an advanced understanding
of medical science by both the maker and the proxy. A statement of principles or
values to guide the proxy in making decisions may be more helpful.

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SPECIFIC DIRECTIONS AND INSTRUCTIONS 2.11.3

In jurisdictions where advance health care decisions can be made in accordance

with instructions in a directive without the participation of a proxy, the maker
should be advised and understand the effect of specific instructions and that, in
future, treatment may proceed without the proxy’s specific consent. There has been
criticism of the practice in some health care facilities that “tick the box” advance
health care directives are routinely being required as a condition of admission, or as
part of the routine paperwork on admission without the patient really understanding
the consequences and without any professional advice.

2.11.2 No Heroic Measures “Right to Die”

Some legislation specifically authorises instructions to limit or withdraw treatment

or otherwise control palliative care or end-of-life treatment. Where the legislation is
silent, the right to make such directions, or for the proxy to make such a decision, is
likely enforceable.

2.11.3 Values and End-of-Life Decisions

Certain religious groups have teachings regarding certain medical treatments and the
use of life-sustaining procedures. If the maker is a member of a religious faith that
believes it is wrong to withhold life-sustaining procedures, the maker should specify
in the document if this is contrary to his or her wishes. Or a maker may want to state
that the teachings of his or her faith should be respected by the proxy in making any
decision.

In order to keep instructions private from third parties, it is not unusual for advance
planning care directions, including end-of-life decisions, extraordinary measures, and
palliative care decisions, to be put in a separate document or letter addressed to the
proxy. In jurisdictions where instructions may be carried out without a proxy, this
strategy ensures any decision will be made by the proxy since the instructions will
not come to the specific attention of physicians or other health care professionals
who might otherwise act on the instructions without the consent of the proxy.
However, a lawyer should review or prepare such instructions to ensure they do not
inadvertently revoke a valid personal directive.

2-13
 CHAPTER 3
THE LAW OF WILLS

LEARNING OBJECTIVES

3.1 INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-5

3.1.1 Terminology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-6
[Link] Conventional Will . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-6
[Link] Intestate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-6
[Link] Notarial Will . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-6
[Link] Proponent of a Will. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-6
[Link] Testamentary Disposition . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-7
[Link] Testate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-7
[Link] Testator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-7
[Link] Will . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-7
[Link] Will in Solemn Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-7
3.2 THE NATURE OF A WILL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-7

3.3 REQUIREMENTS OF A VALID WILL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-9

3.3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-9
3.3.2 Formalities of a Will . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-10
3.3.3 Substantial Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-11
3.3.4 Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-11
3.3.5 Undue Influence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-14
3.3.6 Alleging Undue Influence and the Onus of Proof . . . . . . . . . . 3-15
3.3.7 Suspicious Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-15
3.3.8 Fraud and Mistake . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-16
3.4 AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-19

3.5 REVOCATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-19

3.5.1 Revocation by Overt Act of the Testator . . . . . . . . . . . . . . . . . . . 3-19
[Link] Holograph Revocation and Alterations . . . . . . . . . . . . . 3-19
[Link] Presumption of Revocation: Lost Wills . . . . . . . . . . . . . . 3-20

3-1
 3.5.2 Revocation by Operation of Law: Change in Marital
Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-20
[Link] Marriage Revokes a Will . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-20
[Link] Effect of Divorce. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-21
3.6 WILL SUBSTITUTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-22
3.6.1 Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-23
3.6.2 Gifts Donatio Mortis Causa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-24
3.6.3 Inter Vivos Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-24
3.6.4 Jointly Held Property with a Right of Survivorship . . . . . . . . . 3-25
3.6.5 Beneficiary Designations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-27
3.7 TYPES OF WILLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-27
3.7.1 Holograph Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-27
3.7.2 Mirror Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-28
3.7.3 Mutual Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-28
3.7.4 Joint Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-28
3.7.5 Multiple Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-28
[Link] Property Outside the Jurisdiction . . . . . . . . . . . . . . . . . . . 3-28
[Link] Probate Fee Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-29
3.7.6 International Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-29
3.8 TESTAMENTARY GIFTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-30
3.8.1 Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-30
3.8.2 Lapse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-31
3.8.3 Anti-Lapse Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-32
3.8.4 Abatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-33
3.8.5 Ademption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-34
3.8.6 Class Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-35
3.9 LIMITS ON TESTAMENTARY FREEDOM . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-39
3.9.1 Conditions Contrary to Public Policy . . . . . . . . . . . . . . . . . . . . . . 3-39
[Link] Interference with Family or Matrimonial Life . . . . . . . . 3-40
[Link] Restraint on Alienation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-41
[Link] Discrimination Contrary to Provincial Human
Rights Law and Constitutional Charter Rights . . . . . . 3-41

3-2
 3.9.2 Rights of Dependants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-42
3.9.3 Spousal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-42
3.9.4 Renunciation and Disclaimer of Gifts and Executor
Appointments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-42
3.10 DELEGATION OF TESTAMENTARY POWERS . . . . . . . . . . . . . . . . . . . . . . 3-43

3.11 WHEN MINORS MAY MAKE A WILL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-44

3.12 SUMMARY OF EFFECT OF MARRIAGE ON A WILL BY

JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-46

3.13 ANTI-LAPSE RULES BY JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-47

3.14 WILL LEGISLATION AND FORMAL REQUIREMENTS BY

JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-49

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 Chapter 3
The Law of Wills

Learning Objectives

Knowledge Objectives
• Understand the many types of Wills and how a Will can legally implement a
testator’s wishes

Skills Objectives
• Identify the requirements for a valid Will
• Explain the different types of Wills
• Describe the types of gifts in a Will

3.1 INTRODUCTION

Each jurisdiction in Canada has a “Wills Act” or other statute that governs succession
of property on death by Will. As for all matters in this course, except income taxation,
the law of Wills is part of property law and is thus governed by the law of the province
or territory where the testator resides or is domiciled at the time of death.1 Except
for the province of Quebec, the law is quite similar from one jurisdiction to another
within Canada, and the student should become familiar with the laws of his or her
particular jurisdiction.

1 This may not be so if the domicile of the testator is in a different jurisdiction from the jurisdiction of
residence. In addition, under the common-law conflict of laws rules, the law of testamentary succession
is governed by the domicile of the testator for movables but the law of the situs (location) of immovables
(i.e., real property) for a testator domiciled in one jurisdiction but resident in another. This may or may not
be altered by statute and may not be applied by the courts especially if the deceased neither resides in, nor
has property in, the jurisdiction of domicile. See Stephen G. A. Pitel and Nicholas S. Rafferty, Conflict of Laws
(Toronto: Irwin Law, 2010) at 355-366. Issues of domicile and residence and the relevance to the law of Wills,
probate, and succession will be discussed in Chapter 14.

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3.1.1 CHAPTER 3 — THE LAW OF WILLS

3.1.1 Terminology

[Link] Conventional Will

A conventional Will is a Will that is authorised under the ordinary rules

in the laws of the applicable jurisdiction as to formalities of form and
execution. This is sometimes also called an “attested” Will since the
requirements include witnesses who “attest” to or certify their presence to
the signature of the Will by the testator by signing a declaration at the end
of the Will to that effect and in the presence of the testator. A conventional
Will may be contrasted to a holograph Will or a document that may have
testamentary effect under substantial compliance laws where the strict
formalities of conventional Wills have not been followed.

[Link] Intestate

“Intestate” is an adjective that refers to the state of dying without a Will, as

in “an intestate estate.” Similarly “intestacy” is created when an individual
dies without a Will.

[Link] Notarial Will

This is a special form of Will that is authorised under Article 716 of the
Civil Code of Québec. It must be made before a “notarial deed en minute”
in the presence of a witness, or in some cases two [Link] Will must
be read by the notary to the testator and the testator must declare that the
document read is the expression of his or her last wishes. After the Will has
been read, it must be signed by the testator, the witnesses, and the notary,
all in each other’s presence. Conventional Wills and holograph Wills are
also permitted in Quebec, but only a notarial Will is exempt from probate.

[Link] Proponent of a Will

The “proponent” of a Will is the person, usually the named executor, who
applies for probate of a Will to seek formal court recognition of the Will’s
validity. To “propound” a Will is to apply for probate in solemn form.

3-6
THE NATURE OF A WILL 3.2

[Link] Testamentary Disposition

A testamentary disposition is a gift that is intended to take place on death

and is generally made by Will.2 Testamentary gifts can be contrasted with
inter vivos gifts, which are intended to take effect during the lifetime of
the donor.

[Link] Testate

“Testate” refers to the state of dying with a Will. This can be contrasted
with “intestate,” which means dying without a Will. Estates are said to be
“testate” or “intestate” depending on whether or not the deceased died
with a Will.

[Link] Testator

The person who makes a Will is called a “testator.”The female version from
the Latin is “testatrix,” but “testator” is now used to refer to either gender.

[Link] Will

A Will is a written document that disposes of the property (“estate”) of the

testator to others upon his or her death. A “testament” refers to a Will.

[Link] Will in Solemn Form

There is a presumption that a Will is valid when admitted for probate.

However, where any question is raised about the validity of the Will, the
Will needs to be proved before the court to be certified as a valid Will.
Once certified, the Will is said to be proved in solemn form. This is in
contrast to a Will in common form, which is probated upon an unopposed
administrative application to the court.

3.2 THE NATURE OF A WILL

Gifts may be testamentary or inter vivos. Generally an inter vivos gift is immediate
and is irrevocable once completed, and completion, or “perfection” as it is sometimes

2 Beneficiary designations for life insurance and certain plans registered under the Income Tax Act (Canada),
R.S.C. 1985, c. 3 (5th Supp.), are thought to be testamentary dispositions (although this view is not shared
by all but seems to be settled law at least in Ontario) but are exempt from the rules relating to Wills under
specific statutory provisions.

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3.2 CHAPTER 3 — THE LAW OF WILLS

called, takes place upon delivery, or constructive delivery, of the property that is
the subject of the gift. A testamentary gift, in contrast, is a gift made in a Will that
is intended only to take place on the death of the testator. A testamentary gift in a
Will has no legal effect while the testator is still alive. Wills do not create any legally
enforceable rights or obligations vis-à-vis the testator during his or her lifetime, and
the testator always retains the right to revoke or modify the Will, as long as he or she
is competent.

Until the death of the testator, a beneficiary has a mere expectancy in that estate
unless the testator has become incapable of changing the Will.3 Where the testator
is still alive but has become mentally incompetent to change his or her Will, the
beneficiary may have an interest. In such a case the courts have stated that unless
the testator regains capacity the beneficiary has a vested interest in a “permanent
Will,” with the same result as if the parties were entitled to a remainder interest after
a life interest.4 However, in such a case the rights relating to the interest are limited
to protecting the value of the future inheritance in the estate from actions of third
parties who may diminish the value of the interest.

A contract not to revoke a Will is unenforceable in that the testator cannot be forced
to comply, but there may be an action available for damages for breach of contract.
The doctrine of mutual Wills may be an exception (see 3.7.3, Mutual Wills).

There are four essential elements for the document to be a Will.

1. There must be a clear intention to dispose of property.

2. It must intend to take effect only after the death of the maker.

3. It must be revocable.

4. It must be executed in compliance with the laws for Wills of the

province or territory.

The irrevocable settlement of an inter vivos trust does not create a testamentary
disposition, even if under the terms of the trust the distribution of trust property is
to take place upon the death of the settlor. The rights of a beneficiary under such

3 Kidd v. Canada Life Assurance Co., [2010] O.J. No. 658 citing Weinstein v. Weinstein (Litigation Guardian
of) (1997), 19 E.T.R. (2d) 52 (Ont. Gen. Div.) at para. 12; Nystrom v. Nystrom (2006), 25 E.T.R. (3d) 297 (Ont.
S.C.) at paras. 17-19.
4 Nystrom v. Nystrom, ibid at paras. 17-19.

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REQUIREMENTS OF A VALID WILL 3.3.1

a trust arise upon the settlement of the trust and the gift to the trust cannot be
revoked. It is not clear whether the settlement of a revocable inter vivos trust that
deals with disposition of trust property on the death of the settlor is testamentary.
For this reason, it is sometimes recommended that an alter ego or joint partner trust
be executed in compliance with the formalities of a Will, if the settlor has a right to
capital or the trust might otherwise be considered revocable.

A Will is the primary method of disposing of property on death. The only other ways
in which property may be transferred as a result of death5 are:

• under statutory authority, which includes:

◦ beneficiary designations for registered plans

◦ beneficiary designations for life insurance

◦ intestate succession

• by virtue of survivorship where property is held jointly with a right of

survivorship.

It is not possible, for example, to “name” a beneficiary of a bank account, or real

property, or any other asset (subject to the above list) without the formalities of a
Will. Any such “naming” is not legally enforceable. In the absence of a valid Will, if
an individual dies owning property it will be dealt with according to the rules for
intestate succession.

3.3 REQUIREMENTS OF A VALID WILL

3.3.1 Introduction

A Will is like a single huge cheque for the value of an individual’s entire wealth.
Consequently, the law is very strict about the requirements for a Will to be enforceable.
These requirements include:

• the testator having knowledge and approval of the contents,

• an age requirement for the testator,

5 Will substitutes are discussed at 3.6, Will Substitutes.

3-9
3.3.2 CHAPTER 3 — THE LAW OF WILLS

• a special test for capacity of the testator,

• absence of fraud, mistake, and undue influence, and

• special requirements or “formalities” of the Will document itself and

its execution.

3.3.2 Formalities of a Will

Each province or territory has Wills legislation that sets out formal requirements for
the form and execution (signing) of a conventional Will.6 The requirements are similar
across the common-law jurisdictions. In general, conventional Wills have four major
requirements.

1. The Will must be in writing.

2. It must be signed at the foot or end by the testator or by some other

person in the presence of the testator or by someone who is acting
under the direction of the testator.

3. The testator must sign in the presence of at least two witnesses who
are present at the same time.

4. At least two attesting witnesses must sign the Will in the presence of
the testator.

In Quebec, the conventional or attested Will is called a “Will made in the presence of
witnesses” and its requirements are similar to those listed above.7

The purpose of the formal requirements is to prevent fraud. This concern is

particularly important because many Will-makers belong to vulnerable groups such
as the elderly or terminally ill patients. The formal requirements act as a safeguard
against fraud being perpetrated upon testators by unscrupulous individuals.

6 The only exceptions to these requirements are where there is substantial compliance or a holograph Will
where these are recognised under the law of the jurisdiction (see 3.3.3, Substantial Compliance, and 3.7.1,
Holograph Wills).
7 Civil Code of Québec, S.Q. 1991, c. 64, Art. 727.

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REQUIREMENTS OF A VALID WILL 3.3.4

The formal requirements must be followed precisely. The courts will insist on strict
compliance with the rules and failure will result in a declaration that the Will is
invalid.8

A beneficiary or the spouse of a beneficiary under the Will should not be a witness
as any gift in the Will to an attesting witness or his or her spouse will be void. There
may be discretion to permit a gift to a witness in certain circumstances, and this is
provided for in Manitoba, Ontario, and Saskatchewan.9 However, as a practical matter
it is best to make sure no beneficiary or his or her spouse or common-law partner is
a witness to the Will.

3.3.3 Substantial Compliance

In some provinces legislation permits the courts to dispense with the formal
requirements, providing the court is satisfied that the document expresses the
testamentary intentions of the deceased. This is known as substantial compliance.
Substantial compliance legislation is currently present in all provinces except
Ontario.10 Substantial compliance legislation is intended to be remedial, permitting
the wishes of a deceased person to be followed even if the formalities of execution
required for a conventional Will are not. However, it has not been universally adopted
in all jurisdictions. The concern has been that a great deal of uncertainty may be
introduced with respect to documents that fall short of being a Will.

3.3.4 Capacity

In order for a Will to be valid, a testator must meet an age requirement and must have
“testamentary capacity,” which is concerned with the testator’s mental faculties.

In general, a Will-maker has the legal capacity to make a valid Will if he or she
has attained the age of majority under provincial law. In addition, the law of the
jurisdiction may permit a minor to make valid Wills if he or she is a mariner or is
currently engaged in active military service. In addition, some jurisdictions provide
that a minor who is married, or who has a common-law partner, or who has children

8 James MacKenzie, Feeney’s Canadian Law of Wills, 4th ed. (Markham: LexisNexis/Butterworths, 2000-2009)
at §4.1.
9 A. H. Oosterhoff, Oosterhoff on Wills and Succession, 6th ed. (Toronto: Carswell, 2007) at 282-283, and
Feeney’s ibid at §4.32-§4.33.
10 Feeney’s supra note 8 at §4.1 and §§4.68-4.72.1.

3-11
3.3.4 CHAPTER 3 — THE LAW OF WILLS

who are beneficiaries,11 may make a Will. Wills made by minors specifically permitted
by statute are often called “privileged Wills.”

In British Columbia, the age for making a Will is age 16 even though the age of majority
is 19. In Newfoundland and Labrador, the age for making a valid Will is age 17 even
though the age of majority is [Link] are also no specific provisions in the Wills Act
of that province permitting privileged Wills. However, there may be authority under
the common law for those in military service or seamen or mariners to make a valid
Will even if under age 17.12 See 3.11, When Minors Make a Will.

To create a valid Will, a testator must also have testamentary capacity. The degree of
mental capacity required to make a valid Will is very high. In fact, the mental capacity
required to make a Will is higher than that required to get married or to give a power
of attorney.

The leading case on testamentary capacity is an English decision from 1870 known
as Banks v. Goodfellow.13 It has been cited and approved in Canada many times,
including the following passage from Re Davis,14 a decision of the Ontario Court of
Appeal:

The authoritative statement of the law on the subject of testamentary

capacity is that pronounced in the classic judgment of Cockburn, C.J., in
Banks v. Goodfellow (1870), L.R. 5 Q.B. 549 from which I quote the following
passage at p. 565:

It is obvious, in either case, that to the due exercise of a power thus

involving moral responsibility, the possession of the intellectual
and moral faculties common to our nature should be insisted on as
an indispensable condition. It is essential to the exercise of such a
power that a testator shall understand the nature of the act and its
effects; shall understand the extent of the property of which he is
disposing; shall be able to comprehend and appreciate the claims to
which he ought to give effect; and, with a view to the latter object,
that no disorder of the mind shall poison his affections, pervert his
sense of right, or prevent the exercise of his natural faculties —
that no insane delusion shall influence his will in disposing of his

11 For example, section 9 of the Wills Act of Alberta (R.S.A. 2000, c. W-12) permits a minor to make a Will if
married, has an “adult interdependent partner,” or where the Will provides for the benefit of his or her
children.
12 David A. Howlett, Estate Matters in Atlantic Canada (Toronto: Carswell, 1999) at 24.
13 (1870), L.R. 5 Q.B. 549.
14 [1963] 2 O.R. 666, 40 D.L.R. (2d) 801 (C.A.).

3-12
REQUIREMENTS OF A VALID WILL 3.3.4

property and bring about a disposal of it which, if the mind had

been sound, would not have been made.

In essence, the court in Banks listed four criteria that must be met by the testator
before he or she can be considered to have a degree of testamentary capacity
sufficient for Will-making.

1. The testator must have an appreciation of the nature of the Will and its
effects; this means the testator understands that he or she is creating a
document that has the effect of giving property away to others.

2. The testator must comprehend the nature and extent of his or her
assets and liabilities, but this requirement does not go so far as to
require the testator to know where each and every dollar is located.

3. The testator must comprehend the legal and moral claims that may be
brought against the estate.

4. The absence of any mental illness or conditions that could potentially

affect the terms of the Will.

A legal claim may be brought against the estate by an ex-spouse under family
legislation or a dependant as defined in the dependant relief legislation relevant to
each jurisdiction. Where the testator’s Will provides for all his or her children except
one, the child who was left out may have a moral claim against the estate in some
jurisdictions, such as under British Columbia’s Wills, Estates and Succession Act. A
Will is not rendered invalid simply because the testator failed to provide for those
who may have a legal or moral claim. What is required of the testator is that, at the
time when the Will was signed, he or she had the mental faculties to understand
that certain individuals may have claims against the estate and accepted this risk by
signing the Will.

It is important to note that in Banks v. Goodfellow, the court said that only mental
illnesses and conditions that would affect the terms of the Will would prevent
someone from making a valid Will. This means that a testator can still make a valid
Will even if he or she suffered from some mental illness as long as that illness was
incapable of affecting the terms of the Will.A mental illness or condition will invalidate
a Will if its presence directly caused the inclusion or exclusion of particular clauses
in the Will. Furthermore, a testator who exhibits odd or eccentric behaviour can still

3-13
3.3.5 CHAPTER 3 — THE LAW OF WILLS

have the testamentary capacity to make a valid Will, so long as those eccentricities do
not affect the terms of the Will.

Whether a testator possesses the necessary testamentary capacity is a question of fact

and will depend on the circumstances in each [Link] issue in each case is whether
the mental condition or eccentricity in question was the reason that motivated the
testator to make the Will or to omit certain clauses from it. If the answer is affirmative,
then there is a connection between the mental condition or eccentricity and the
terms of the Will, and a Will made under these circumstances is invalid.

3.3.5 Undue Influence

“Undue influence” is a term that refers to influence exerted by someone on the

testator and that influence caused the testator to execute the Will or a provision in
it. Where the testator has been unduly influenced, the Will is not the result of the
testator’s voluntary actions. If it is shown that a testator was unduly influenced, then
the Will or provision in question will be invalidated.

Mere influence or persuasion by someone on the testator will not invalidate a Will. A
Will is rendered invalid only where the degree of influence exerted on the testator is
so great and overpowering that it ought to be considered undue influence. Ordinary
influence of a persuasive nature by family members, friends, and others is not
sufficient. There must be an element of force or coercion so great that the testator’s
Will was not made freely and voluntarily. In essence, undue influence means that the
testator’s mind was controlled by some external source, and the terms of the Will
represents the desires of the external source rather than that of the testator.

In one case, for example, the testator was terminally ill.15 His brother suggested that
his wife’s carelessness and bad cooking were to blame. The testator made a new Will
disinheriting his wife and naming his brother as the sole beneficiary. The Supreme
Court of Canada found that the new Will was invalid because it would not have been
made had it not been for the undue influence of the brother. In the result, the wife
inherited the entire estate of the testator under the earlier Will. In the words of the
court:

The testator would not, in my opinion, have disposed of his estate as he

did were it not for the improper influence exercised by the respondent,
that the time the will was made, over his mind weakened by the wasting
disease which eventually caused his death. The suggestion repeated day after

15 Mayrand v. Dussault (1909), 38 S.C.R. 460.

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REQUIREMENTS OF A VALID WILL 3.3.7

day for weeks and months that his malady was caused or aggravated by the
negligence or want of skill in the preparation of his food by this wife was,
under the circumstances, the most insidiously effective method that could be
used to improperly influence the testator who should, at the time have had a
reasonable expectation of a prolonged life during which to enjoy the reward
of his industry and business capacity. Convinced that his death was caused
or hastened by the poor food which his wife prepared, his natural impulse
would be to deprive her of the benefits accruing to her under his previous
will, and the respondent seems to have directed his efforts to the fostering of
this false impression.

3.3.6 Alleging Undue Influence and the Onus of Proof

The onus of proof is on the party alleging undue influence to prove that the testator
was unduly influenced. Because of its potentially devastating emotional impact on
family members, the allegation of undue influence should not be made frivolously. A
litigant who pursues such a claim may be penalised as to costs to discourage litigation
of unsubstantiated allegations with no chance of success but which cause enormous
distress and embarrassment to the family.16 However, there may also be an onus on
the propounder of the Will where the person challenging the validity of the Will can
show suspicious circumstances surrounding the preparation of the Will.

In British Columbia, the Wills, Estates and Succession Act17 reverses the burden of
proof where it is alleged that:

1. a person was in a position where there was potential for dependence

or domination of the will-maker, and

2. that person used their position to unduly influence the will-maker to

make the will or the provision of it that is challenged.

3.3.7 Suspicious Circumstances

Where a Will has been prepared in circumstances that are suspicious, it is the
responsibility of the propounder of the Will to remove such suspicion. The degree
of proof is the “civil” standard being “on the balance of probabilities” and falls short
of the criminal standard of “beyond a reasonable doubt.” However, the extent of
the proof may vary depending on the gravity of the suspicion. The leading case on

16 Re West Estate, 2003 ABQB 205.

17 S.B.C. 2009, c. 13, s. 52.

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3.3.8 CHAPTER 3 — THE LAW OF WILLS

suspicious circumstances is Vout v. Hay,18 where the Supreme Court of Canada set
out the legal principles of suspicious circumstances.

• The legal burden with respect to due execution, knowledge, approval,

and testamentary capacity of the testator lies with the propounder of
the Will.

• There is a general presumption that the above factors are satisfied,

which may be rebutted with sufficient evidence.

• The evidence must be scrutinised in accordance with the gravity of

the suspicion.

• The burden of proof respecting fraud and undue influence is upon

those attacking the Will on the balance of probabilities.

Factors that might give rise to suspicious circumstances include the following:

• vulnerability of the testator due to age, illness, disability, or dependence

on another person,

• change in beneficiary from a previous Will or Wills,

• disinheriting family members in favour of a person of recent

acquaintance or a stranger,

• a gift to a person in a special relationship with the testator such as

the testator’s lawyer, doctor, or other person in a position of power or
trust, or

• reliance on translation or other third party communication of the

testator’s wishes or instructions.

3.3.8 Fraud and Mistake

Where it is shown that a Will or a provision in it was the result of some fraud
perpetrated on the testator, then that Will or provision will be rendered invalid. It
must be shown that the fraud was perpetrated on the testator intentionally with
the purpose of tricking the testator. For example, where a husband uses fraud and

18 [1995] 2 S.C.R. 867.

3-16
REQUIREMENTS OF A VALID WILL 3.3.8

deceit to induce his wife into marrying him when he is, in fact, married to someone
else, then the courts may set aside a bequest in the wife’s Will to her husband if the
court finds that the bequest was made solely on the belief that he was her husband.19
However, if the testator has other reasons for making the gift, then the presence of
fraud will not invalidate that gift.

Similar to undue influence, the onus of proof is on the party who advanced the
allegation of [Link] alleging party must show that the Will or provision would not
have been made if it were not for the fraud — that is, the alleging party must show
that the fraud was directly responsible for the making of the Will or a provision in it.

Where a testator was motivated to make a Will or a provision in it by a mistake, then

the Will or provision is invalid on the ground that the testator did not really approve
of [Link] are three categories of mistakes.

1. A mistaken belief of fact

2. Drafting errors in the Will document

3. Execution of the wrong Will

If a testator made the Will based on the mistaken belief that certain facts were
true when they were really false, then the Will or a portion of it may be rendered
invalid. For example, if a testator revoked a gift because she had received incorrect
information that the beneficiaries were dead, then the revocation will not be valid
because it was made on a mistaken belief of the facts.20 Note that a mistaken belief
of the facts will serve to invalidate the Will or a portion of it only if it was the sole
motivation that the testator had for making the Will or provision.

It is important to distinguish between a mistake of the facts and a mistake of the

legal effect of the words used in a Will. Mistaken beliefs of the facts can invalidate
a Will, whereas a mistaken belief of the legal effect of the words in a testamentary
document will not invalidate it. If the testator had knowledge of the actual contents
and wording of the Will and approved of it (i.e., the testator read it or someone else
read it to the testator and the testator subsequently signed the document), then
nothing can be done to correct this mistake. The courts will enforce the Will as it is

19 Kennell v. Abbott (1799), 4 Ves. 802, 31 E.R. 416.

20 Campbell v. French (1797), 2 Ves. 321, 30 E.R. 1033.

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3.3.8 CHAPTER 3 — THE LAW OF WILLS

written even if the legal effect of the words fails to accomplish what the testator had
intended to do by the Will.

If a drafting mistake was made in a Will by the draftsperson such that words were
inserted into the Will that do not reflect the testator’s intentions, then a court
can exercise its power of rectification to strike out the words that were inserted
by mistake. However, a court will only do so if it is shown that the testator did not
approve of the Will’s contents. Also, the power of rectification generally only allows
the courts to strike out certain words inserted in the Will by mistake, but it does not
go so far as to allow the courts to add words into the Will, regardless of whether the
added words would better express the intentions of the testator, although in some
rare cases the courts have added words.21 In general, if the testator had read over the
Will or if it was read to the testator by someone else, then the courts will presume
that the contents were approved by the testator.

In one example where the court exercised its power of rectification to correct a
drafting mistake, a testator wanted to make two gifts — one to each of his daughters.A
mistake occurred during the drafting process and the name of the same daughter was
inserted as the beneficiary of both [Link] the Will seemed to make two gifts to the
same daughter while leaving nothing for the other [Link] court found that the
testator did not read the Will nor was it read to him. Instead, the drafter summarised
the Will for the testator. The court reviewed the instructions that the testator had
given to the draftsperson and found that it clearly supported the conclusion that the
testator intended to make a gift to each of his daughters. On these facts, the court
corrected the drafting error by striking out one of the duplications. However, the
court refused to insert the name of the daughter who had been left out, choosing
instead to leave a blank space where the duplication had been struck out.22

Another category of mistake occurs where the wrong Will was executed. This may
occur where, for example, a husband and wife made their Wills at the same time
but accidently signed the wrong Wills such that the husband signed the wife’s Will
and vice versa.23 Under these circumstances, some courts have been willing to strike
out the error and substitute the correct signature in its place. Therefore it seems
that where the two testators are spouses and they accidently signed the Will of the
other spouse, courts may be willing to go further than what the traditional power of
rectification permits by actually inserting changes into a Will document.

21 Feeney’s Canadian Law of Wills, supra note 8 at §10.89.

22 In the Goods of Boehm, [1891] P. 247.
23 Re Brander, [1952] 4 D.L.R. 688 (B.C. S.C.).

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REVOCATION [Link]

3.4 AMENDMENT

An amendment to a Will must be executed in the same manner as a Will to be valid.

A Will may be amended by another testamentary document called a codicil. A codicil
must conform to all the requirements of a Will in order to be valid.

If an alteration is made on a formally executed Will after the execution of the Will, it
is of no effect unless signed and witnessed in the same manner as required for a Will.
Initials are generally acceptable in lieu of full signatures of the testator and witnesses.
Alterations will be effective to the extent that any alteration renders particular words
no longer apparent.

3.5 REVOCATION

A Will must be revocable. Revocation must conform to the statutory requirements in

the [Link] common-law rule that revocation is presumed if there is a change
of circumstances or domicile has been abolished by statute. Under the legislation,
revocation may result from an overt act of the testator, or by operation of law such as
marriage or divorce as described below.

3.5.1 Revocation by Overt Act of the Testator

The testator my revoke a Will:

• by subsequent instrument executed with the same formalities as a

Will or

• by destruction of the Will by the testator with the intention to revoke.

Destruction of the Will may be done by burning, tearing, or otherwise either by the
testator or at his or her direction, but the physical destruction must coincide with
the intention to revoke. Where the destruction was accidental, it will have no effect;
however, there is a presumption that the Will is revoked that can be rebutted by
evidence that the Will was not destroyed with this intention.

[Link] Holograph Revocation and Alterations

Where holograph Wills are permitted a holograph codicil or other

instrument may revoke or amend a formally executed Will or a prior

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[Link] CHAPTER 3 — THE LAW OF WILLS

holograph Will.24 Holograph alterations to a formally executed Will may not

be made by writing on the Will itself.25 However, in at least one case in
Manitoba where substantial compliance legislation exists, a testator who
wrote “void” across the original and all copies of the Will was found to have
successfully revoked the Will.26

Where an individual makes a holograph Will, a formal revocation clause

may not be included. This leads to uncertainty as to whether any previous
Will is revoked, and whether the holograph Will replaces the former Will or
is only intended as a codicil.

[Link] Presumption of Revocation: Lost Wills

Where a Will was known to last be in the possession of the testator,

but cannot be found upon death, there is a presumption of revocation.
However, in order for the presumption to apply, a thorough search for the
Will must be made, and the court must apply the presumption.27

3.5.2 Revocation by Operation of Law: Change in Marital Status

[Link] Marriage Revokes a Will

Marriage revokes a Will in all provinces except British Columbia, Alberta, and
Quebec. The Will is not revoked if it is made specifically in contemplation
of marriage. Marriage also creates a number of legal rights and obligations,
including payment of support, division of property, and a distribution from
the estate of the deceased spouse upon intestacy. Accordingly, it is essential
that before marriage a person should obtain legal advice, and have a new
Will prepared. In some cases a marriage contract may also be appropriate.

Now that same-sex marriage is recognised, same-sex marriage will also

revoke a Will.

Saskatchewan: Common-law spouses are recognised after 24 months

of continuous co-habitation and at the end of the 24-month period any
existing Will is considered revoked as if a legal marriage took place.

24 Feeney’s supra note 8 at §4.61.

25 Ibid.
26 Estate of Marinus Johannes (Rien) Roelofs (2004), 12 E.T.R. (3d) 241, 2004 MBQB 280 (CanLII).
27 Feeney’s supra note 8 at §5.64.

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REVOCATION [Link]

However, marriage will not revoke a Will if the person marries a person
with whom they were living common law, and they had already signed a
Will in contemplation of that common-law relationship.

Manitoba: Marriage revokes any previous Will, unless:

• the Will was drafted in contemplation of the marriage,

• the Will was declared to be made in contemplation of a

common-law relationship and the couple gets married, or

• the Will fulfills obligations to a former spouse or common-law

partner under a separation agreement or court order.

Ontario and Nova Scotia: Marriage revokes any previous Will, unless:

• the Will was drafted in contemplation of the marriage or

• the spouse elects to take under the Will within one year of the
testator’s death.

Quebec: Marriage does not revoke a Will in the province of Quebec.

New Brunswick: Marriage revokes any previous Will, unless:

• the Will was drafted in contemplation of the marriage or

• the parties later divorce and the couple did not have any
children or grandchildren.

Prince Edward Island: Marriage revokes all previous Wills, unless the
Will was drafted in contemplation of the marriage and it was executed
within one month of the marriage.

See 3.12, Summary of Effect of Marriage on a Will by Jurisdiction.

[Link] Effect of Divorce

In British Columbia, Saskatchewan, Manitoba, Ontario, Quebec, Prince

Edward Island, and Nova Scotia, divorce will revoke any benefits or
appointments in favour of the former spouse under any Will made before

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3.6 CHAPTER 3 — THE LAW OF WILLS

the divorce. The divorce decree must be final for this rule to have effect.
Separation or a Decree Nisi is not sufficient.

Any gift of specific property, any residual gift, any appointment as

executor or trustee, or any power of appointment to the former spouse
will be revoked. Generally the provincial legislation operates to interpret
the Will as if the former spouse pre-deceased the testator. In addition to
disinheriting the former spouse, this could have the effect of accelerating
the interests of other beneficiaries under the Will.

Divorce has no effect on the provisions of a Will in Alberta, New Brunswick,

Newfoundland and Labrador, Yukon, the Northwest Territories, and
Nunavut.

Sharon and Allen had been separated for 4 years. Allen continued to pay all
the expenses for the family home and made voluntary payments to Sharon of
$3,000 per month for her living expenses. Allen was in a new relationship and
had been co-habiting for a period of 2 years and 11 months when he died
suddenly of a stroke. Sharon was the sole executor and beneficiary under his
Will.

Since Sharon and Allen were still married, his Will was fully effective.

Depending on the province of residence, Allen’s new girlfriend may have a

potential claim for dependant relief and/or in respect of property.

3.6 WILL SUBSTITUTES

Wills allow individuals to transfer the property that they own at the time of death,
but there are other methods of transferring property that do not involve a [Link]
methods are known as “Will substitutes.” Will substitutes are often used instead of a
Will for estate-planning purposes, which may include an attempt to avoid probate fees
or to minimise income taxes that would be payable otherwise (for more information
on probate fee planning, see Chapter 9). There are a number of Will substitutes,
including:

• inter vivos gift,

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WILL SUBSTITUTES 3.6.1

• donatio mortis causa (a gift in contemplation of death),

• inter vivos trust,

• joint tenancy (joint interests in property), and

• designation of beneficiaries for insurance or registered plans

authorised by statute.

3.6.1 Gifts

When one person (the giver or donor) makes an inter vivos gift to another (the
recipient or donee), the giver is essentially transferring ownership of the property
to the donee during the lifetime without using a Will. However, the gift deprives the
donor of the enjoyment of the property since a valid gift is irrevocable. In general, it is
not good estate planning to manage the transfer of wealth by simply “giving it away”
during your [Link] are a number of [Link] include the following:

• the gift is irrevocable;

• loss of control over the funds or property;

• exposure to recipient’s creditors or claims of spouses or heirs;

• the effect of the gift on the recipient — family members may not be
ready to manage wealth;

• potential future financial needs of the donor or other immediate

family members;

• costs of disposition of property, including income tax on any accrued

gains, legal fees, and transfer taxes; and

• effect on distribution of remainder of estate.

In general, if an individual wishes to make significant gifts to children or other family

members, independent legal advice is recommended. A safe philosophy is “never give
away anything that may be needed in the future.” Advisors should be wary of the
potential influence of family members whenever an individual expresses the desire
to accelerate the inheritance of a loved one.

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3.6.2 CHAPTER 3 — THE LAW OF WILLS

3.6.2 Gifts Donatio Mortis Causa

Donatio mortis causa is Latin for “gift in contemplation of death,” sometimes called
a “deathbed gift.” A gift donatio mortis causa is a gift made during the lifetime of
the donor in contemplation of death, although not necessarily in the expectation
of death. Death must be anticipated from an existing peril such as illness, event, or
high-risk activity such as military posting to a war zone. The gift is not valid unless
the donor actually dies as a result of the specific cause contemplated. In summary the
requirements include:28

• the gift must be made in contemplation of death;

• the property that is the subject of the gift must be delivered to the
donee, although “constructive delivery” is sufficient;

• the gift must be made in circumstances that make it clear that the gift
is only to take effect in the event of death; and

• the donor must die from the peril contemplated.

The gift is revocable during the lifetime of the donor, and if the giver does not die
from the disorder or event that was contemplated, then the gift reverts back to the
giver.

For example, suppose Bill has been diagnosed with a serious medical condition. His
friend Tina paid him a visit, and during their conversation, Bill says to Tina, “In case I
die, I want you to have my stereo” and then hands her the stereo. At this point, several
requirements of the gift have been satisfied: there was an intention to make a gift
in contemplation of death, and the property was delivered to the recipient donee.
If Bill dies from his illness, then the gift is complete and the stereo belongs to Tina.
However, if Bill recovers from his illness, then the gift is not complete because he did
not die from the contemplated disorder that was the basis of the gift. Furthermore,
Bill can take the stereo back from Tina or demand that she return it to him.

3.6.3 Inter Vivos Trust

A trust is a legal device for dealing with property. In general, a trust arises where
one person (called the “settlor”) transfers property to another person (called the
“trustee”) with instructions that the property is to be used for the benefit of a third

28 Brown v. Rotenberg, [1946] O.W.N. 353.

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WILL SUBSTITUTES 3.6.4

person (called the “object” or “beneficiary”). Trusts can be set up during the lifetime
of the settlor, and when this occurs the trust is called an inter vivos trust.

For example, Daniel creates a trust by transferring his investments to Judy as trustee,
with instructions to Judy that she is to hold the investments for the benefit of Vicky,
and give it all to Vicky when Vicky is 18 years old. In this example, Daniel is the
settlor, Judy is the trustee, Vicky is the beneficiary, and the investments are the trust
property. By using a trust, Daniel was able to deal with his property without using
a Will while ensuring that the property is used in a manner that he has approved.
Daniel is no longer the owner of the investments because they have been transferred
to Judy, assuming that the trust is [Link] when Daniel dies, the investments
will not form a part of his estate.

The use of an inter vivos trust can be an excellent way of planning for the transfer of
property in the future, while dictating the terms and conditions upon which it will be
held in the [Link] is thus a degree of control that the donor has by creating
the terms of the trust that provide advantages over an immediate gift. If distributions
from the trust are discretionary during both the trust’s existence (duration) and
upon termination of the trust, the settlor may postpone both delivery of the property
and decisions relating to the appropriate distribution among a number of potential
beneficiaries until a future time. In addition, subject to income tax consequences, the
settlor may be able to exercise an additional degree of control over the property by
his or her choice of trustees and possibly becoming a trustee him- or herself.

Some of the same considerations that relate to inter vivos gifts are identical to
transfers to trusts.

3.6.4 Jointly Held Property with a Right of Survivorship

There are a number of ways to own or have an interest in property. In an ownership

structure known as a “joint tenancy,” one or more persons can own property together.
Each person has an interest in the property, and if one of them dies, their entire
interest in the property reverts by operation of law to the surviving joint owners, and
the property will not pass through the estate of the deceased owner or be subject
to the terms of his or her Will. Only upon the death of the last surviving owner will
property pass through the estate of the (surviving) owner since all the survivorship
interests of the other pre-deceased joint owners have been extinguished upon their
death. Joint tenancy usually refers to joint ownership of real property with rights of
survivorship. Where the property is other than real property, it is usually called “joint

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3.6.4 CHAPTER 3 — THE LAW OF WILLS

with right of survivorship.” Survivorship rights are not possible in Quebec since they
are not recognised under the Civil Code.

Joint tenancy, including joint with a right of survivorship, is a common form of

property ownership between married couples who want each other to automatically
receive the property of the other when the first of them dies.

Joint bank accounts are often held by the account holders as “jointly with a right of
survivorship.” Suppose that Kylie and Leon are friends and they have a joint bank
account with a right of survivorship. If Leon dies, then his interest in the account
will automatically revert to Kylie and no part of the account will pass through Leon’s
estate. If Leon has a Will, giving everything to Tom, for example, Tom will not inherit
any part of the bank account. If Kylie is the only surviving account holder in this
example, she will own the entire interest in the property after Leon’s death so that
the entire account will belong to her. Upon her death, as the last surviving joint
owner, the property will pass through her estate. On the other hand, if Kylie dies first,
the property will pass through Leon’s estate and be subject to the terms of his Will
upon his subsequent death.

A joint interest in property with a right of survivorship can be used as a Will substitute
because upon the death of someone who owns property in this way, their share of
the property will pass to the other owners of the property who are still alive.

Returning to the example above, Leon was able to transfer his ownership interest in
the bank account to Kylie upon his death without using a Will because he held the
account as a joint tenant with Kylie. However, this assumes Leon dies first.

The income tax consequences of transfers of property on death are not avoided by
the use of joint property with rights of survivorship.

Two cases from the Supreme Court of Canada29 have recently altered the nature of
property interests held in a joint tenancy on death by finding in some circumstances
that a joint tenancy does not necessarily result in the surviving joint owner having
an absolute interest in the property. Where there is a gratuitous transfer for property
into joint names with a right of survivorship to an adult child, for example, there is a
presumption of resulting trust such that the property remains as part of the estate of
the transferor.

29 Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, and Madsen Estate v. Saylor, 2007 SCC 18, [2007] 1 S.C.R.
838.

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TYPES OF WILLS 3.7.1

3.6.5 Beneficiary Designations

Legislation in each jurisdiction in Canada permits beneficiary designations to be

made naming a beneficiary on the death of the life insured with respect to the death
benefit of a life insurance policy. Similarly, legislation permits the annuitant or holder
of certain plans registered under the Income Tax Act, such as Registered Retirement
Savings Plans (RRSPs) and Registered Retirement Income Funds (RRIFs) including the
locked-in versions. Every jurisdiction has also recently passed legislation permitting
the holder of a Tax-Free Savings Account (TFSA) to designate a beneficiary.

A beneficiary designation may be contained in a Will, although this is not required.

Normally the statutory requirements are that the designation be in writing but
generally no other specific formalities are required.

Where a valid beneficiary designation has been made, the property (i.e., the registered
plan or insurance proceeds) will pass directly to the named beneficiary and not form
part of the assets of the estate of the deceased. Where the designation is in the Will,
drafting techniques exist to keep the insurance or plan proceeds separate from the
assets of the estate to maintain creditor protection and probate fee savings. Further
details are contained in Chapter 9, Probate Fee Planning.

3.7 TYPES OF WILLS

3.7.1 Holograph Wills

The holograph Will is another form of Will. Unlike the conventional Will, holograph
Wills do not require any [Link] only formal requirements for a holograph Will
is that the entire Will must be written in the handwriting of the testator and signed by
the testator. Therefore, where a document contains clauses that were not written by
the testator — for example, a document with clauses that were written by someone
other than the testator or clauses that were printed using a computer — then that
document will not qualify as a valid holograph Will.

Holograph Wills are recognised for all purposes in Alberta, Saskatchewan, Manitoba,
Ontario, Quebec, New Brunswick, Nova Scotia, Newfoundland and Labrador, Yukon,
the Northwest Territories, and Nunavut. British Columbia may recognise holograph
Wills made outside the province for movable property in the province in some
circumstances. Prince Edward Island does not recognise holograph Wills, although
the province does have substantial compliance legislation. Even if the document does
not satisfy the requirements of a holograph Will, the document may be recognised

3-27
3.7.2 CHAPTER 3 — THE LAW OF WILLS

as testamentary under the doctrine of substantial compliance in jurisdictions where

this has been legislated. (See 3.3.3, Substantial Compliance.)

3.7.2 Mirror Wills

Mirror Wills are separate Wills made by two individuals that are identical, except they
make each other the beneficiary with identical gifts over on the death of the survivor.
Such Wills are very common between married or common-law couples who wish to
leave everything to the surviving spouse with a gift over to children or other issue of
the union.

3.7.3 Mutual Wills

Mutual Wills are used by two or more individuals who have agreed to dispose of their
property in a certain way and there is an agreement, implied or otherwise, that the
individuals will not change the terms of his or her Will after the death of the other
individual. Mutual Wills are sometimes used by spouses in their second marriage who
want their estate to take care of the surviving spouse while that spouse is alive, and
then have the assets of the estate distributed among the children from their first
marriage. Mutual Wills can cause many problems relating to drafting, intention, and
enforcement and most lawyers avoid them wherever possible. Other Will planning
strategies may better achieve the wishes of an individual to preserve capital for an
ultimate beneficiary, including the use of a testamentary trust with a life interest and
a gift over on the death of the life tenant to the ultimate beneficiary.

3.7.4 Joint Wills

Joint Wills are almost never seen in practice today. In the past they were used for
a husband and wife where one Will was made for both instead of two. Modern
computerised document production and the risk of litigation over interpretation of
joint Wills have made them obsolete.

3.7.5 Multiple Wills

In some circumstances it may be appropriate for a testator to make more than one
Will to deal with separate assets of his or her estate.

[Link] Property Outside the Jurisdiction

A separate Will for property in another country or another province may

be the most expeditious way of transferring such property on death. The

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TYPES OF WILLS 3.7.6

separate Will can be prepared in accordance with the formalities of the

other jurisdiction and, if appropriate, in the language of that country where
outside [Link] separate Will avoids the two-step procedure that might
otherwise be required to have the Will probated in the jurisdiction of
residence and the procedures to have the original grant recognised in the
other jurisdiction. Normally these Wills are made to deal with real property
in the other jurisdiction, but they can include any or all property in the
other jurisdiction.

For example, if an individual lives in Ontario and owns a condominium

in Spain, he or she may make an Ontario will that deals with all property
except for the property located in Spain and a Spanish Will that deals solely
with the Spanish [Link] Spanish Will should be prepared by the
appropriate legal professional in Spain and most likely would be written in
Spanish. On death of the individual it will not be necessary to have the
Ontario Will probated in Ontario and officially translated and recognised in
Spain.

[Link] Probate Fee Planning

Multiple Wills or dual Wills are sometimes used to limit the value of the
estate subject to probate fees. This is discussed in Chapter 9, Probate Fee
Planning.

3.7.6 International Wills

In 1973, an international treaty was signed called the Convention Providing a

Uniform Law on the Form of an International Will. This convention is significant
because it created a new type of Will — the international Will — which is recognised
in multiple jurisdictions around the world. A testator who owns property in different
jurisdictions but wishes to dispose of them via a single Will may do so by using an
international Will. However, international Wills are not used very frequently because
not many jurisdictions recognise the convention as law. Currently, the provinces of
Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Prince Edward Island,
Nova Scotia, and Newfoundland and Labrador have all recognised the validity of
international Wills.

To make a valid international Will, a number of requirements must be met.

3-29
3.8 CHAPTER 3 — THE LAW OF WILLS

• The document must be in writing although any language may be used,

and it does not have to be written by the testator personally.

• The testator must declare in the presence of two witnesses and an

authorised person that the document is his or her Will and that the
testator knows the contents of it, but the testator does not have to
disclose the contents of the Will.

• The testator must sign the Will in the presence of two witnesses and
the authorised person (if the testator has already signed the document,
then the witness and/or authorised person must acknowledge the
signature).

• If the testator is unable to sign, the testator may designate another

person to sign for him or her, but the authorised person must make
a note of this in the Will document along with the reason that the
testator is unable to sign.

• The witnesses and authorised person must sign the document in the
presence of the testator.

• The authorised person must attach a certificate to the Will that

establishes that the obligations of the convention have been complied
with.30

An “authorised person” is a person who is permitted to act in connection with

international Wills. This authority is granted by the Wills legislation of each province.
For example, in Ontario, all barristers and solicitors are authorised persons.

3.8 TESTAMENTARY GIFTS

3.8.1 Types

In the past, testamentary gifts were categorised by their form and each form was
given a special name. “Devises” referred to gifts of real property, such as land;
“bequests” were gifts of tangible personal property, such as a set of antique books or
a car; and “legacies” referred to gifts of money or other intangible property, such as
stocks and [Link] terms are still used but generally their meaning refers to gifts

30 But failure to comply with this condition is not fatal to the validity of the Will.

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TESTAMENTARY GIFTS 3.8.2

interchangeably and they are no longer used as terms of art and are not confined to
the specific type of property that is the subject of the gift.

There are, however, some distinctions that are still relevant since they may be used to
determine which gifts can be used as payment for debts owed by the testator. Gifts
may be categorised as specific, general, demonstrative, and residuary.

Specific gifts are gifts that the Will has described in sufficient detail to determine
which specific item the testator intended to give. A testator makes a specific gift
where the Will describes the gifts as “the red Porsche with VIN number 1234” or “the
money held at Royal Bank in account number 6789.” If the property is not owned on
death, the gift is said to “adeem” and the beneficiary receives nothing.

General gifts are those that do not describe the specific piece of property that the
testator wants to gift away. For example, if the Will says “$10,000 to Sarah if she
survives me,” this gift would be a general gift since the $10,000 can be taken from
any of the property of the estate, including cash on hand or cash proceeds of assets
that are sold during the administration of the estate as a result of the liquidation of
estate assets.

Demonstrative gifts are gifts of money that the testator intended to be paid out of
a designated fund, but in the event that the designated fund no longer exists or has
been diminished to a point where it cannot satisfy the amount of the gift, then the
gift can be paid from elsewhere in the estate. One can think of demonstrative gifts
as lying somewhere between specific gifts and general gifts, where the designated
fund or source is preferred but the gift does not adeem if the preferred source is not
sufficient or not owned by the testator on death.

A residuary gift is a gift of the residue or residuary property of the estate, which is the
portion of the estate that remains after the payment of debts, taxes, and all the other
types of gifts have been given. Thus if the Will says “the residue to James,” then James
will take whatever property was left in the estate after debts and taxes have been
paid and after all the other gifts in the Will have been honoured.

3.8.2 Lapse

Lapse is a legal doctrine that provides that where a beneficiary pre-deceased the
testator, the gift that was intended for the beneficiary will fail to take effect. Under
these circumstances, the gift is said to have lapsed. This means that the gift will not
pass to the estate of the deceased beneficiary but will form a part of the residue of

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3.8.3 CHAPTER 3 — THE LAW OF WILLS

the testator’s estate. If the lapsed gift was already a part of the residue, then it will
pass according to the rules of intestacy that are applicable in the jurisdiction. Note
that the doctrine of lapse does not apply to class gifts, unless every individual in the
class has died, in which case the gift would lapse.

Where the testator expressed an intention in his or her Will that the lapse doctrine
is not to apply, then the testator’s intentions will be respected. A testator can express
such an intention by providing for a substitute or alternate beneficiary for the gift in
the event the beneficiary pre-deceases the [Link] is known as a “gift over.”

A gift of property to a named beneficiary “if he survives me” with no alternate

beneficiary indicates that the doctrine of lapse will apply. In contrast, a gift “to my
friend James, if he survives me, but if he does not to my friend Eric” will not lapse if
James pre-deceases the testator and Eric survives, but it will lapse if Eric has also pre-
deceased the testator.

3.8.3 Anti-Lapse Legislation

Each province has also enacted “anti-lapse” legislation that explicitly ousts the lapse
doctrine where the beneficiary of a gift is a close relative of the testator being a child,
grandchild, or other issue, or in some jurisdictions to a brother or sister.31 The persons
to whom the gift over is made under the anti-lapse rule depends on the particular
statutory provision in the jurisdiction. It may be to the persons who would inherit
the estate of the pre-deceased beneficiary as on an intestacy (without debts), or in
some circumstances to the estate of such person. In Nova Scotia, the gift over is to
the estate of the beneficiary; and in Prince Edward Island, the gift over is only to
the issue of a pre-deceased beneficiary excluding any surviving spouse.32 In Ontario,
the gift over is as on an intestacy of the pre-deceased beneficiary, excluding debts
and excluding the spouse’s preferential share where both the spouse and the issue
survive the pre-deceased beneficiary.33

Anti-lapse legislation does not apply if there is an intention to the contrary in the Will.
Generally a class gift is considered to be a contrary intention. Nevertheless, class gifts
are subject to anti-lapse in most jurisdictions in Canada34 so that if a member of the

31 In Nova Scotia and Prince Edward Island, anti-lapse applies only to children or other issue, and not siblings. In
Manitoba, anti-lapse applies only to real property.
32 See Howlett, supra note 12 at 50-51.
33 See Chapter 5, Intestacy, for a discussion of the spouse’s preferential share.
34 The application of statutory anti-lapse is subject to a contrary intention in the Will in all jurisdictions.
However, class gifts are carved out of this exception in every jurisdiction except Manitoba, Ontario, Prince

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TESTAMENTARY GIFTS 3.8.4

class dies before the testator there will be a gift over to the family members of the
deceased beneficiary rather than an accretion to the gift to the members of the class
alive at the closing date. As an example, the anti-lapse provision in Alberta specifically
includes a devise or bequest to “a child or other issue or a brother or sister of the
testator to whom, either as an individual or as a member of a class.”

Where anti-lapse does not apply to class gifts in Manitoba, Ontario, Prince Edward
Island, and Nova Scotia, the remaining members of the class will have the value of
their gift increased by the pre-deceased individual’s share. So, for example, if the
Will provided a gift of $100,000 to be divided among “my children,” the anti-lapse
provisions would not apply to substitute the issue of a pre-deceased child.35

Where the testator left her estate to be divided between her two sons, James and
Floyd, “in equal shares per capita,” it was held to be subject to Ontario’s anti-lapse
provision. The court decided that the intention was that each son was to have an
equal share, and since there was no specific gift over, the anti-lapse rule applied with
the result that the gift to James, the pre-deceased son, did not lapse and under the
anti-lapse rule was subject to a gift over to his surviving wife and children as on an
intestacy.36

The best way to show a contrary intention with respect to anti-lapse is to provide an
alternate [Link] use of the words “for his own use absolutely” have been held not to
exclude the anti-lapse provisions. However, the words “if he or she survives me” with
no alternate beneficiary will ensure that the gift will lapse. See 3.13, Anti-Lapse Rules
by Jurisdiction.

3.8.4 Abatement

The assets of an estate may be insufficient to satisfy all the liabilities of the estate and
all gifts in the [Link] this occurs, the gifts must be reduced to satisfy the payment
of debts and liabilities. The reduction of testamentary gifts is called “abatement” (i.e.,
gifts under the Will must be reduced to raise the funds necessary for meeting the
shortfall to pay debts and liabilities of the estate).

Edward Island, and Nova [Link] result is that in these latter jurisdictions the anti-lapse rules do not apply
to class gifts.
35 See, for example, Re Lightfoot (1985), 50 O.R. (2d) 346 (H.C.).
36 Dewitt v. Taggart Estate, 2006 CanLII 26979 (Ont. S.C.).

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3.8.5 CHAPTER 3 — THE LAW OF WILLS

Where abatement is required, gifts are abated according to the type or category of
[Link] following gifts abate in the following order:37

1. the residue of the estate is reduced first until it is exhausted;

2. general gifts abate second;

3. specific and demonstrative gifts, other than real estate, abate next and
for the purposes of abatement they are reduced pro rata together as
one category of gift; and

4. specific gifts of real property abate last.

The gifts in each category abate at the same rate. This means that no one gift in
a category will be abated at a higher or lower rate than another gift in the same
category.

For example, suppose that the entire residue must be used to pay liabilities but
$60,000 of debt must still be paid. If the Will contains two general gifts, one of $30,000
to Alpha, and one of $90,000 to Bravo, each gift will be reduced by 50% since the
total of general gifts is $120,000 and the amount of the abatement must be 50% of
the general gifts. So Alpha would receive $15,000 and Bravo would receive $45,000.

In the same example above, assume that the amount of unpaid debt after exhausting
the residue was $200,000, and there was a further gift of the family cottage worth
$350,000 to [Link] general gifts would be exhausted completely, and $80,000 of
unpaid liability would have to be satisfied from the specific gift of the family cottage.
As a result, the cottage property would have to be sold and Charlie would receive the
balance of the funds or $270,000 after the remaining debt of $80,000 was paid.

The testator can modify the application of the rules of abatement if a contrary
intention is expressed in the Will.

3.8.5 Ademption

“Ademption” refers to situations where a testator gifted some property to a beneficiary

by Will, but for one reason or another, the testator no longer owned the property at
the time of death. The property may have been destroyed, or the testator may have
sold the property, or the property no longer matches the description given in the

37 Feeney’s supra note 8 at §§8.51-8.53.

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TESTAMENTARY GIFTS 3.8.6

Will. In such a scenario, the gift is said to have adeemed and the beneficiary receives
nothing. Only specific gifts (i.e., gifts of specific property), described in the Will, are
subject to ademption. A general or demonstrative gift is not subject to ademption
because the property to satisfy such gifts may be taken from any part of the estate.

Suppose that a testator gifted her antique Rolls-Royce to a nephew in her Will, but the
car was wrecked in an accident during her lifetime. Upon death, the gift adeems and
the nephew will receive nothing. The same result would occur even if the car were
not wrecked but sold and the proceeds deposited into the testator’s bank account.
The nephew would not have a claim on the proceeds from the sale.

It is a matter of construction whether “tracing” can be applied to follow described

assets into their modified form or to their proceeds of sale of insurance after
destruction. In certain cases, there may be statutory relief from the doctrine of
ademption. For example, in Manitoba and Ontario, if a substitute decision maker
disposes of an individual’s property, that individual’s heirs will have the same interest
in the proceeds of sale that they would have had in the property if the sale had not
taken place.38

3.8.6 Class Gifts

A class gift is a gift that is made to a defined group of persons, called a “class.”The group
is often a group of persons related to the donor, such as children or grandchildren,
but any defined or otherwise ascertainable group can be the object of a class gift. If
the description of the class has no precise meaning or is too wide for its members
to be ascertained, the gift will be void.39 So, for example, a gift “to my friends” is too
vague to be a class gift.

Class gifts must be carefully drafted to avoid any uncertainty as to who is a member
of the group and at what point in time all members of the group will be ascertainable.

Usually a class gift is made in a Will or trust at a time when the members of the class
may not yet all be identified. It is possible, for example, to create a trust in a Will for
“my grandchildren, who survive me.” At the time the Will is made, the testator may
not have any grandchildren, or may have a reasonable expectation that additional
grandchildren will be born after the Will but before death. The class gift permits

38 See s. 24 of the Wills Act of Manitoba and ss. 35 and 36.1 of Ontario’s Substitute Decisions Act.
39 Feeney’s supra note 8 at §14.3.

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3.8.6 CHAPTER 3 — THE LAW OF WILLS

additional members of the class to benefit from the gift. However, the opposite is also
true as individuals may cease to be a member of the group by death or other factor.

It is only when the “class closes” that the actual members of the group who
benefit from the gift can be determined. Until that time, persons who fall within
the description of the group are only potential beneficiaries. Class closing occurs
when no new members can join the class and all the members of the class can be
ascertained with certainty. In other words, it is the time when the complete list of
beneficiaries comprising the class can be determined. This may be determined by a
date, an event, or other factor. For example, a gift to “grandchildren” may be drafted to
close:

• on a specified date: for example, to my grandchildren who are alive

on December 31, 2020, in equal shares per capita;

• at the date of death: to my grandchildren who survive me in equal

shares per capita; or

• at the time my oldest living grandchild attains a specific age:

to my grandchildren alive at the date my eldest grandchild attains age
25 in equal shares per capita.

Only the grandchildren alive at those specific times will be beneficiaries. Any
grandchild who has died before that time or who is born after that time will not be a
beneficiary.

Determining whether a gift is a class gift is important since lapse is not applicable to
a class gift, and although a gift to a beneficiary who is an attesting witness is normally
void, the gift to a witness will not be if the gift is a class gift (see 3.3.2, Formalities of
a Will).

A class gift will not lapse if one of the beneficiaries died before the closing date.
Rather, the gift will accrue to the remaining members of the class, so that a class gift
would only lapse if every member of the class died before the closing date. Note that
this assumes the members of the class are not persons to whom anti-lapse applies or,
if they are, that in the particular jurisdiction anti-lapse does not apply to class gifts.

Suppose the testator made a gift to “all my brother’s children,” and one of the brother’s
children pre-deceased the testator. Since this is a class gift, the death of a beneficiary
before the testator does not cause the gift to the class to lapse. Instead, the share of

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TESTAMENTARY GIFTS 3.8.6

each surviving beneficiary is increased by the amount that would have gone to the
deceased beneficiary. Note that if the gift had been to “all my children” and there was
a pre-deceased child, the gift to the pre-deceased child would be subject to anti-lapse
rules in all jurisdictions where anti-lapse applies to class gifts,40 with the result that
there would be a gift over of the pre-deceased child’s share to his or her surviving
heirs.

Determining whether a gift is a class gift is important since lapse is not applicable to
a class gift, and although a gift to a beneficiary who is an attesting witness is normally
void, the gift to a witness will not be if the gift is a class gift (see 3.3.2, Formalities
of a Will). A class gift, which is a gift to a group, must be distinguished from a gift to
individuals called a gift persona designate (to specific persons and not to a class). For
example, “$5,000 to my children who survive me” is a class gift, whereas “$5,000 to
each of my children who survive me” is not.

Where the members of the group are named, or the number of members of a group
is specified, generally this will not be a class gift. So a gift to “my two children Jack
and Jill” would not be a class gift, whereas a gift to “my children” would be.

To assess whether a gift is a class gift, the question that needs to be answered is
whether the testator intended to make a gift to a group of persons in their capacity
as individuals or whether the testator intended to make a gift to a group of persons
fitting a general description as members of a class.

For example, a testator can make a gift to all members of a group, such as the Society
of Trust and Estate Practitioners (STEP) of Canada. All members of STEP could
potentially be beneficiaries of the [Link] is a class gift.

Conversely, a testator may express an intention to make a gift to a group of persons

as individuals when he or she names the beneficiaries. For example, if the testator
made a gift by stating “$10,000 in equal shares to my friends, Tom, Jerry, and Elaine,”
then this would not be construed as a class gift since the members were named and
the testator is presumed to have made a specific gift to each beneficiary. If one of the
named beneficiaries died before the testator, then 1/3 of the $10,000 would fall into
residue.

40 Anti-lapse rules do not apply to class gifts in Ontario or Nova Scotia.

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3.8.6 CHAPTER 3 — THE LAW OF WILLS

The testator can refer to some of the members of the class by name and it would
still be a class gift.41 Returning to one of the examples above, suppose that Albert
and Betty are members of STEP, and the testator made a gift to “all the members of
STEP and Albert and Betty”; this gift is a class gift even though the testator specifically
named two of the members in addition to having given a general description of the
members in the class. However, it will not be a class gift if the testator had named
every beneficiary of the gift. Similarly, a testator can exclude specific persons who
would otherwise fit the description of the class. A gift is a valid class gift where it is
made to all the members of STEP but to the exclusion of Albert and Betty.

Class closing occurs on the cut-off date, however specified (i.e., a time period after
death or upon the occurrence of a particular event), after which no new members
can join the class. It is the time when the members of the class can be definitively
ascertained. Prior to class closing, only the potential beneficiaries of the class gift can
be determined. This is because beneficiaries may leave the class through death or by
ceasing to fit the definition of the class. Similarly, new members can join the class if
they acquire the characteristics of the class prior to the time of class closing.

In general, the time when the class of beneficiaries closes can be determined by
looking to the Will itself. For instance, a gift to “all my children who survive me” will
create a class gift where the class closes upon the death of the [Link] is because
as long as the testator remains alive, he or she could conceive of more children (or
adopt). Therefore, the group consisting of the children who will survive the testator
cannot be determined with certainty while the testator is still alive.

A testator may provide for the time at which the class is to close. For example, the
testator could provide for a class gift to “my children who are alive on January 1, 2025,
at 12:00 AM.” A testator could also provide that the class closes on the happening of
an event, such as a gift to “my children who are alive when the youngest child attains
the age of 21.”

If the Will does not provide for the time of class closing, a number of rules of
convenience have been developed. A class gift where a member of the class is alive
at the death of the testator will close upon the death of the testator. So a gift to “all
my grandchildren” with no other wording will close on the death of the testator. Only
those grandchildren alive at the time of death will be entitled to share in the gift to
the exclusion of grandchildren born at a later time.

41 Kingsbury [Link], [1901] A.C. 187 (U.K. H.L.).

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LIMITS ON TESTAMENTARY FREEDOM 3.9.1

3.9 LIMITS ON TESTAMENTARY FREEDOM

Testators generally have the freedom to dispose of their property in any way they
see fit. In most cases, a testator is able to dispose of his or her property as intended.
However, testamentary freedom may be abridged for a number of reasons, such as:

• the gift is contrary to public policy,

• spousal rights,

• the rights of dependants,

• gift is disclaimed by beneficiary, or

• refusal by a designated person to take on the role of trustee or

executor.

3.9.1 Conditions Contrary to Public Policy

A court may strike down a condition attached to a gift as invalid if the condition is,
in the court’s opinion, contrary to public policy. The gift will be permitted to stand
alone without the condition. In the case of Re Millar Estate,42 the Supreme Court of
Canada said that the courts will not enforce a condition attached to a testamentary
gift on public policy grounds when the following two conditions are met: 1) the “…
prohibition is imposed in the interest of the safety of the state, or the economic or
social well-being of the state and its people as a whole” and 2) “… the harm to the
public must be substantially incontestable, and does not depend on the idiosyncratic
inferences of a few judicial minds.”43 This means that a testamentary disposition would
only be void on grounds of public policy if it is generally agreed that allowing such a
disposition would cause harm to society. It is not enough that a few judges believe it
would cause harm to society. In general, conditions are void for public policy reasons
where any of the following issues arise:

• the condition requires performance of an illegal or immoral act,

• where it restricts marriage or matrimonial life,

42 [1938] S.C.R. 1, [1938] 1 D.L.R. 65.

43 Ibid.

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[Link] CHAPTER 3 — THE LAW OF WILLS

• where the condition limits the rights of the beneficiary to deal with
the gifted property (restraint on alienation), or

• where it discriminates on the basis of race or ethnicity or other rights

protected by human rights legislation or the Charter.

The courts will not enforce a condition that would require someone to commit a
crime or is otherwise against the law. To allow such a condition would be harmful to
an orderly and peaceful society.

A clause that revokes a gift to the beneficiary if that beneficiary challenges the Will
is void on public policy grounds in some circumstances (for more information, see
4.4.3, No Contest Clause or In Terrorem Clauses).

[Link] Interference with Family or Matrimonial Life

A condition that attempts to control or restrain marriage is void. For

example, where a testator purports to make a gift to a person while they
are unmarried with a condition that the gift will be revoked if that person
marries, the courts will sever the revocation clause from the gift.44

Conditions that interfere with married life may also be void. In one case, the
testator made a gift to his married daughter but also gave a power to the
executors to withhold part of the gift if the daughter aided or supported
her husband or allowed the husband to reside with [Link] court held that
the condition was void for public policy reasons because it would force
the daughter to violate her matrimonial responsibilities.45

However, a gift or trust fund created for the purpose of supporting the
testator’s surviving spouse as long as that spouse does not remarry is not
contrary to public policy.46

A condition that prevents a minor child from residing with his or her
parents would be against public policy.47

44 Re Gelinas, [1923] O.J. No. 445 (S.C. H.C. Div.).

45 Re Nurse (1921), 20 O.W.N. 428 (S.C. H.C. Div.).
46 Cowan v. Allen (1896), 26 S.C.R. 292; Re Diver, [1936] O.W.N. 255 (C.A.), and Re Perrie (1910), 21 O.L.R. 100
(K.B.).
47 Clarke v. Darraugh (1884), 5 O.R. 140 (H.C. Ch. Div.).

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LIMITS ON TESTAMENTARY FREEDOM [Link]

[Link] Restraint on Alienation

A condition that prevents the beneficiary of the gift from selling or

otherwise disposing of the property is void for repugnancy. The courts
have held that gifts should be given absolutely — that is, the beneficiary
ought to have the right to deal with the property as he or she sees fit.48

Repugnancy is related to the principle from the case of Saunders v.

Vautier (see 4.4.4, Avoiding the Rules in Saunders v. Vautier for more).
The principle is that “… restrictions on the enjoyment of gift contrary to
the nature of that gift are void.”49 Because the nature of a gift includes the
right to deal with the property as the beneficiary sees fit, a condition that
attempts to limit this right may be found invalid.

[Link] Discrimination Contrary to Provincial Human Rights Law and

Constitutional Charter Rights

Since the Charter of Rights and Freedoms was entrenched in the

Canadian Constitution in 1982, the courts have taken Charter rights such
as the right to be free from discrimination based on race, sexuality, or faith
into account when considering whether a condition attached to a gift was
valid. Where a condition is contrary to the Charter by discriminating on
the basis of race, ethnicity, sexual orientation, or religion, then the courts
will not enforce that offending condition. Each province has similar human
rights legislation that also sets a standard by which to judge public policy.

Generally it is possible to have a condition that benefits particular

beneficiaries based on religion or some other human rights protected
criteria as long as the reason is not hateful or prejudiced per se. So a bursary
for Protestant students would be acceptable. However, a scholarship that
was based on blatant religious supremacy and racism excluding “all who are
not Christians of the White Race, all who are not of British Nationality or of
British Parentage, and all who owe allegiance to any Foreign Government,
Prince, Pope, or Potentate” was found to be offensive and the condition
was struck.50

48 Noik v. Noik Estate, [2004] O.J. No. 2479 (C.A.).

49 Rogers Estate v. Rogers, [2006] N.B.J. No. 568 (Q.B.).
50 Canada Trust Co. v. Ontario Human Rights Commission (sub nom. Re Leonard Foundation Trust) (1990), 37
O.A.C. 191, 69 D.L.R. (4th) 321, 74 O.R. (2d) 481 (C.A.). See the analysis in Re Peach Estate, 2009 NSSC 383 (S.C.).

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3.9.2 CHAPTER 3 — THE LAW OF WILLS

3.9.2 Rights of Dependants

In all of the common-law provinces, dependant relief legislation has been enacted
that allows persons classified as dependants to apply for support and maintenance
out of the estate where the deceased was under a duty to support the dependant
in question. Dependants include the spouse and minor children and, depending on
the jurisdiction, may also include common-law partners and adult children. Where
dependants exercise their statutory right for support, the right to support will take
precedence over the terms of the Will — that is, assuming that the dependant is
eligible for support, dependants are entitled to the support amount regardless of what
is written in the deceased’s Will. Dependant relief is discussed in detail in Chapter 6,
Claims Against the Estate by Family Members.

3.9.3 Spousal Rights

In addition to claims under dependant relief, in most jurisdictions the spouse of

the deceased can also make a claim for division of property under family property
legislation.51 Family property legislation is based on the premise that marriage is
an economic partnership and the contribution of both parties to that partnership,
whether pecuniary or otherwise (such as homemaking, child rearing, or other family
activities), should be recognised as having equal [Link], when the marriage ends
as a result of divorce or death, a spouse is generally entitled to 50% of the property
acquired during the marriage and the amount of appreciation in property that was
acquired by either spouse before the marriage (although the definition of what is
or isn’t shareable family property can differ greatly between the jurisdictions). The
right of the surviving spouse, including same-sex spouses and common-law partners,
to make a claim against the estate of the deceased partner is discussed in detail in
Chapter 6.

3.9.4 Renunciation and Disclaimer of Gifts and Executor Appointments

A testator’s plans as laid out in his or her Will may be thwarted by the choices of
others. In cases of gifts, the beneficiary is entitled to disclaim the gift — that is, the
beneficiary can refrain from taking the gift. A beneficiary may choose to do so for a
number of reasons. In any event, the testator cannot force a beneficiary to accept a
gift. Similarly, a testator can appoint a person as a trustee or executor under the Will,
but he or she cannot force the person to accept the role if they refuse.

51 Generally spouses do not have the ability to make a family property application at the time of death in British
Columbia, Alberta, or Prince Edward Island.

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DELEGATION OF TESTAMENTARY POWERS 3.10

3.10 DELEGATION OF TESTAMENTARY POWERS

A testator cannot delegate his or her Will-making powers to someone else. For
instance, a person cannot ask another person to make a Will on his or her behalf.
Nor can the testator make a Will that simply appoints an executor to determine
the beneficiaries of his or her estate. Such a Will would be invalid under the non-
delegation rule. As discussed in Chapter 1, an attorney under a power of attorney
may not make a Will or any other testamentary disposition on behalf of the grantor.
A valid Will requires that the testator had knowledge and approval of its contents.
Therefore, no one other than the testator can create a document to dispose of his or
her property. Even if such a document was made by someone other than the testator
and later signed by the testator without reading it, the Will is still invalid because the
testator will be deemed to have no knowledge or approval of the Will’s contents.

Of course, this does not mean that one cannot delegate the drafting of a Will to a
lawyer in accordance with the testator’s instructions. A testator can delegate the task
of drafting the Will to someone else provided that instructions are given concerning
the property to be disposed of, the beneficiaries entitled to claim under the Will, and
how the property will be distributed.

One exception to the rule that a person cannot delegate their Will-making powers is
that a testator may permit the executor to determine what charitable beneficiaries
shall benefit from the estate.

A second exception is that a testator may appoint another person to determine the
manner in which certain property is to be disposed of after death. This is called a
power of appointment. For the exception to apply, the property must be specified,
and the testator’s instructions must be sufficiently certain to ascertain the object or
beneficiary in whose favour the power may be exercised so that it is possible to
determine whether a particular person might be entitled to be a beneficiary or not.
A testator may not give the appointee a power so wide as to chose any person in the
world to receive a particular gift, but it is acceptable to give the appointee the power
to choose which individuals, among a specific group of persons, is entitled to receive
a particular item.

An example of an acceptable power of appointment would be a gift to “any of the

STEP Canada members whose names are published in the 2016 STEP Directory.”The
testator is also permitted to determine how a gift may be distributed among a group

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3.11 CHAPTER 3 — THE LAW OF WILLS

of ascertainable beneficiaries, such as a gift of $10,000, to his or her children with the
power to an appointee to decide how the $10,000 is to be divided among them.

On the other hand, if the process for identification of the beneficiary is precise, a gift
may be valid.

In one case, a testatrix stated that the person to receive a diamond ring was to be
chosen from among six people by lottery. The executor was instructed to put their
names into a box and the name that was drawn would receive the ring. The court
held that this was a valid gift because the testatrix did not delegate her Will-making
powers to the executors. The testatrix gave instructions for choosing the beneficiary,
and the executor was to follow these instructions. The executor had no discretion to
pick someone of his choice as the beneficiary of the ring.52

The relationship between the rule against delegation and the ability to choose
charitable objects, grant a power of appointment, and other permitted “hybrid powers”
is not always clear, leading one Canadian academic to speculate that the rule against
delegation, if it exists, is quite limited.53 It is still clear that a complete abdication
of the disposition of the entire estate to beneficiaries to be chosen “at large” by an
executor or other person is invalid, as is a Will prepared by another person on behalf
of the testator unless the testator knew of and approved the contents.

3.11 WHEN MINORS MAY MAKE A WILL

The following jurisdictions provide for Wills made by minors (sometimes referred to
as “privileged Wills” in common-law jurisdictions). The age for making Wills is noted,
as is the relevant section from the Wills legislation for the [Link] exceptions
for when minors can make a Will are summarized below. Students are referred to the
legislation for actual language. The applicable section references are noted. The age
for making a Will in British Columbia is now 16. Newfoundland and Labrador permit
the making of a will at age 17. Neither jurisdiction has provisions for privileged Wills.

52 Bowen Estate v. Bowen, Court No. 0395/01, unreported, August 30, 2001 (Ont. S.C.J.).
53 Oosterhoff supra note 9 at 161-169.

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WHEN MINORS MAY MAKE A WILL 3.11

Jurisdiction Age of Majority When Minors Can Make a Will (Privileged Wills)
(see applicable Wills legislation)
Alberta 18 Has or has had a spouse or adult interdependent partner;
(s. 13) Member of regular forces or other Canadian forces on
active duty; Court authorizes (s. 13)
Saskatchewan 18 Is or was married or cohabiting in a spousal relationship
(s. 4) (s. 5); is a member of the armed forces in actual service or a
sailor in the course of a voyage (s. 6)
Manitoba 18 Is or has been married; is a member of a component of the
(s. 8) Canadian Forces as a regular force; or is a person described
in s. 5 (s. 8)
Ontario 18 Is or has been married; is made in contemplation of
(s. 8) marriage; is a member of a component of the Canadian
Forces, as a regular force, or while placed on active service
or is a sailor and at sea or in the course of a voyage (s. 8)
Quebec 18 A minor can dispose of articles of little value by will (art.
(art. 153 CCQ) 708 CCQ).
A minor who obtains full emancipation through marriage
exercises his or her civil rights alone, as if he or she were of
full age and may make a will (arts. 175 and 176 CCQ)
New Brunswick 19 Is or has been married; is a member of a component of
(s. 8) the Canadian Forces as a regular force, or while placed on
active service or is a mariner or seaman (s. 8)
Nova Scotia 19 Is or has been married (s. 4); is a soldier in active service,
(s. 4) including Air Force, naval or marine forces, or any mariner
or seaman being at sea (s. 9)
Prince Edward Island 18 Married person or member of the Armed Forces of Canada,
(s. 59) or of any mariner or seaman (s. 62)
Northwest Territories 19 Is or has been married; is a member of a component of the
(s. 4) Canadian Forces that as a regular force, or placed on active
service; is a mariner or sailor; or is a member of the RCMP
(s. 4)
Nunavut 19 Is or has been married; is a member of a component of
(s. 4) the Canadian Forces as a regular force, or placed on active
service; is a mariner or sailor; or is a member of the RCMP
(s. 4)

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3.12 CHAPTER 3 — THE LAW OF WILLS

3.12 SUMMARY OF EFFECT OF MARRIAGE ON A WILL BY JURISDICTION

Jurisdiction Effect of Marriage on a Will

British Columbia Marriage does not revoke a will. Unlike most jurisdictions, BC
legislation that came into force on March 31, 2014, does not
include a provision stating that a marriage revokes a will.
Alberta Marriage does not revoke a will; entering an adult interdependent
relationship does not revoke a will. (Wills and Succession Act, s. 23)
Saskatchewan Marriage revokes any will unless the will was made in
contemplation of the marriage. After 2 years of continuous co-
habitation in a spousal relationship, a will is revoked unless the
will was made in contemplation of the marriage or co-habitation.
However, marriage to the person after 2 years of continuous co-
habitation will not revoke a will. (Wills Act, s.17)
Manitoba Marriage revokes any will unless the will was made in
contemplation of the marriage; the will was declared to be made
in contemplation of a common-law relationship and the couple
gets married; or the will fulfills obligations to a former spouse or
common-law partner under a separation agreement or court order.
(Wills Act, s.17)
Ontario Marriage revokes any will unless the will was made in
contemplation of the marriage or the spouse elects to take his or
her entitlement under the will within one year of the testator’s
death. (Succession Law Reform Act, s. 16)
Quebec Marriage does not revoke a will in the province of Quebec. Unlike
other provinces, the CCQ does not have an article stating that a
marriage will revoke a will. Similar rules apply to civil unions.
New Brunswick Where a person has made a will and subsequently marries, the
person is deemed to die intestate while married or while any issue
of the marriage is still alive. (Wills Act, s. 15.1; see the full section for
exceptions)
Nova Scotia Same as Ontario. (Wills Act, s. 17)
Prince Edward Island Marriage revokes any will unless the will was made in
contemplation of the marriage, and the marriage occurs within one
month of the will being made. (Probate Act, s. 68)
Newfoundland and Labrador Marriage revokes any will unless the will was made in
contemplation of the marriage. (Wills Act, s. 9)
Yukon Marriage revokes any will unless the will was made in
contemplation of the marriage. (Wills Act, s. 10)
Northwest Territories Marriage revokes any will unless the will was made in
contemplation of the marriage. (Wills Act, s. 11)
Nunavut Marriage revokes any will unless the will was made in
contemplation of the marriage. (Wills Act, s. 11)

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ANTI-LAPSE RULES BY JURISDICTION 3.13

3.13 ANTI-LAPSE RULES BY JURISDICTION

Jurisdiction Legislation Anti-Lapse Rule

British Columbia Wills, Estates and If a gift cannot take effect for any
Succession Act, S.B.C. reason, including that a beneficiary pre-
2009, c. 13, s. 46 deceases the will-maker, priority goes to:
a) The alternative beneficiary
b) If the beneficiary was a brother, sister
or descendant (issue) of the will-maker,
to the descendants of the beneficiary as if
the beneficiary died intestate
c) The surviving residuary beneficiaries
in proportion to their interests.
Alberta Wills and Succession Act, If a gift cannot take effect because the
S.A. 2010, c. W-12.2, s. 32 beneficiary died before the testator, the
distribution is:
a) To the alternate beneficiary
b) If the beneficiary was a descendant
(issue) of the testator, to the descendants
as if the beneficiary died without leaving a
spouse or adult interdependent partner
c) To the surviving residuary
beneficiaries in proportion to their
interests
d) To the testator’s intestate heirs.
S. 31 also provides that if a gift is to the
issue of the deceased or another person,
and a member of the class pre-deceased,
that member’s issue will take.
Saskatchewan Wills Act , 1996, S.S. 1996, If the beneficiary is a child, other issue,
c. W-14.1, s. 22 brother or sister of the deceased, as an
individual or a member of a class, and
leaves a spouse or issue living at the
date of death of the testator, the gift takes
effect as if the beneficiary had died
intestate, without debts, except that a
surviving spouse does not receive the
preferential share.
Manitoba Wills Act, C.C.S.M., If the beneficiary is a child, other issue,
c. W150, s. 25.2 brother or sister of the deceased, as an
individual or a member of a class, and
leaves issue living at the date of death of
the testator, the gift takes effect as if the
beneficiary had died intestate, without
a spouse and without debts.

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3.13 CHAPTER 3 — THE LAW OF WILLS

Jurisdiction Legislation Anti-Lapse Rule

Ontario Succession Law Reform If the beneficiary is a child, grandchild,
Act, R.S.O. 1990, c. S.26, brother or sister who died before the
s. 31 testator leaving a spouse or issue
surviving, the gift to the beneficiary
is paid to the spouse and/or issue of
the pre-deceased beneficiary as if the
beneficiary died intestate and without
debts, except that surviving spouse does
not receive the preferential share.
New Brunswick Wills Act, R.S.N.B. 1973, If the beneficiary is a child, other issue,
c. W-9, s. 32 brother or sister of the deceased, as an
individual or a member of a class, and
leaves issue living at the date of death of
the testator, the gift takes effect as if the
beneficiary had died intestate, without
a spouse and without debts.
Newfoundland and Labrador Wills Act, R.S.N.L. 1990, If the beneficiary is a child, other issue
c. W-10, ss. 18-19 of the deceased, as an individual or a
member of a class, and leaves issue
living at the date of death of the testator,
the gift takes effect as if the beneficiary
had died intestate, and without debts,
except that surviving spouse does not
receive the preferential share.
If the beneficiary is a brother or sister,
as an individual or as a members of a
class, and leaves a child or children, the
beneficiary’s share is paid to the child or
children in equal shares.
Nova Scotia Wills Act, R.S.N.S. 1989, If the beneficiary is a child or issue of
c. 505, s. 31 the testator and dies during the testator’s
lifetime leaving issue alive at the date of
the testator’s death, the gift takes effect.
The effect of this provision is that the gift
is paid to the deceased beneficiary’s
estate to be distributed in accordance
with the will, or if there is no will, in
accordance with the applicable intestacy
rules.
Prince Edward Island Probate Act, R.S.P.E.I. 1988, If the beneficiary is a child or other
c. P-21, s. 85 issue, the gift passes to the deceased
beneficiary’s issue by stocks as if the
beneficiary died intestate with only the
issue surviving.

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WILL LEGISLATION AND FORMAL REQUIREMENTS BY JURISDICTION 3.14

Jurisdiction Legislation Anti-Lapse Rule

Yukon Wills Act, R.S.Y. 2002, If the beneficiary is a child, other issue,
c. 230, s. 20 brother or sister of the deceased, as an
individual or a member of a class, and
leaves issue living at the date of death
of the testator, the gift takes effect as if
the beneficiary had died intestate and
without debts.
Northwest Territories Wills Act, R.S.N.W.T. 1988, If the beneficiary is a child, other issue,
c. W-5, s. 21 brother or sister of the deceased, as an
individual or a member of a class, and
leaves issue living at the date of death
of the testator, the gift takes effect as if
the beneficiary had died intestate and
without debts.
Nunavut Wills Act, R.S.N.W.T. (Nu) If the beneficiary is a child, other issue,
1988, c. W-5, s. 21 brother or sister of the deceased, as an
individual or a member of a class, and
leaves issue living at the date of death
of the testator, the gift takes effect as if
the beneficiary had died intestate and
without debts.

3.14 WILL LEGISLATION AND FORMAL REQUIREMENTS BY JURISDICTION

The following table sets out the primary Wills legislation for each province, indicates
the formal requirements for witnesses, and provides the legislative references. It
also indicates if holograph Wills are specifically permitted and indicates the relevant
provisions for curing deficiencies or rectifying mistakes in the execution of the Will.
The final column indicates the relevant section for determining when a Will prepared
in accordance with the laws of another jurisdiction may be recognized. Students are
referred to the legislation for the actual language.

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3.14 CHAPTER 3 — THE LAW OF WILLS

Jurisdiction Legislation Witnesses Holograph Substantial Wills from

Wills Compliance Other
Jurisdictions
British Wills, Estates 2 witnesses and No. Curing For wills made
Columbia and Succession testator sign at But see deficiencies under other
Act, S.B.C. 2009, end (s. 37); s. 80. (s. 58) – may laws see s. 80
c. 13 Exceptions for recognize for list of
a member of a record, options
military forces document
(s. 38); or writing
Gifts to or marking
witnesses may on a will or
be void (s. 43) document as a
will, revocation,
alteration, or
revival.
For rectification
provisions see
s. 59
Alberta Wills and 2 witnesses and Yes Writing is valid For wills made
Succession Act, testator sign at (s. 16) as a will or in accordance
S.A. 2010, end (ss. 15, 19); revocation with certain
c. W-12.2 Exceptions for (ss. 37-38). other laws see
a member of For rectification s. 42 for list of
regular forces or provisions see options
others on active s. 39
service
(ss. 17-18);
Gifts to
witnesses may
be void (s. 21)
Saskatchewan Wills Act, 1996, 2 witnesses and Yes Document For wills made
S.S. 1996, testator sign at (s. 8) or writing is in or outside of
c. W-14.1 end (s. 7); effective as Saskatchewan
Exceptions for a though it had and in
member of the been properly accordance
armed forces in executed as with certain
actual service; the will of the other laws see
a sailor in the deceased or as s. 39 for list of
course of a the revocation, options
voyage (s. 6); alteration or
Gift to witness revival (s. 37)
may be void
(s. 13)

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WILL LEGISLATION AND FORMAL REQUIREMENTS BY JURISDICTION 3.14

Jurisdiction Legislation Witnesses Holograph Substantial Wills from

Wills Compliance Other
Jurisdictions
Manitoba Wills Act, 2 witnesses and Yes Document For wills for
C.C.S.M., testator sign at (s. 6) or writing is movables
c. W150 end (s. 4); effective as made in
Exceptions for though it had accordance
a member of been properly with certain
the Canadian executed as other laws see
Forces while on the will of the s. 42 for list of
active service; deceased or as options
a member of the revocation,
any other naval, alteration or
land, or air revival (s. 23)
force while on
active service;
a mariner or
seaman when
at sea or in the
course of a
voyage (s. 5);
Gift to witness
may be void (s.
13)
Ontario Succession Law 2 witnesses and Yes n/a For wills made
Reform Act, testator sign at (s. 6) in or outside of
R.S.O. 1990, end (s. 4); Ontario, see ss.
c. S.26 Exception for 35-37 for list of
a member of options
the Canadian
Forces placed on
active service; a
member of any
other naval, land
or air force while
on active service;
or a sailor when
at sea or in the
course of a
voyage (s. 5);
Gift to witness
may be void
(s. 12)

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3.14 CHAPTER 3 — THE LAW OF WILLS

Jurisdiction Legislation Witnesses Holograph Substantial Wills from

Wills Compliance Other
Jurisdictions
Quebec Civil Code Notarial will (art. Yes See art. 714 CCQ See art. 3109
of Québec, 717 CCQ): Before (art. 726) CCQ
S.Q.1991, a notary or 2
c. 64 (C.C.Q.), witnesses;
Title Four: Wills Will in presence
of witnesses: 2
witnesses and
testator sign at
end (art. 727)
and initial on
each page not
already bearing
signatures, if will
not handwritten
by testator
(art. 728 CCQ).
Holograph
will: entirely
handwritten
by testator and
signed by him
or her.
New Brunswick Wills Act, 2 witnesses and Yes A document or For wills made
R.S.N.B. 1973, testator sign at (s. 6) any writing is within or
c. W-9 end; valid and fully without the
Exceptions for a effective as a Province see
member of the will, revocation, s. 37 for list of 3
Canadian Forces alteration or options
on active service; revival (s. 35.1)
a member of any See also Probate
other naval, land Court Act Rules,
or air force while s. 2.02 (7.1 and
on active service; 7.2)
a mariner or a
seaman when
at sea or in the
course of a
voyage (s. 5);
Gift to witness
or spouse is void
(s. 12)

3-52
WILL LEGISLATION AND FORMAL REQUIREMENTS BY JURISDICTION 3.14

Jurisdiction Legislation Witnesses Holograph Substantial Wills from

Wills Compliance Other
Jurisdictions
Newfoundland Wills Act, 2 witnesses and Yes n/a For will dealing
and Labrador R.S.N.L. 1990, testator sign at (s. 2) with movables
c. W-10 end; see s. 24 for list
Exceptions for of 4 options
a sailor or fisher
while at sea
(s. 2);
Gift to witness
may be void
(s. 7)
Nova Scotia Wills Act, 2 witnesses and Yes A writing is For wills made
R.S.N.S. 1989, testator sign at (s. 6) valid and fully within or
c. 505 end (s. 6); effective as a without the
Exceptions for a will, revocation, Province see
soldier in active alteration or s. 15 for list of 3
service, naval or revival (s. 8A) options
marine forces;
a mariner or
seaman at sea
(s. 9);
Gift to witness
or spouse is void
(s. 12)
Prince Edward Probate Act, 2 witnesses and No A document n/a
Island R.S.P.E.I. 1988, testator sign at may be valid
c. P-21 end (s. 60); as a will and a
Exception for a document or
writing signed writing may
by member of be valid as a
Armed Forces revocation,
of Canada, or of alteration or
any mariner or revival (s. 70)
seaman when at
sea or in course
of a voyage
(s. 62);
Gift to witness is
void (s. 65)
Yukon Wills Act, R.S.Y. 2 witnesses and Yes n/a For will dealing
2002, c. 230 testator sign at (s. 5) with movables
end (s. 5); made within
Gift to a witness or outside of
or spouse is void Yukon see
(s. 9) s. 25 for list of
options

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3.14 CHAPTER 3 — THE LAW OF WILLS

Jurisdiction Legislation Witnesses Holograph Substantial Wills from

Wills Compliance Other
Jurisdictions
Northwest Wills Act, 2 witnesses and Yes n/a For will dealing
Territories R.S.N.W.T. 1988, testator sign at (s. 6) with movables
c. W-5 end (s. 5); made within
Exceptions for a or outside of
member of the the Northwest
Canadian Forces Territories see
on active service; s. 26 for list of
a member of any options
other naval, land
or air force while
on active service;
a mariner or a
sailor when at
sea or in the
course of a
voyage (s. 6);
Gift to witness
or spouse is void
(s. 10)
Nunavut Wills Act, 2 witnesses and Yes n/a For will dealing
R.S.N.W.T. 1988, testator sign at (s. 5.1) with movables
c. W-5 (as end (s. 5); See s. 5.1 made within
duplicated for Exceptions for a for broad or outside of
Nunavut) member of the definition Nunavut see
Canadian Forces of “own s. 26 for list of
on active service; writing” options
a member of any
other naval, land
or air force while
on active service;
a mariner or a
sailor when at
sea or in the
course of a
voyage (s. 6);
Gift to witness
or spouse is void
(s. 10)

3-54
 CHAPTER 4
WILL PREPARATION

LEARNING OBJECTIVES

4.1 DUTY OF SOLICITOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-3

4.1.1 Capacity and the Duty to Prepare the Will . . . . . . . . . . . . . . . . . . 4-5
4.1.2 Liability of Solicitor to a Disappointed Beneficiary . . . . . . . . . . 4-6
4.1.3 Joint Retainers and Conflicts of Interest . . . . . . . . . . . . . . . . . . . . 4-7
4.2 TAKING INSTRUCTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-7
4.2.1 Using Forms and Checklists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-8
4.2.2 Disclosure of Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . 4-8
4.2.3 Discovering Dependants and Family Members . . . . . . . . . . . . . 4-9
4.2.4 Choice of Executors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-10
[Link] Attributes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-10
[Link] Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-11
[Link] Who Should Be Appointed? . . . . . . . . . . . . . . . . . . . . . . . . 4-11
4.2.5 Personal Effects and Personal Property . . . . . . . . . . . . . . . . . . . . 4-12
4.2.6 Gifts of Residue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-13
4.3 ORDER AND CONTENTS OF A WILL INCLUDING USUAL
CLAUSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-14
4.3.1 Introductory Clause or Declaration . . . . . . . . . . . . . . . . . . . . . . . . 4-14
4.3.2 Revocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-14
4.3.3 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-14
4.3.4 Beneficiary Designations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-14
4.3.5 Appointment of Executors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-15
4.3.6 Transfer the Property of the Testator to the Executors
“in Trust” and Disposition of the Estate . . . . . . . . . . . . . . . . . . . . 4-15
[Link] Debts, Funeral Expenses, Taxes, and Other
Testamentary Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-15
[Link] Conversion and Retention of Assets. . . . . . . . . . . . . . . . . 4-15
[Link] General and Specific Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . 4-15

4-1
 [Link] General Disposition of Personal Effects and
Reference to Memorandum . . . . . . . . . . . . . . . . . . . . . . . . 4-16
[Link] Trusts for Specific Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-16
[Link] Residual Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-16
[Link] Hotchpot Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-17
[Link] Common Disaster Clause . . . . . . . . . . . . . . . . . . . . . . . . . . 4-17
4.3.7 Payments to Minors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-17
4.3.8 Administrative Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-17
4.3.9 Other Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-18
4.3.10 Testimonium Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-19
4.4 SPECIFIC DRAFTING ISSUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-19
4.4.1 Mirror Wills for Husband and Wife . . . . . . . . . . . . . . . . . . . . . . . . . 4-19
4.4.2 Intention Regarding Jointly Held Property . . . . . . . . . . . . . . . . . 4-19
4.4.3 No Contest Clause or In Terrorem Clauses . . . . . . . . . . . . . . . . . 4-20
4.4.4 Avoiding the Rule in Saunders v. Vautier . . . . . . . . . . . . . . . . . . . 4-21
4.4.5 Gifts Over, Lapse, and Anti-Lapse. . . . . . . . . . . . . . . . . . . . . . . . . . 4-21
4.4.6 Gifts to Minors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-22
4.4.7 Ademption and Substitute Gifts. . . . . . . . . . . . . . . . . . . . . . . . . . . 4-23
4.4.8 Per Stirpes Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-23
4.4.9 Per Capita Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-26
4.4.10 Drafting Revocation Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-28
4.5 EXECUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-28

4.6 HOMEMADE WILLS AND WILL KITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-30

4.7 AVOIDING LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-31

4.7.1 Professional Negligence and Will Drafting . . . . . . . . . . . . . . . . . 4-31
4.8 TROUBLESHOOTING IN WILL DRAFTING TO AVOID LITIGATION. . . . 4-32
4.8.1 Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-32
4.8.2 Assets and Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-33
4.8.3 Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-33
4.8.4 Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-34
4.8.5 Estate Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-34
4.8.6 Avoiding Intestacy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-35

4-2
 Chapter 4
Will Preparation

Learning Objectives

Knowledge Objectives
• Understand the process for taking Will instructions and preparing a Will

Skills Objectives
• Describe the role of the solicitor in Will preparation
• Explain the process for taking Will instructions
• Identify the general layout of a Will
• Explain the purpose of specific clauses in a Will
• Describe how Wills may be amended and revoked

4.1 DUTY OF SOLICITOR

A Will is a legal document that should be prepared by a solicitor. Will preparation

is considered part of the practice of law, and anyone preparing a Will for another
person who is not a solicitor may be subject to sanction or prosecution by the body
responsible for regulating the legal profession in the province (i.e., the provincial law
society). For example, in British Columbia, the Legal Profession Act1 provides that the
“practice of law” includes drawing, revising, or settling a Will. Only persons licensed
to practice law in the province may prepare Wills.

The solicitor has a number of essential duties in Will-making practice.2

1 S.B.C. 1998, c. 9.
2 For an excellent article on solicitor’s duties in Will preparation and review of Commonwealth cases, see
“Solicitors’ Will-Making Duties,” [2002] MULR 4, (2002) 26 Melbourne University of Law, available on the
Internet.

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4.1 CHAPTER 4 — WILL PREPARATION

1. Duty to ensure the testator has capacity and is not subject to undue
influence.

2. Duty to prepare the Will.

3. Duty to ensure the Will gives legal effect to the instructions of the
testator.

4. Duty to ensure the Will is validly signed and witnessed.3

5. Duty to advise against accidental revocation.

6. Where appropriate, maintain custody of the Will.

Ideally the solicitor should meet with the client when taking instructions. Where this
is not possible or practical, the solicitor must meet with the client at least before
execution of the Will. At the meeting with the client it is the solicitor’s responsibility
to be satisfied that the client has testamentary capacity.

The solicitor should make sufficient inquiry into the testator’s assets and family to
ensure no obvious beneficiary has been omitted and that the client appreciates the
nature and extent of the estate. Where an obvious beneficiary has been omitted, or
the distribution is unequal or otherwise inequitable, the solicitor should be satisfied
as to the reason to ensure there is no defect of mind. Where there is any question
regarding capacity, the solicitor should arrange for a professional assessment. Where
possible the solicitor should review the current Will, if any, and inquire regarding
deviations from the instructions.

In order to guard against undue influence, the solicitor should obtain instructions,
or confirm the instructions, in a private meeting without any beneficiary or other
interested party being present. Where an interpreter is required, a disinterested party
should translate.

Although questions of incapacity and undue influence are not identical, the solicitor
should be particularly attuned to undue influence if capacity is diminished since in
such cases the testator is more easily manipulated.

3 Ross v. Caunters, [1979] 3 All E.R. 580, [1980] 1 Ch. D. 297.

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DUTY OF SOLICITOR 4.1.1

4.1.1 Capacity and the Duty to Prepare the Will

Where the client has capacity, the solicitor has a clear duty to prepare the Will. If
capacity is uncertain, and the time frame does not allow for further inquiries or a
medical assessment, the duty of the solicitor may be to proceed rather than to refrain
from taking instructions and preparing and attending to execution of the Will.

In the case of Hall v. Bennett,4 the solicitor visited a terminally ill client in the hospital.
The client was lucid, at least temporarily, but the lawyer decided not to follow the
client’s instructions because of concerns regarding capacity. The client died later the
same day, and the prospective beneficiary under the client’s instructions sued the
lawyer.

The Court of Appeal decided that the issue was not whether or not the client had
testamentary capacity but “whether a reasonable and prudent solicitor in those
circumstances could have concluded that the client did not have such capacity.” One
of the first obligations of the solicitor was to inquire into the capacity of the client:

... it is well-settled that a solicitor who undertakes to prepare a will has the
duty to use reasonable skill, care and competence in carrying out the testator’s
intentions. This duty includes the obligation to inquire into and substantiate
the testator’s capacity to make a will. This first obligation is of fundamental
importance. After all, if the testator does not have the requisite testamentary
capacity, the preparation of a will in accordance with his expressed wishes at
the time may only serve to defeat his true intentions.5

The court recognised the dilemma facing a solicitor who has reservations about
capacity, noting that it is a no-win situation. If the solicitor fails to prepare the Will,
there may be liability to the prospective beneficiaries under the proposed Will;
but if the Will is prepared, the solicitor may be exposed to liability to the personal
representatives of the estate for costs incurred by the estate in determining that the
testator lacked capacity. In the result, the court found that the solicitor did fulfill his
obligation to the client, and since there was actually no retainer to prepare a Will, he
owed no duty to the prospective beneficiary.

Even though the trial decision in Hall, which found the solicitor negligent, was
overruled on appeal, the decision makes it clear that the solicitor may have
considerable exposure to liability in deathbed situations, either because of the

4 2003 CanLII 7157 (Ont. C.A.).

5 Ibid. at para 48.

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4.1.2 CHAPTER 4 — WILL PREPARATION

urgency to prepare the Will or because of capacity issues. As a result, a lawyer with a
busy practice may be reluctant to meet with a client even initially, or accept a retainer
where there is any urgency regarding the preparation of the Will.

It has been suggested that when faced with questions of capacity, the better course
is for the solicitor to prepare the Will making careful notes of any reservations and
the observations that support them.6 The quantum of loss is potentially limitless if
the testator is subsequently found to be capable of making a Will and the solicitor
refused. In this situation, the financial risk is much higher than the lesser costs of a
determination by the estate as to capacity when the Will is prepared and executed. In
circumstances where the Will may be set aside for lack of testamentary capacity, the
cost may legitimately be a cost of the estate in any event.

4.1.2 Liability of Solicitor to a Disappointed Beneficiary

The principle that a disappointed beneficiary had no action against a lawyer whose
negligence caused a loss7 has now been set aside in common-law jurisdictions.
The principle was originally set out in a Scottish case predating the modern law of
negligence, and its demise has extended the liability of lawyers preparing Wills to
include beneficiaries. It is now clear that a solicitor may be liable to a disappointed
beneficiary. The leading case is the 1995 English House of Lords decision in White v.
Jones,8 subsequently followed and now the law in Canada.

In Earl v. Wilhelm,9 the Saskatchewan Court of Appeal found a solicitor liable to the
beneficiary of a farm property that had been transferred by one of his law partners to
a corporation.

In Whittingham v. Crease,10 the solicitor was found to be liable to the beneficiary

whose wife witnessed the Will at the request of the solicitor.

However, the duty of a solicitor to a disappointed beneficiary is limited to situations

where there is no conflict between the interests of the client and the interests of the
particular beneficiary. Otherwise, the solicitor would be in a conflict of interest. So in

6 See John E. S. Poyser, “Estate Planning for Clients with Diminished Capacity: Deathbed Wills,” Vol. 29, No. 3
Estates, Trusts and Pensions Journal.
7 Robertson v. Fleming (1861), 4 Macq 167 at 177, 184–185, and 199–200.
8 [1995] 1 ALL E.R. 691 (U.K. H.L.).
9 (sub nom. Wilhelm v. Hickson) (2000), 189 Sask. R. 71, 2000 SKCA 1 (CanLII) (C.A.).
10 (1978), 88 D.L.R. (3d) 353, 1979 CanLII 286 (B.C. S.C.).

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TAKING INSTRUCTIONS 4.2

Graham v. Bonnycastle,11 there was no duty to a beneficiary under a previous Will in

relation to the preparation and execution of a new Will.

4.1.3 Joint Retainers and Conflicts of Interest

A lawyer must avoid conflicts of interest in advising any client. In Wills practice, a
conflict of interest may arise where there is a joint retainer, such as for both husband
and wife, to prepare Wills. As a general rule, the solicitor cannot keep any matter
confidential as between the two clients where there is a joint retainer. In addition,
if Wills are prepared under a joint retainer, no subsequent Will can be prepared for
one of the parties without the knowledge and consent of the other. If consent is not
given, the solicitor must refuse to act in the preparation of a subsequent Will.

In some provinces, rules relating to joint retainers and Will preparation have been
incorporated into the rules of practice for the legal profession.

A conflict of interest may also arise where a solicitor acts for a family member in
preparing a Will or where the solicitor is a beneficiary under the Will. The most
prudent course may be to refuse the retainer or to require there be independent
legal advice. There is not generally considered to be a conflict where the solicitor is
appointed as executor.

4.2 TAKING INSTRUCTIONS

The solicitor’s duty in taking instructions is not discharged if he or she merely

prepares a document that expresses the words of the client.

When taking Will instructions there are two major tasks:

1. ensure that the instructions obtained accurately reflect the wishes of

the testator and

2. identify and alert the testator to problems that may hinder effective
administration of the estate.

It is important to take notes when interviewing a client to obtain Will instructions.

These notes may protect the solicitor from claims that instructions were not followed
and provide assistance should the Will be called into question at a later date. These
notes should record:

11 2004 ABCA 270 (CanLII) (C.A.).

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4.2.1 CHAPTER 4 — WILL PREPARATION

• reasons for any unusual dispositive provision, such as a dependant or

spouse being excluded from the Will;

• any advice given that the client refuses to follow, such as providing
for dependants or obtaining tax advice, confirmed in writing with the
client;

• reasons for any dramatic change in instructions as compared with the

previous Will; and

• any concerns the solicitor has regarding the testamentary capacity of

the client.

4.2.1 Using Forms and Checklists

A standard procedure or checklist can assist with gathering information and ensuring
that all the required information is obtained and all issues that need to be reviewed
are addressed.

Many solicitors have a form or checklist they use for this purpose. It is a good practice
to have a form or questionnaire to record all client information and, where possible,
to send it to the client for completion in advance to assist in the discovery process.

The Law Society of British Columbia has published a Practice Checklists Manual for
Will Drafting on its public website.

4.2.2 Disclosure of Financial Information

A statement of net worth should be prepared that includes:

• all property owned by the testator;

• all property held jointly with or without a right of survivorship;

• all insurance policies, with details of beneficiary designations;

• all pension plans and registered plans, with details of beneficiary

designations; and

• liabilities, including mortgages and any other liabilities secured against

property.

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TAKING INSTRUCTIONS 4.2.3

Where possible, the approximate value of each property and liability should be
included. The location of real property should be noted. Any property that may be
subject to U.S. estate tax should also be identified and the value determined.

It is not usually necessary to obtain formal valuations of property in order to prepare

a Will, although in some cases this might be appropriate. For example, if a testator is
making specific gifts of property representing a significant portion of the value of the
estate, valuation may be important to determine the tax consequences and whether
sufficient funds will be available to pay all liabilities and carry out the testator’s
intentions with respect to the balance of the estate.

It may be appropriate to verify the information provided by the testator. Copies of

insurance policies, investment statements, beneficiary designations, and title deeds
may be requested. The solicitor should make reasonable inquiries into the actual title
of assets being disposed of in the Will, particularly if they are the subject of specific
gifts. An independent subsearch to confirm the title or ownership of real property
may be appropriate. Failure of the solicitor to verify the ownership of property may
lead to liability in respect of a claim from a disappointed beneficiary.

In Earl v.Wilhelm12 the solicitor prepared a Will on the instructions of the testator to
leave the farm property to a particular beneficiary. At the time the Will was prepared,
another lawyer in the same firm had acted for the testator in the transfer of the farm
property to a corporation. The named beneficiary in the Will successfully sued the
lawyer for failure to ensure that the farm property passed to the intended beneficiary.

4.2.3 Discovering Dependants and Family Members

The testator’s family situation should be fully disclosed.

In addition to children, grandchildren, and other issue, siblings, nieces and nephews,
and parents should be [Link] latter persons may be candidates for executor
appointments or as beneficiaries of specific gifts or common disaster clauses.

The solicitor should consider a number of questions with regard to dependants and
family members.

• To whom is the testator providing support or assistance?

• Does the testator wish to provide for these persons in the Will?

12 Supra note 9.

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4.2.4 CHAPTER 4 — WILL PREPARATION

• Are there any potential claims for dependant relief?

• If parents are living, does the testator want to provide for them in the
event they survive the testator?

Common-law relationships, children born out of wedlock, and step-children within

the family tree should be identified and instructions requested regarding their
inclusion or exclusion in class gifts. For example, if there is a gift over to the spouse
of a child or other beneficiary, does it include a common-law spouse?

4.2.4 Choice of Executors

One of the most important decisions in making a Will, after the disposition of the
estate, is the choice of executor. The solicitor can assist the testator by advising who
might be appropriate and pointing out any difficulties with respect to a particular
choice.

[Link] Attributes

An executor should have the following attributes:

• be trustworthy, conscientious, and intelligent,

• has the time and inclination to act, and has agreed to act,

• be willing to hire professionals and experts to assist him or her,

• understands and will respect the testator’s instructions,

• has the confidence and respect of the beneficiaries,

• be young enough to carry out all duties under the Will and any
trust of which the executor is a trustee,

• be detail-oriented enough to attend to all the “red tape” but have

the big-picture savvy to put the many tasks of administering the
estate into perspective,

• ideally be resident in the same province for convenience, and

• at least be a resident of Canada for income tax reasons and to

avoid the requirement of security.

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[Link] Number

While the testator can name more than one executor, it’s best to limit the
number to three or less for better decision making. Only those who will
co-operate together well should be appointed. There is a presumption
that trustees or executors must act unanimously. Unless the Will specifies
otherwise or there is a specific provision in the provincial trust legislation,
all executors must act jointly in making decisions. If executors cannot
agree, the administration of the estate could grind to a halt, sometimes over
trivial matters.

If more than two persons are appointed, a majority clause may be added
so that two out of three, for example, can make any decision. It is also
possible to require that a particular executor be a member of the majority
in making decisions.

Creating a method in the Will to resolve disputes or deadlocks among

executors may be appropriate to prevent indecision from paralyzing the
administration process. While provincial law may provide for statutory
methods of resolving deadlocks,13 it is better to address such difficulties
in the Will itself rather than leaving the resolution to chance. Not every
province provides a statutory rule to break a deadlock.

[Link] Who Should Be Appointed?

Children. Many parents name all their children to be “fair” and prevent
hard feelings. This is a misconception. Acting as executor is time-
consuming and can be a heavy burden on family members who have their
own children and careers. This may be a mistake particularly if children
have trouble co-operating. Conflicts over past events can often erupt once
both parents have passed away and there is no longer any motivation to
“keep the peace.” If one executor shoulders more of the responsibility than
the others, resentments can build. The added stress of forcing children to
work together right at the time when they are grieving the loss of a parent
can create an acrimonious environment that hinders effective estate

13 For example, in British Columbia, under the Trustee Act, R.S.B.C. 1996, c. 464, s. 42, the court may be called
upon to approve a decision of the majority where no unanimous agreement can be reached. In Saskatchewan,
the common law is embodied in s. 41 of the Trustee Act, R.S.S. 2009, c. T-23, of which provides specifically
that trustees or executors must act unanimously unless the instrument provides otherwise.

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4.2.5 CHAPTER 4 — WILL PREPARATION

administration. Worse still, family relationships can be damaged, sometimes

beyond repair. Appointing the child or children who the others will trust
may be more effective than including all children. Adding an impartial
non-family member or a mediation clause may also be effective to permit
children to administer the estate more effectively.

Non-Family Members. Another option is to appoint outside executors

who can act as an impartial party in the administration of the estate.
Lawyers and other professionals will sometimes agree to act; however,
these individuals may not specialise in estate administration. There should
also be a clear understanding, verified under the terms of the Will, as to
the basis for compensation. Many lawyers drafting Wills do not wish to be
appointed as executor as this may not be their area of expertise or they
wish to avoid the potential liability. Lawyers who specialise in preparing
Wills and estate administration may accept an appointment.

Corporate Executor. It is possible to appoint a trust company to act

as a “corporate” executor. Trust companies offer professional estate
administration and have the expertise to navigate all the legal, tax, and
administrative details. A trust company has perpetual existence — an
advantage over appointing specific individuals who may die before you
or fail to outlive their duties. A trust company can be appointed as a co-
executor along with family members or as sole executor. Often a trust
company may be appointed as a “back up” executor in the event all other
persons appointed are unavailable. It may be possible to provide for a
substitute or replacement corporate executor so that the estate is not
locked into one particular trust company. The trust company will generally
have standard clauses they require to be included in the Will, including a
compensation agreement and investment clause.

4.2.5 Personal Effects and Personal Property

In a simple Will, gifts of personal effects, including household goods, are sometimes
excluded. It is better to address this in the Will as having personal effects fall into
residue may require the executor to value specific items if there is more than one
residual beneficiary.

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TAKING INSTRUCTIONS 4.2.6

It is common to have a general gift as to personal effects that provides any or a

combination of the following:

• beneficiaries may agree among themselves as to the distribution, with

any items over which there is a dispute to be sold and the proceeds
falling into residue,

• the executor has discretion to distribute among named beneficiaries

or a class of beneficiaries, or

• division of personal effects into lots by the executor with beneficiaries

choosing lots.

If there are any items of sentimental value to one or more beneficiaries, it may be
prudent to include a specific gift of such item.

If one or more personal items have significant value, this should be identified. Such
items might include collections, jewellery, art, vehicles, antiques, and the like. This
will alert the solicitor to inquire as to how such items should be disposed of. Valuable
items may be the subject of a specific gift to resolve disputes. A record of such items
in the solicitor’s notes or any questionnaire may also assist the executor and ensure
the value of the item is not inadvertently overlooked in the administration of the
estate.

4.2.6 Gifts of Residue

The bulk of the estate is usually disposed of through the residue of the [Link] all
debts are paid, all specific gifts made, and any other financial obligations satisfied, the
balance of the assets of the estate form the “residue.”

Typically the residue of the estate may be divided into an equal number of shares
to be divided among all the members of a class or to be divided among a number of
named [Link] division of residue into shares for the intended beneficiaries
has a number of advantages. Gifts over can be accommodated between the intended
beneficiaries, and fluctuations in the value of specific properties between the date of
the Will and the date of death will not prejudice or favour one beneficiary over the
other.

Providing for the bulk of the estate to pass by way of gifts of specific property to
individual beneficiaries is not generally recommended as there is no guarantee how

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4.3 CHAPTER 4 — WILL PREPARATION

changes in the value or ownership of assets between the making of the Will and
the death of the testator might affect the share of each beneficiary. In addition, if
beneficiaries pre-decease the testator, it is difficult to provide for gifts over that will
produce a predictable result.

Gifts over in residual clauses must be carefully drafted to guard against intestacy. If
there is a division of shares, a common drafting technique is to provide for as many
shares “as are required to satisfy the following,” followed by the distribution of shares
to certain beneficiaries. Such drafting may cut down on the need for repetitive gifts
over for each share since the share will simply collapse if the particular distribution
of that share fails.

4.3 ORDER AND CONTENTS OF A WILL INCLUDING USUAL CLAUSES

Wills have a structure that is commonly followed. Reference can be made to a sample
Will on the STEP website for students under “Resources.” Wills are written in the first
person. Typically the Will is drafted to include the provisions discussed below, in the
order presented, more or less.

4.3.1 Introductory Clause or Declaration

The testator identifies him- or herself by full name, place of residence, and declares
the document to be his or her last Will.

4.3.2 Revocation

Previous Wills and codicils are usually revoked.

4.3.3 Definitions

Not all Wills contain a definition section, but this can be very convenient for the
testator and others reviewing the Will and may reduce the risk of errors in drafting.

4.3.4 Beneficiary Designations

Beneficiary designations for insurance and registered plans typically follow the
revocation clause and precede the appointment of executors in order to make it
clear that the proceeds pass outside the estate.

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ORDER AND CONTENTS OF A WILL INCLUDING USUAL CLAUSES [Link]

4.3.5 Appointment of Executors

One or more executors are appointed and alternate executors may be [Link]
directions as to majority decisions or breaking deadlocks may be included.

4.3.6 Transfer the Property of the Testator to the Executors “in Trust” and
Disposition of the Estate

This clause vests all the property of the testator in the executors to administer under
the terms of the Will. Immediately following the vesting clause are the “dispositive”
provisions of the Will, which deal with the disposition of the estate by the executor.

[Link] Debts, Funeral Expenses, Taxes, and Other Testamentary

Expenses

These are to be paid before any other gifts are made (except personal
effects in most cases, assuming they have only nominal value and the estate
is solvent).

[Link] Conversion and Retention of Assets

The executors are generally permitted to dispose of assets or retain them

at their discretion. In addition, there is typically a discretion to distribute
assets in kind.

[Link] General and Specific Gifts

Specific gifts of particular personal items may be given. The description of

the item should be detailed enough to properly identify the property. “My
diamond ring” may not be sufficient if there is more than one diamond ring,
but “my engagement ring” may be sufficient if there was only engagement.

General and specific gifts may be made, including gifts of real property,
cash gifts, and gifts to charity. See 3.8.1, Types, for discussion of general,
specific, and demonstrative gifts and 3.8.4, Abatement, for discussion of
abatement of gifts.

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[Link] CHAPTER 4 — WILL PREPARATION

[Link] General Disposition of Personal Effects and Reference to

Memorandum

A general clause dealing with the remainder of personal effects, after any
specific or general gifts, is usually included so that the personal effects do
not have to be dealt with as part of the residue.

Memorandums may be made of the disposition of personal effects and such

memorandums may be referred to in the Will. However, unless specifically
incorporated into the Will by reference, and the legal requirements
followed, the memorandum will not be binding on the executor. A legally
binding memorandum cannot be changed after the execution of the Will
except by codicil.

Alternatively, a testator may find it convenient to make a list, and refer to

it in the Will without it being formally binding, so that they can change it
from time to time after the Will is executed. Non-binding memorandums
are referred to as “precatory.”

[Link] Trusts for Specific Assets

If property, such as a residence, cottage, or specific fund, is to be set aside

and held in a testamentary trust, it may be drafted separately from the
residual clause.

[Link] Residual Clause

This is the main dispositive provision in the Will usually disposing of the
bulk of the estate. All reasonable contingencies with respect to failure of
any provision should be provided for with an alternate gift or gift over. If
equal shares are created to be distributed, the language may provide for
equal shares to be created only for any beneficiaries who have survived
the testator. This may be a preferred wording rather than giving a certain
percentage to each beneficiary as this can make gifts over difficult to draft
and even more difficult to comprehend.

Testamentary trusts may be set up in the residual clause. For example,

there may be a spousal trust or there may be two spousal trusts: one that
qualifies for the spousal rollover and one that does not. There may be
children’s trusts, family trusts, or grandchildren’s trusts. Where trusts are

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ORDER AND CONTENTS OF A WILL INCLUDING USUAL CLAUSES 4.3.8

included, the rights to income and where appropriate the rights to capital
during the existence of the trust should be specified. The duration of the
trust and distribution date should also be included. If no specific trustees
are appointed, the executors will be the trustees. Care should be taken to
address the 21-year deemed disposition rule under tax law where it applies.

[Link] Hotchpot Clause

If there is to be an adjustment in respect of property passing to a beneficiary

outside the estate, it should be made in a hotchpot clause. Simply stated,
a hotchpot clause can ensure fairness among beneficiaries by taking into
account amounts already received by one or more beneficiaries.

[Link] Common Disaster Clause

If all residual beneficiaries in the Will or under any trust fail to survive
the distribution date, a further gift over should be contained in a final
dispositive clause called a “common disaster” clause. Siblings, nieces and
nephews, more distant relatives, or charities are often beneficiaries of such
clauses. For a husband and wife making mirror Wills (see 4.4.1, Mirror Wills
for Husband and Wife), the common disaster clause will often be drafted so
that the estate of whoever dies last is divided between the families of each
of the husband and the wife, although not necessarily in equal shares.

4.3.7 Payments to Minors

Trusts are typically set up for the interest of any minor beneficiary. There is often an
additional discretion to make payments to the children, a parent or legal guardian
of the child, or any other person on behalf of the child from the trust fund, and the
executor is usually protected from liability from making such payments.

4.3.8 Administrative Provisions

Powers of the executors are granted usually to provide maximum flexibility and
discretion to executors in dealing with the assets as part of the administration of the
estate. Without a list of such powers, the executors will be limited to those powers
set out in the provincial trustee [Link] powers of the executors may include
the following:

• to make investments at their discretion,

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4.3.9 CHAPTER 4 — WILL PREPARATION

• to borrow, mortgage, or give guarantees,

• to lend or advance any amount to a beneficiary or otherwise,

• to pursue, defend, or settle any claims or debts,

• to make elections permitted by statute or regulation,

• to hire agents and professional advisors,

• to determine income and capital receipts and disbursements,

• to deal with shares of corporations or other securities, and

• to deal with real property.

4.3.9 Other Provisions

Other provisions in the Will may include:

• protection for executors from liability for any loss if acting in good
faith,

• permission for executors to purchase property from the estate,

• the right for professional advisors who are executors to take their
normal professional fees,

• the ability to operate spousal trusts to preserve the spousal rollover

(i.e., refrain from loans that could taint the tax status),

• family law provision — for example, in Ontario, such provision may

protect the income from any inheritance from becoming subject to
the equalisation of property with the spouse of a beneficiary,

• custody of person and property of minors (i.e., guardians),

• donation of body and organs,

• funeral and burial instructions, and

• governing law.

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SPECIFIC DRAFTING ISSUES 4.4.2

4.3.10 Testimonium Clause

A testimonium clause provides for the signature of the testator and the attestation by
witnesses.

4.4 SPECIFIC DRAFTING ISSUES

4.4.1 Mirror Wills for Husband and Wife

Often a husband and wife will execute mirror Wills, leaving everything to each other
and the remainder of each of their estates to the children. Such Wills are typically
drafted with identical wording except one spouse is substituted for the other.

Care must be taken to provide for survivorship in the event one spouse dies within
close proximity in time to the other, such as in the case of a common [Link]
the estate of the spouse first to die devolves to the second spouse, there is a cascading
effect that may delay the administration of the second estate, triggering liability for
probate fees or taxes in both estates. A 30-day survivorship requirement may prevent
the cascading succession.

Where general cash gifts are to be made on the death of the surviving spouse, care
should also be taken to ensure they are not paid twice. If there is a gift to grandchildren,
for example, of $1,000 each on the death of the survivor, or a substantial gift to charity,
the gifts may be paid twice if the order of death is unknown and the provincial rules
provide that each is deemed to survive the other. If the gift is only intended to be
paid once, this must be provided for separately in the Will.

4.4.2 Intention Regarding Jointly Held Property

A statement in the Will may be made to clarify the testator’s intention regarding
property transferred gratuitously into joint names with a right of survivorship (see
9.3.7, Property Held Jointly with a Right of Survivorship). Such a statement may
avert litigation between the surviving joint owner and the estate or beneficiaries.
In addition, where it is intended that the surviving joint owner hold the property
in trust on behalf of the estate, including a statement of intention to that effect, the
Will may serve to protect the estate beneficiaries by recording the obligation of the
surviving joint owner to account to the estate.

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4.4.3 CHAPTER 4 — WILL PREPARATION

Note that where joint property is used to save probate fees and the surviving joint
owner holds the property for the estate, if the Will is probated, the value of the joint
account must be included in the calculation of probate fees or taxes.

4.4.3 No Contest Clause or In Terrorem Clauses

In order to discourage beneficiaries from litigation, a testator may want to include

a gift that is conditional on the beneficiary not taking any action to challenge the
validity of the Will or any provision in the Will.

Generally at common law such clauses were thought not enforceable because the
courts had considered they were intended only to threaten rather than actually
disinherit the beneficiary. However, such clauses may be enforceable under the
circumstances below.

• The conditions are limited to challenges to the validity of the Will and
do not attempt to oust the jurisdiction of the court to interpret the
Will or related matters over which the court has exclusive jurisdiction.

• They are not void for public policy.

• There is a specific gift over or alternate gift in the event the beneficiary
challenges the Will (i.e., the gift cannot simply fall into residue or
increase the share of other residual beneficiaries but a direction that
this is to occur is sufficient).

As an alternate to the requirement for a specific gift over, there may be another gift
for that beneficiary expressed to be effective whether the condition is complied with
or not.

A no-contest clause will not operate to forfeit rights or benefits under the Will that the
claimant is only trying to enforce, as this is inconsistent with the testator’s intention.
There will be no forfeiture if the beneficiary seeks a remedy for dependant relief, as
this would be contrary to public policy.

If the beneficiary brings an action disputing the validity of the Will because of undue
influence or incapacity, the clause may technically apply but will be of no effect if the
challenge is successful since the Will itself will be struck down in the action.

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SPECIFIC DRAFTING ISSUES 4.4.5

The enforceability of no-contest clauses can be difficult to determine and will always
vary with the circumstances. Factors include the wording of the particular forfeiture
clause, the nature of the claim made by the beneficiary, and the extent to which the
claim had merit.

A no-contest clause may be utilised where there is an unequal provision for children
or where one beneficiary is receiving a benefit to the exclusion of others or being
excluded from a benefit that others are to enjoy under the Will.

4.4.4 Avoiding the Rule in Saunders v. Vautier14

Where distribution of capital is provided for in a trust document, payment is

contingent only upon a beneficiary attaining a certain age, and when all beneficiaries
or potential beneficiaries are of age and consent, the condition may be waived and
the beneficiary can enforce the terms of the trust as if the condition had already been
fulfilled. This is the effect of the rule in Saunders v. Vautier. As a result, if a testator
wishes his or her children to receive their inheritance at age 25, in order to avoid the
rule, an additional condition must be imposed. Otherwise once all the children attain
the age of majority, and they all agree, they will be able to enforce distribution.

Termination of the trust under this rule is subject to court approval in Alberta and
Manitoba.15

The most common drafting technique is to provide a gift over to surviving issue of
the beneficiary should he or she fail to live to the specified age. The inclusion of
issue as potential alternate beneficiaries prevents the required consent from being
obtained since issue could include persons who are not yet born and for whom
consent would have to be obtained only upon approval of the court in a variation of
trust application with the blessing of the Public Guardian or other relevant official
appointed to protect the interests of children.

4.4.5 Gifts Over, Lapse, and Anti-Lapse16

A “gift over” refers to an alternate gift to a substitute or replacement beneficiary if a

gift or other benefit to a first-identified beneficiary fails. Failure of the gift may result

14 Saunders v. Vautier (1841), 49 E.R. 282, 4 Beav. 115 (Eng. Rolls Ct.); affirmed (1841), 41 E.R. 482, 1 Cr. & Ph.
240 (Eng. Ch. Div).
15 STEP Diploma Program, Law of Trusts, 7.2.4, Competing Views on the Application of Saunders [Link] and
the Legislative Response in Alberta and Manitoba.
16 See 3.8.2, Lapse, and 3.8.3, Anti-Lapse Legislation.

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4.4.6 CHAPTER 4 — WILL PREPARATION

if the beneficiary has died, has failed to reach a specific age, or otherwise failed to
fulfill any condition precedent. A testator should always be asked as to his or her
intention with respect to the failure of a gift. Unless the provincial anti-lapse rules
apply, if there is no gift over, the gift will lapse and the property will fall into residue.

The following statement provides a gift over to the friend but no gift over if the
friend fails to survive: “To transfer my gold watch to my son David, but if he fails to
survive me to transfer my gold watch to my friend, Larry.” If both David and Larry die
before the testator, the gift will lapse.

Note that anti-lapse provisions may apply to a gift, or a gift over if there is one, if the
beneficiary is a member of the class of persons to whom the anti-lapse legislation
applies. For example, in the example above of the gold watch, if the gift over was to
“my son Larry,” and both Larry and David died before the testator, anti-lapse would
apply (see 3.8.3, Anti-Lapse Legislation). To prevent anti-lapse, the following could be
used: “To transfer my gold watch to my son David, but if he fails to survive me to
transfer my gold watch to my son Larry, if he survives me, but if he does not the
watch shall fall into the residue of estate.”

Use of the words “for his [or her] own use absolutely” do not prevent anti-lapse.

If the testator wants to prevent the anti-lapse rule from applying, a gift over should
be used. For example, a statement such as the following should be used: “To transfer
my residence to my wife Frieda if she survives me, but if she does not to transfer such
residence to the Canadian Cancer Society.”

Residual clauses must be drafted so that the failure of any gift does not result in
intestacy. Common disaster clauses are used to provide additional gifts over in the
event all residual gifts fail. If a gift of all or part of the residue lapses, without a gift
over, without anti-lapse applying, and without a catch-all common disaster clause,
there will be partial or complete intestacy.

4.4.6 Gifts to Minors

A gift to a minor should be held in trust until the beneficiary attains the age of majority.
Otherwise, the gift may come under the supervision of the public guardian for the
province and any funds over a certain threshold may have to be paid into court.
Where the amount is small, it is common to permit the executor to make payment to
the parent or legal guardian. Where personal effects may be disposed of to a minor,

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SPECIFIC DRAFTING ISSUES 4.4.8

it is common to provide that the executor may retain the items for the benefit of the
minor until the age of majority or distribute them earlier without personal liability.

4.4.7 Ademption and Substitute Gifts

A gift of specific property will adeem if the particular property is not owned at the
date of death. The testator may wish to replace the gift with another if that property
is no longer held by the testator at the time of death, and instructions should be
obtained.

Suppose the testator wishes to make a Will that provides for a gift of his or her
residence to the surviving current spouse, with the residue to children of a first
marriage. If the residence is sold, does the testator wish to provide an alternate gift
to the spouse? The alternate gift could be for a fixed sum or, if the proceeds are
segregated in an investment account, a gift of the proceeds.

Specific gifts of shares of public or private corporations should be carefully drafted to

address future corporate reorganisations whereby the particular shares are no longer
owned at death but replaced by shares in a successor corporation.

4.4.8 Per Stirpes Division

A per stirpes division is a manner of dividing a particular gift or fund among the issue
(meaning, descendants) of an individual by “stocks” or by roots. It is also sometimes
described as a division “by representation.” A per stirpes distribution can only be
made to issue because the nature of the division is that a share of a pre-deceased
descendant who has issue surviving is always re-distributed among those surviving
descendants of more remote degree.

Descendants or issue are sometimes referred to by degree of lineage. This can be

helpful in explaining a per stirpes division. A degree refers to how closely one is
related to another person by blood (although adopted persons and their issue
are included for purposes of the law of succession). Children are first degree,
grandchildren second degree, and so on down lines of descendants in a family tree.

In a per stirpes division, at each degree of lineage, there is a division into equal shares
for:

1. each living individual: each individual at that degree of lineage

who survives the decedent; and

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4.4.8 CHAPTER 4 — WILL PREPARATION

2. each pre-deceased person who has issue surviving: each person

at that degree of lineage who dies before the decedent but who has
issue who survive the relevant decedent.

The second share must be then re-divided “by representation” among the issue of that
pre-deceased individual in an identical manner. This is best understood with the use
of a diagram (see Figure 4.1).

Figure 4.1: Per Stirpes Division Example

Papa

George Susan Martin

child 1 child 2 child 3 child 1

Assume that Papa has three children: George, Susan, and Martin. Martin has no
children or other descendants; George has three children; and Susan has one child.
In Papa’s Will, he directs that the residue of his estate will be divided equally among
his surviving issue, in equal shares per stirpes. While each of Papa’s children and
grandchildren are surviving issue, a distribution to issue per stirpes restricts the
issue who receive a share of Papa’s estate and determines the proportionate share
that those particular individuals (i.e., the individuals who are issue and who are also
entitled to a distribution) will inherit.

There will first be a division into three equal shares at the first degree of lineage.
So, for example, if George, Susan, and Martin all survive Papa, the residue of the
estate will be divided into three parts and each of George, Susan, and Martin will be
entitled to a one-third share of the residue of the estate, and there will be no further
representative share to re-divide among other issue.

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SPECIFIC DRAFTING ISSUES 4.4.8

In the event Martin pre-deceased Papa, since Martin has no surviving issue, the residue
of the estate will be divided into only two shares and one-half of the residue of the
estate will be distributed to each of George and [Link] is still no representative
share because no child of Papa has died before him with issue surviving.

If George pre-deceases Papa, George’s share (i.e., one-third of the estate if Martin
survives Papa or one-half of the estate in the event that Martin pre-deceases Papa) will
be divided equally among George’s three children, so that each of George’s children
will receive either one-sixth or one-ninth of the estate respectively.

In the event that Susan dies before Papa, the share at her degree of lineage will be
inherited in whole by her one [Link] list below presents just some of the possible
combinations that would result in a different distribution where Papa’s issue inherit
his estate in equal shares per stirpes.

• If Papa is survived by all three children, each child receives an equal

share and the grandchildren receive nothing.

• If Martin and George pre-decease Papa, Susan will receive one-half,

George’s children will each receive one-sixth of the estate, and Susan’s
child will receive nothing.

• If Susan and Martin pre-decease Papa, George and Susan’s child will
each receive one-half of the estate.

• If Martin, Susan, and Susan’s child pre-decease Papa, then George will
receive all of Papa’s estate. If George also pre-deceases Papa, each of
George’s children will receive one-third of the estate.

In the above examples, if a grandchild who would have been entitled to receive a
share has also pre-deceased Papa but has issue surviving, then that grandchild’s share
will still be created but it also will be re-divided among the issue of that grandchild
(i.e., Papa’s great-grandchild(ren)). Note that no grandchildren who have a parent
who survives Papa and who is also a child of Papa will inherit. Instead, the parent
who is a descendant of Papa (a child in this case) inherits.

In determining a per stirpes distribution, you first look at the individual’s children.
There will be a division into equal shares for each child who survives the parent and
for each child who dies before the parent with surviving issue. In the event a child
dies before the parent without issue, that child’s share is extinguished and the share

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4.4.9 CHAPTER 4 — WILL PREPARATION

of the other surviving children or other pre-deceased children with issue surviving
will be greater, since the number of shares at that level of descendants will be smaller,
thereby increasing the value of the share. So, for example, if two children survive and
the third child is deceased without issue, instead of three shares being worth one-
third each there will be two shares being worth one-half each.

4.4.9 Per Capita Distribution

Per capita is a method of dividing a gift or fund among a number of individuals. Per
capita is Latin for “by head” and essentially means that each person who is in the
described group will receive an equal share. A per capita division differs from a per
stirpes division in that there is no re-division of any share among the issue of a pre-
deceased beneficiary. The division takes place once in equal shares among all the
persons entitled without regard to their degree of relationship.

For example, an individual may leave $100,000 to be divided “in equal shares per
capita among my grandchildren and each of my nieces and nephews who survive
me.” If three grandchildren and seven nieces and nephews survive the testator,
then each of them would be entitled to $10,000. On the other hand, if only two
grandchildren and three nieces and nephews survive the testator, there would only
be five shares and each of them would receive $20,000.

A gift to be divided in equal shares per capita among a class of beneficiaries all at
the same degree of lineage from the testator, such as grandchildren, will be divided in
equal amounts and each member of that class will receive the same amount regardless
of the number of brothers and sisters each member of that class has. This also is
different from a per stirpes distribution, where representation through a deceased
parent will vary the inheritance of each member of the class. For example, if there is
one grandchild who is an only child and other grandchildren who have two siblings,
the only child would get three times the inheritance in a distribution that is to issue
in equal shares per stirpes distribution but the same amount if the distribution is to
grandchildren in equal shares per capita. For example, looking at the estate of Papa
described in Figure 4.1:

• if Papa left a gift to my grandchildren in equal shares per capita, then

each grandchild would receive an equal share, but

• if the gift were to my issue in equal shares per stirpes and each of
George and Susan pre-deceased Papa, Susan’s child would get three

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SPECIFIC DRAFTING ISSUES 4.4.9

times the amount that each of George’s children would receive

because each child must divide their parent’s share with his brothers
or sisters.

Note that if the distribution was to Papa’s issue in equal shares per capita, then each
of Papa’s children and grandchildren who survived him would receive an equal share
of the estate.

A per stirpes division among issue is more common for a distribution of the residue
of the estate. On the other hand, a division of a gift among certain persons per capita
is not usually used as a residual gift. It is commonly used to divide a fixed amount
among grandchildren or other relatives as a small cash gift.

A per stirpes division is not always made among the issue of the testator. Rather, it
can be used as a gift over for another relative of the testator so that there is a per
stirpes distribution among the issue of that other relative. It is not unusual to have a
residual clause that provides for a division of residue into one equal share “for each
of my children who survives me, provided that any child who fails to survive me but
who has issue alive at the date of my death shall be considered alive for the purpose
of such division.” In addition to the distribution of each surviving child’s share, such
a division is followed by another provision that redistributes the share of any pre-
deceased child among the issue of the pre-deceased child (alive at the date of death
of the testator in this case) in equal shares per stirpes. In effect, this distribution pre-
empts the per stirpes division at the first degree.

A per stirpes distribution can only be made to issue because issue includes descendants
and this is consistent with the representative share that is created with a per stirpes
division. A per stirpes distribution cannot be made to children or grandchildren since
this is inconsistent with a gift over to descendants of a pre-deceased person.

On the other hand, it is possible to make a per capita distribution to either issue, in
addition to class gifts to children or grandchildren. This would be unusual, however,
and is usually not intended. A gift to Papa’s issue (who survive him) in equal shares
per capita would result in George’s estate being divided equally among each of
George’s children and grandchildren.

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4.4.10 CHAPTER 4 — WILL PREPARATION

4.4.10 Drafting Revocation Clauses

Wills typically contain a revocation clause revoking any previous Wills or codicils.
Codicils typically revoke the relevant clauses from the Will they are amending and for
greater certainty confirm the other contents of the original Will.

Where multiple Wills are intended to be effective, the revocation clauses in all the
Wills and any codicils must be carefully drafted to prevent unintentional revocation
of Wills that are intended to operate together. Multiple Wills might be used to save
probate fees or taxes or to dispose of assets in different jurisdictions.

It has been the practice for revocation clauses in Wills to revoke all previous
“testamentary dispositions.” There is concern that this could be interpreted to
include beneficiary designations as beneficiary designations have been held to be
testamentary.17 In order to prevent inadvertent revocation of beneficiary designations,
it is now becoming the practice for revocation clauses to refer to “previous Wills and
codicils” rather than revoking all prior “testamentary dispositions.”

4.5 EXECUTION

A solicitor may be liable for negligence if a Will is not properly [Link] technical
nature of the formalities of execution, and the severity of the consequences if they
are not perfectly observed, make it almost obligatory that the Will be executed under
the supervision of the solicitor. The practice of sending out a final Will with written
instructions as to proper execution has been criticised, and some English authorities
have suggested it may even be negligent.18

In addition to ensuring that the Will is validly signed and witnessed, and intestacy
avoided, executing a Will with a solicitor’s supervision has several other benefits:

• the solicitor will have the opportunity to confirm the capacity of the
testator,

• the solicitor can review the final contents of the Will with the testator,

17 See Ashton Estate v. South Muskoka Memorial Hospital Foundation, 2008 CanLII 21421 (Ont. S.C.), and
Desharnais v. Toronto Dominion Bank, 2002 BCCA 640 (CanLII) ; affirming 2001 BCSC 1695 (CanLII).
18 See CCH Canadian Estate Planning Guide at ¶8725 discussing Esterhuizen v. Allied Dunbar, [1998] 2 FLR
668 (Eng. H.C.) at 674 and 677.

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EXECUTION 4.5

• the solicitor can ensure that the testator’s instructions are reflected in
the Will,

• the solicitor can answer any questions that arise,

• the solicitor can ensure the Will is signed voluntarily by the testator,
and not under duress or in circumstances that could suggest undue
influence, and

• the solicitor can make last-minute changes where there has been any
misunderstanding or the testator has altered the instructions.

For the requirements of execution, see 3.3.2, Formalities of a Will. It is essential that
the testator and the two witnesses be together in each other’s presence throughout
the signing of the Will by the testator and the attestation by the witnesses. In addition
it is essential that disqualified persons not witness the Will.

The practice is to have the testator place his or her full signature or “mark” at the
end of the document and to place his or her initials or mark at the bottom of each
previous [Link] the witnesses will place their signatures after that of the testator
and also place their initials at the bottom of each previous page. If any alterations
have been made to the Will at the time of execution, these should be initialled by the
testator and the witnesses in that order.

The practice of initialling each page of the Will is not a formal requirement. However,
this serves as additional evidence that the testator knew and approved of the contents
and protects against subsequent fraudulent alteration of the document.

There are special requirements where the testator is blind. Generally in the presence
of the witnesses:

• the Will must be read aloud to the testator,

• the testator must indicate that he or she understood the contents, and

• the witnesses must attest to these conditions.

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4.6 CHAPTER 4 — WILL PREPARATION

4.6 HOMEMADE WILLS AND WILL KITS

“If you think it’s expensive to hire a professional to do the job, wait until you hire
an amateur.” Red Adair, legendary oil well firefighter

Growth of the do-it-yourself (DIY) industry has been fuelled by technology, the
Internet, and commerce. There is no shortage of DIY products available to self-arm
the unsuspecting individual to prepare Wills and other legal documents relating to
estate planning and indeed other areas of legal practice.

Purchasing a Will kit or stationer’s form in order to prepare a Will can be dangerous.
It has been said more than once that the “most expensive advice is the advice you
don’t pay for.”This applies to homemade [Link] list of contents of this chapter and
Chapter 3 alone should ring alarm bells for anyone expecting a Will can be prepared
without legal advice. A homemade Will may work, but the risk is great that it may not,
and if there are no problems this may be a matter of luck rather than design.

While instructions in kits or other stationer’s products may or may not be clear, it is
easy for a non-professional to make a simple mistake that may have significant adverse
consequences. No book or fill-in-the-blank form can take the place of a discussion
with a lawyer about the testator’s unique circumstances.

Even where instructions are simple there are always additional issues that an individual
may not consider without the advice of a professional. An individual may also use
language that leaves his or her intention open to many different interpretations.
Litigation is a common result of homemade Wills. The solicitor’s cost of preparing
the Will is a bargain compared with the cost of tying an estate up in litigation, to say
nothing of the angst it causes family members.

The Will itself may not be a difficult document to prepare or understand. The advice
of a solicitor is what is needed in order to prepare a proper Will that follows a process.

• Discover assets, including title, succession, and tax attributes.

• Discover family members and obligations.

• Identify objectives.

• Consider tax consequences and probate fees.

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AVOIDING LITIGATION 4.7.1

• Troubleshoot.

• Identify and choose particular strategies.

• Discuss and confirm instructions.

It is upon the completion of this process that a Will can be prepared that properly
transfers the property of the testator to his or her beneficiaries in a manner
understood and chosen by the testator.

Lastly, while it may be small comfort, professional liability insurance must be carried
by all solicitors licensed to practice in Canada. A solicitor may be sued for negligence
if the Will is poorly drafted or invalid. Beneficiaries will have no such remedy if the
testator “does it himself.”

4.7 AVOIDING LITIGATION

Estate litigation is increasing. Not only are family members quarrelling more than
ever before over the estates of parents and other family members, but solicitors who
draft Wills and advise on estate planning are increasingly being sued for negligence.

4.7.1 Professional Negligence and Will Drafting

For the professional, loss prevention should be incorporated into standard practices.
While there is no foolproof strategy to avoid exposure to liability, a number of loss
prevention principles may be helpful.

• Full disclosure — have all relevant facts been discovered?

• What ifs? Have all the reasonable alternative scenarios been explored?

• Has the checklist and notes of all meetings been reviewed to ensure
nothing has been overlooked?

• Use of expertise — do the affairs of the testator warrant the additional

expertise of another professional? Advice from other jurisdictions, tax
advice, appraisals and valuations, or accounting advice, to name a few,
may be required.

• Has there been confirmation in writing to the client in respect of any

limitations or concerns the solicitor may have regarding disclosure,

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4.8 CHAPTER 4 — WILL PREPARATION

the instructions, the refusal of the client to follow any advice, or any
other relevant matter?

• Has an adequate record of all decisions and advice been made such
that the solicitor can demonstrate due diligence in anticipation of a
future challenge?

• Has the Will been reviewed by a colleague or peer as a “second pair of

eyes”?

• Has a reporting letter been sent that summarises the contents of the
Will?

The majority of claims against solicitors for negligence in Will preparation are the
result of poor communication between the solicitor and the client or failure of the
solicitor to understand or follow the client’s instructions. The above safeguards may
reduce such risk.

4.8 TROUBLESHOOTING IN WILL DRAFTING TO AVOID LITIGATION

The potential source of problems that may generate estate litigation is limitless.
Disappointed beneficiaries, family conflict, greed, and lack of confidence in the
executor are common causes in addition to problems with the actual document.
Below are lists of questions organised by categories that might be included in a
checklist to ensure the instructions are complete and the Will adequately addresses
the relevant [Link] lists are not meant to be comprehensive but to uncover some
of the more common errors and omissions.

4.8.1 Beneficiaries

• Is the testator or any potential beneficiary a U.S. resident, deemed

resident, or U.S. citizen?

• Have common-law relationships been identified and their impact

considered with respect to obligations and drafting of the provisions
of the Will? For example, the term “spouse” may need clarification.

• Are there step-children, or step-grandchildren, or any of their issue to

be included or excluded from class gifts?

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TROUBLESHOOTING IN WILL DRAFTING TO AVOID LITIGATION 4.8.3

• Are there family members who are born out of wedlock who should
be included, or whose issue should be included? Or should they be
excluded?

• Will any beneficiary’s right (or potential right) to social assistance be

affected by an inheritance, and should special arrangements be made?
Does the testator want to protect these benefits?

• Are there any special needs beneficiaries?

• Are any beneficiaries in another country where their inheritance may

be subject to confiscation by a foreign government?

4.8.2 Assets and Liabilities

• Will the estate be sufficient to fund all the estate expenses and
bequests?

• Are there obligations on death under a marriage contract, separation

agreement, shareholders’ agreement, or any other contract?

• Is any debt owing to the testator to be forgiven on death?

• Where appropriate, has the ownership of assets relevant to

distribution of the estate been confirmed?

• Has the consequence of property held jointly with a right of

survivorship been considered, including the alternative orders of
death of joint owners?

• Does the client have any powers of appointment, such as in another

estate or trust, that should be addressed in the Will?

• Might any assets be subject to a resulting or constructive trust?

4.8.3 Income Tax

• Have tax planning opportunities been discussed with the testator and
maximised where appropriate? These include but are not limited to:

◦ the spousal rollover,

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4.8.4 CHAPTER 4 — WILL PREPARATION

◦ the capital gains exemption,

◦ the inter-generational rollover of farm property, or

◦ planning for efficient transfer and post-mortem tax planning in

respect of interests in private corporations.

• Has the impact of the 21-year rule on any testamentary trust been
considered?

• Have the tax consequences of registered plans been considered?

• Have the tax consequences of any property passing outside the

estate been considered, including any registered plan or jointly held
property that may trigger income tax liability in the estate?

• How will the tax liability be funded?

4.8.4 Claims

Have the potential claims of family members been identified and discussed? These
could include spousal rights to property under family law and rights to support and
dependant relief.

4.8.5 Estate Distribution

• Does the scheme of distribution in the Will take into account the
effect of property passing outside the estate?

• Is there a gift over in the event any beneficiary fails to attain a certain
age to prevent the “trust busting” rule in Saunders v. Vautier19 from
applying?

• Is the time for class closing clear? Is the time of division and the time
each beneficiary must be alive in order to take under the Will clear?

• Have the rules against perpetuities and accumulations been addressed,

where relevant?

• Does the residual clause clearly distribute in addition to divide?

19 Supra note 14.

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TROUBLESHOOTING IN WILL DRAFTING TO AVOID LITIGATION 4.8.6

4.8.6 Avoiding Intestacy

• Is there a residual clause? If percentages are used, ensure there is a

gift over.

• Has the entire estate been disposed of, including all income and
capital of any fund?

• Will the scheme of distribution be effective to dispose of the entire

estate no matter what the order of death?

• Have the residual clauses and any trust provisions been reviewed to
ensure that there is a final distribution of all property?

• Has a common disaster clause been included to ensure that if all the
intended residual beneficiaries fail to survive the distribution date,
there is an alternate gift?

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 CHAPTER 5
INTESTACY

LEARNING OBJECTIVES

5.1 IMPORTANCE OF MAKING A WILL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-5

5.1.1 A Will Permits Choice of Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . 5-5
5.1.2 A Will Permits Choice of Disposition of Specific Assets . . . . . . 5-6
5.1.3 A Will Provides Choice of Administrator . . . . . . . . . . . . . . . . . . . . 5-6
5.1.4 Mortality: Death Is a Certainty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-6
5.2 BARRIERS TO WILL-MAKING AND CONSEQUENCES OF
INTESTACY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-7
5.2.1 Discomfort about Death and Dying . . . . . . . . . . . . . . . . . . . . . . . . 5-7
5.2.2 Unresolved Issues about Wishes or Family Relationships . . . . 5-7
5.2.3 Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-7
5.2.4 No Perceived “Deadline” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-8
5.2.5 Procrastination May Lead to Intestacy . . . . . . . . . . . . . . . . . . . . . . 5-8
5.2.6 Additional Administrative Requirements . . . . . . . . . . . . . . . . . . . 5-9
5.2.7 Provision for Minor Children . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-9
5.2.8 Delay in Administration of Estate and Distribution to
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-10
5.2.9 Additional Tax Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-10
5.2.10 Failure to Engage in Tax Planning or Probate Fee
Saving Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-10
5.3 MISCONCEPTIONS ABOUT INTESTACY . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-11
5.3.1 My Spouse Will Inherit Everything . . . . . . . . . . . . . . . . . . . . . . . . . 5-11
5.3.2 My Common-law Spouse or Partner Will Be Entitled
on Intestacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-11
5.3.3 Everything Will Pass Outside the Estate to My Spouse
Even Without a Will . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-12
5.4 PARTIAL INTESTACY OR INVALID WILL . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-12

5-1
5.5 STATUTORY REGIME OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . 5-13
5.5.1 Introduction and Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-13
5.5.2 Rule 1: Share of Spouse Where No Issue . . . . . . . . . . . . . . . . . . . 5-15
[Link] Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-15
5.5.3 Rule 2: Share of Spouse Where Only One Child. . . . . . . . . . . . . 5-15
[Link] Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-16
5.5.4 Rule 3: Share of Spouse Where Two or More Children . . . . . . 5-18
[Link] Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-19
5.5.5 Rule 4: Children or Issue Only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-19
5.5.6 Rule 5: Division of Intestate Estate among Children
and Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-19
[Link] Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-19
5.5.7 Rules Where No Spouse, Children, or Issue . . . . . . . . . . . . . . . . . 5-22
5.5.8 Calculation of Spousal Share Where Children Have
Pre-Deceased the Intestate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-23
5.5.9 Rights to the Matrimonial Home . . . . . . . . . . . . . . . . . . . . . . . . . . 5-23
5.5.10 Rights of Common-law Spouses. . . . . . . . . . . . . . . . . . . . . . . . . . . 5-24
5.5.11 Determining Common-law Status . . . . . . . . . . . . . . . . . . . . . . . . . 5-25
5.5.12 Multiple Spouses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-26
5.5.13 Disqualification of a Spouse’s Entitlement . . . . . . . . . . . . . . . . . 5-27
5.6 APPOINTMENT OF ADMINISTRATOR OF AN INTESTATE ESTATE . 5-27

5.7 SURVIVORSHIP RULES AND ORDER OF DEATH . . . . . . . . . . . . . . . . . . 5-28

5.8 CASE STUDIES ON INTESTATE DISTRIBUTION . . . . . . . . . . . . . . . . . . . . 5-30

5.8.1 Faith Dies Intestate Survived by All Issue Except
Penny (Penny Dies First) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-30
5.8.2 Faith Dies Intestate Survived by All Issue (Penny
Survives Faith) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-31
[Link] Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-31
5.8.3 Faith Dies Intestate Survived by Spouse and All Issue
Except Penny (Penny Dies First) . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-31
[Link] Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-32
5.8.4 Penny Dies Intestate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-32

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 5.8.5 Faith Dies Intestate Survived by Anita and Three
Grandchildren . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-33
[Link] Exception in Manitoba. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-33
5.8.6 Comparison of Distribution in Manitoba, Ontario, and
Per Stirpes Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-34
5.9 PROVINCIAL LEGISLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-35

5.10 INTESTACY RULES WHERE THERE IS NO SPOUSE OR

ISSUE (BY JURISDICTION) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-35

5.11 WHEN A SPOUSE IS NOT ENTITLED ON AN INTESTACY . . . . . . . . . . 5-37

5.12 DEFINITION OF SPOUSE AND COMMON-LAW

SPOUSE FOR PURPOSES OF INTESTATE SUCCESSION
(BY JURISDICTION) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-39

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 Chapter 5
Intestacy

Learning Objectives

Knowledge Objectives
• Know the rules relating to estates of persons who die without a Will

Skills Objectives
• Identify the scheme of distribution on an intestacy
• Describe the problems that arise when a person dies without a Will
• Explain how an intestacy can arise

5.1 IMPORTANCE OF MAKING A WILL

A Will determines how the estate of an individual will be administered and distributed.
Where an individual dies without a Will, he or she is said to die “intestate,” meaning
without a Will, and the estate will be divided and distributed according to a formula
set out in the law of each province. However, the provincial formula should never be
relied upon as a substitute for making a [Link] importance of making a Will may be
self-evident, providing choice and some degree of control by the testator. However,
the following points provide a more detailed discussion of the value of having a Will.

5.1.1 A Will Permits Choice of Beneficiaries

The primary reason for making a Will is to provide for the beneficiaries of the
estate. On an intestacy, the provincial formula will dictate who the beneficiaries
will be and the share of the intestate estate that each of them is entitled to receive.
The distribution of the assets of the estate may not be to those whom the deceased
would have chosen. If an individual intends or wishes to make a charitable gift on

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5.1.2 CHAPTER 5 — INTESTACY

death, benefit persons other than family members, or have his or her estate divided
among family members in a way that is different from the provincial formula, then
this can only be done through a valid Will. (The only exception is for assets that may
be transferred on death by a beneficiary designation.)

5.1.2 A Will Permits Choice of Disposition of Specific Assets

Only through a Will may an individual ensure that particular beneficiaries become
entitled to particular assets. For example, assume an individual has no spouse and
three surviving children. The individual wants the family cottage or certain family
heirlooms to go to particular children in preference to the other children. Even if the
three children are equal beneficiaries of the estate under the provincial formula, the
rules of intestate distribution do not address how specific assets are to be divided
among beneficiaries. The only way an individual can ensure that specific assets will
be inherited by the individuals intended is through a valid Will.

5.1.3 A Will Provides Choice of Administrator

The choice of executor or administrator of an estate is key to preserving family

harmony and providing an orderly transfer of the individual’s wealth to beneficiaries
and providing for responsible stewardship during the estate administration process.
If the individual dies intestate, the family member or other interested person will
have to apply to become the administrator of the estate. There is no guarantee that
the person the individual would have chosen or the appropriate person will end
up being the administrator of the estate. In addition, it is not unusual for disputes to
arise as to who shall be granted the right to administer the estate. Most provinces
provide rules for who is entitled to apply to administer an intestate estate, based on
the relationship to the deceased, giving a list that ranks those having priority. The
provincial rules do not ensure that the best person will be the person with priority,
nor will it necessarily prevent disputes among those who rank equally, or even those
who have different priorities if there are allegations of unsuitability in respect of
those with higher priority.

5.1.4 Mortality: Death Is a Certainty

Death, unfortunately, is inevitable. Thus the importance of a Will is self-evident, being

even more essential than powers of attorney that may be needed only if the maker
becomes incapable — a potential but not certain outcome.

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BARRIERS TO WILL-MAKING AND CONSEQUENCES OF INTESTACY 5.2.3

5.2 BARRIERS TO WILL-MAKING AND CONSEQUENCES OF INTESTACY

The reasons for not having a Will are unlimited and may be as unique as individuals
themselves. However, some of the more common obstacles are discussed below,
followed by details of some of the adverse consequences of intestacy.

5.2.1 Discomfort about Death and Dying

Unfortunately, the process of making a Will forces an individual to contemplate his

or her demise, and the discomfort this causes may be a barrier to addressing and
completing the task. The psychological tendency to put off what is perceived as a
frightening task can create unnecessary worries for a surviving spouse or dependants
if tragedy strikes.

5.2.2 Unresolved Issues about Wishes or Family Relationships

There may also be difficult questions that need to be answered in order to properly
prepare a Will that the individual may not be ready or willing to face or answer. It
is not unusual for these issues to be even more difficult to resolve where a married
couple has different views or feelings on a matter. Unresolved issues may involve
family relationships, complex financial decisions, anxiety as to how specific assets are
to be distributed, and how to treat all family members fairly. For example:

• Which children should inherit the cottage?

• Who should be the guardian of children under the age of majority?

• Who can be trusted to carry out the duty of executor without the
beneficiaries objecting?

• How should the “black sheep” beneficiary be treated?

These unresolved issues are often the very issues that make writing a Will even more
important. If not dealt with in a Will, issues like these can easily germinate upon an
intestacy into a family feud, creating permanent rifts between family members and
sparking litigation.

5.2.3 Cost

The cost of hiring a lawyer to prepare a Will may be seen as an expensive exercise for
many. However, preparing a Will may be excellent insurance against family feuds and

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5.2.4 CHAPTER 5 — INTESTACY

litigation that often occur where the individual failed to make a Will. In this sense, the
cost of a well-prepared Will — meaning one prepared by a lawyer after proper review
of the individual’s unique personal and financial circumstances, a probing inquiry
into the individual’s wishes, an eye to tax and probate fee saving opportunities, and
careful drafting — is a good investment in one’s estate. In some cases the cost is a
bargain compared with the cost of litigation and other costs relating to intestacy.
Estate litigation now occurs with greater frequency than ever before, and two reasons
are the poorly planned estate or no planning at all, resulting in an intestate estate.

5.2.4 No Perceived “Deadline”

The best time to make a Will is when it is not needed — before a crisis or other
circumstance makes it imperative. Postponing the task until an extended vacation,
medical procedure, or family event is a common occurrence. Many solicitors will
not accept a retainer to prepare a Will within a short timeframe for fear of exposing
themselves to liability if the Will is not completed within the deadline. In addition,
haste can lead to mistakes or shortcuts that also risk liability and may result in an
inappropriate result for the testator and his or her beneficiaries. A client in a hurry
may be his or her own worst enemy, omitting critical information or failing to think
through all the consequences before finalising the instructions.

Deathbed Wills can be particularly difficult for the testator, family, and the professional.
It is easier to make decisions about the administration and distribution of one’s estate
when death seems far in the future. The prospect of death and distribution of one’s
estate can then be treated as a somewhat hypothetical exercise, and decisions can
be made without the interference of time pressure and emotional distress. It may
be much more difficult to make clear-headed decisions if the individual is facing
imminent demise through terminal illness or other life-threatening situations, such
as high-risk surgery. Time pressures also make good planning more difficult and less
effective as tax planning, and other cost-saving opportunities, may be limited where
the time frame is short.

5.2.5 Procrastination May Lead to Intestacy

Many individuals put off making a Will on the assumption that at some future point in
time they will “get around to it.”This can be a dangerous strategy as it is not possible to
predict when or how one will die. If the individual dies unexpectedly in an accident
or as a result of sudden illness, his or her estate will be intestate. In addition, if the

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BARRIERS TO WILL-MAKING AND CONSEQUENCES OF INTESTACY 5.2.7

individual becomes incapable, it will not be possible to make a valid Will, and unless
the individual regains capacity, he or she will die intestate.

5.2.6 Additional Administrative Requirements

There are numerous additional requirements in respect of administering an intestate

estate. Since no executor has been appointed, someone must apply to be granted the
right to administer the estate. Granting of Letters of Administration may be subject
to terms and conditions that would not otherwise be required if an executor were
appointed under a Will. This may include a requirement to post a bond or other
security. This can be a very onerous condition as it may be difficult to obtain the
required security at all and, in addition, the cost may be considerable (see Chapter 11,
The Steps in Estate Administration).

The administrator will also be required to determine all the persons related to the
intestate to ensure that the distribution to the next of kin under the provincial
formula is properly carried out. This may complicate the administration of the estate
considerably where next of kin are difficult to identify or locate.

Ascertaining assets and liabilities may be more difficult if the deceased died intestate
since the deceased may never have made any list or organised his or her papers or
affairs with a view to providing information to assist the person who must take over
after death.

5.2.7 Provision for Minor Children

Most Wills contain a standard clause creating a trust for beneficiaries who are under
the age of majority and providing for receipt of distributions to the child’s guardian
and payments for the benefit of the minor to third parties.

Without a Will, the administrator of the estate will be required to make special
arrangements with respect to the inheritance of a minor beneficiary. The provincial
official (such as the Public Guardian and Trustee) has responsibility for safeguarding
the interests of minors and incompetent adults or may become involved in overseeing
the administration of the estate to ensure minor beneficiaries’ interests are protected.
In most provinces, the inheritance will be required to be paid into court and may be
administered by the Public Trustee for the jurisdiction. In many cases, this is not what
the deceased parent or grandparent would have wanted, especially where a child has
a surviving parent who will not have control over the property, nor any say as to how
funds are invested or distributed for the benefit of the minor child. These functions

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5.2.8 CHAPTER 5 — INTESTACY

will be in the hands of a government official and, if the parent or other family member
is permitted to participate, there may be terms and supervision conditions.

5.2.8 Delay in Administration of Estate and Distribution to Beneficiary

The additional steps required to administer an intestate estate and the complexities
that arise will add to the cost of the administration of the estate and delay the ultimate
distribution of assets to the beneficiaries. Depending on the law of the jurisdiction,
there may be a required time period before the distribution of an intestate estate
may take place. In Ontario, no distribution may be made until one year after death.
Similarly, in British Columbia, distribution of the surplus of the personal estate may
not be made until one year after death, unless there is a court order or the distribution
is made by the Public Guardian and Trustee.

5.2.9 Additional Tax Costs

The distribution of an estate on intestacy may attract additional income taxes. If the
deceased dies intestate where there is a surviving spouse, spousal rollover may not
be available for all property if the value of the estate exceeds the preferential share.
A surviving spouse will not be the sole beneficiary if there are surviving children
or other issue of the deceased and the value of the estate exceeds the preferential
share of the [Link] only exceptions are Alberta and Manitoba, where children of
both the deceased and the surviving spouse or common-law partner do not share on
intestacy.

5.2.10 Failure to Engage in Tax Planning or Probate Fee Saving Strategies

Where an individual dies without a Will, he or she will not have taken advantage of
possible strategies available to reduce probate fees and income [Link] opportunity
for tax savings and probate fee savings afforded to an intestate estate will therefore
be by chance rather than by [Link] following opportunities will be missed:

• maximise the spousal rollover for capital property and

• maximise the use of the capital gains exemption.

In the case of probate fees, a number of strategies are available to reduce or defer probate
fees, which will not have been explored or implemented. These include the use of
multiple Wills and minimising the value of assets that pass through the estate and are
subject to probate fees. See Chapter 9 for more details regarding probate fee planning.

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MISCONCEPTIONS ABOUT INTESTACY 5.3.2

5.3 MISCONCEPTIONS ABOUT INTESTACY

A number of misconceptions exist with respect to the need for a Will and the
distribution that will result on intestacy. It is important to dispel these inaccurate
ideas as they may prevent an individual from recognising the need to make a Will.
The result that occurs may be completely contrary to what the individual may have
wanted and may leave surviving family members inadequately provided for.

5.3.1 My Spouse Will Inherit Everything

This is often incorrect. The spouse may inherit everything if there are no surviving
issue. If there are surviving issue, the spouse will inherit everything only if the value
of the estate is less than the preferential [Link] surviving spouse is entitled to the
preferential share provided for in the formula of the jurisdiction plus a distributive
share. Depending on the size of the estate, and the particular jurisdiction, the surviving
spouse may have to share the value of the estate that exceeds the preferential share,
called the distributive share, with the children, including adult children. If children
have died before the intestate with issue surviving, the surviving issue will step into
the child’s shoes with respect to the right to the distributive share on a per stirpes
basis along with the surviving spouse. Where the value of the estate exceeds the
preferential share, the surviving spouse will not be the sole beneficiary unless none of
these other family members survive the deceased, except in Alberta and Manitoba. In
both provinces, the surviving spouse will receive the entire estate if all the surviving
children of the deceased (or their issue) are also all children of the surviving spouse.

5.3.2 My Common-law Spouse or Partner Will Be Entitled on Intestacy

Many people believe that because Canada recognises common-law relationships that
their common-law partner or spouse will inherit upon [Link] is not correct in
every province. In a number of provinces, common-law spouses are not recognised on
intestacy in the same way a married spouse is [Link] provinces are Ontario,
Quebec, New Brunswick, Prince Edward Island, Nova Scotia, and Newfoundland and
Labrador.1 In Nova Scotia, common-law partners will not inherit on intestacy unless
they have a registered domestic partnership. In all other jurisdictions in Canada,
common-law spouses have the same rights as a surviving married spouse. This can
lead to quite different results depending on where the coupled resided. For example,
in Ontario, a separated spouse will inherit and a common-law spouse will receive

1 However, surviving partners may inherit if they registered as a civil union in Quebec or as a domestic
partnership in Nova Scotia.

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5.3.3 CHAPTER 5 — INTESTACY

nothing on intestacy, even if the separated spouse is in a new relationship. In Alberta,

the common-law spouse who qualifies will receive the spousal distribution and a
married but separated spouse will receive nothing since a spouse is disentitled in
Alberta if separated and living with another partner.2 For disentitlement of a spouse,
including a common-law partner upon separation and/or adultery, see 5.5.13,
Disqualification of a Spouse’s Entitlement.

5.3.3 Everything Will Pass Outside the Estate to My Spouse Even Without a Will

Couples may hold the family home, unregistered investments, and bank accounts jointly
with a right of survivorship and designate each other as beneficiaries of registered
plans and insurance on the understanding that everything will automatically go to
the surviving spouse and a Will is not needed. This may be technically true on the
death of the first spouse, providing that the individual does not want to provide for
any beneficiary except the surviving spouse and is comfortable leaving the ultimate
disposition of his or her wealth in the sole discretion of the surviving spouse. This
may not always be the case.

This plan will result in an intestacy on the death of the second (surviving) spouse.
If there are no children or other issue, the combined wealth of the couple will be
distributed to the family of the spouse who dies last. If the husband and wife die in a
common accident, there would be no surviving spouse, and no time to make a Will.
Again, depending on the province, the joint estates might be distributed solely to the
family of the spouse “deemed” to die last by legislation (see 5.7, Survivorship Rules
and Order of Death). In addition, if one or both of the spouses becomes incapable,
an intestacy may arise since the incapable spouse will not be able to make a Will and
title to the jointly held property cannot generally be transferred between spouses
once one of the owners is incapable even with a power of attorney for property.

5.4 PARTIAL INTESTACY OR INVALID WILL

Generally the courts will interpret a Will so as to avoid intestacy wherever possible.
There is a presumption against intestacy in interpreting a Will. The logic is sound. If
an individual took the time to make a Will, he or she could not have intended to die
intestate or to have disposed of only part of his or her estate. However, even where
the individual has a Will, intestacy may result if not all the estate has been disposed of
in the Will or the Will is invalid. For example, a Will may be found invalid if:

2 Subject to rights of both a married spouse and a common-law partner to make an application in lieu of
support under dependant relief legislation.

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STATUTORY REGIME OF DISTRIBUTION 5.5.1

• the testator was incapable,

• the Will was prepared in circumstances where the testator was

subject to undue influence, or

• there was an error in the formalities of execution of the document

that cannot be repaired by the court.

A partial intestacy may occur where:

• the provisions of the Will do not dispose of the entire estate of the
deceased or

• some or all beneficiaries of the residual estate in the Will have pre-
deceased the testator.

For example, if the Will provides “to my two friends Thor and Cleo” with no gift
over, and neither Thor nor Cleo are persons to whom the anti-lapse rules apply and
they have pre-deceased the testator, then the gift to Thor and Cleo will lapse and
the property that is the subject of the gift will fall into residue. However, if this is
the residuary clause, then the gift will “fail” under the Will and the property that is
the subject of the gift can only be distributed as on an intestacy. There would be no
intestacy if Thor and Cleo were children of the testator who had issue surviving since
in that case the anti-lapse rules would apply. Anti-lapse is discussed in detail at 3.8.3,
Anti-Lapse Legislation.

Where a family member of a deceased is entitled to a distribution under the Will and,
in addition, is entitled to a share of distribution in respect of an amount on intestacy,
the beneficiary may generally “double dip,” subject to adjustment under the particular
legislation of the jurisdiction. For example, in Manitoba and Ontario, the preferential
share of the surviving spouse on a partial intestacy will be reduced by any benefit
received under the Will.

5.5 STATUTORY REGIME OF DISTRIBUTION

5.5.1 Introduction and Summary

Each province has its own formula for distribution of an intestate estate although the
general scheme of distribution is similar. Priority is generally given to the surviving

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5.5.1 CHAPTER 5 — INTESTACY

spouse, who will receive the entire estate if there are no surviving issue, except in
Quebec.

In general, where there is a surviving spouse and issue of the deceased, the estate
will be divided between the spouse and the surviving issue. In most provinces, the
surviving spouse will be entitled to a “preferential share” before any amount is to
be divided between the spouse and issue (see Figure 5.1). The preferential share
is generally a dollar amount. If the value of the estate is equal to or less than the
preferential share, then no amount is distributed to issue under the formula, although
minor children or other dependants may be entitled to make a claim for dependant
relief.

The portion of the estate in excess of the preferential share for the surviving spouse
is called the “distributive share.” The division of the distributive share between the
surviving spouse and issue varies by how many children either survive the intestate
or die before the intestate with issue surviving. If there is only one such child, the
spouse is entitled to one-half the distributive share. If there is more than one such
child, the spouse is entitled to one-third of the distributive share.

The surviving issue of the intestate will be entitled to the remainder of the distributive
share, or if there is no surviving spouse, he or she will be entitled to the entire estate
of the intestate. The exceptions are Manitoba and Ontario. In those two provinces,
the distribution to surviving issue of the intestate will be by representation (i.e., on a
per stirpes basis).

In Alberta, the spouse receives the entire estate if descendants are descendants of
the deceased and the surviving spouse or adult independent partners. Otherwise,
after the greater of the preferential share or 50% of the net value of the estate, the
remainder goes among the intestate’s descendants.

In Manitoba, the surviving spouse will receive the entire estate to the exclusion of
children of the marriage. Only children who are step-children of the surviving spouse
(or their issue) will share with the surviving spouse. In addition, instead of a per
stirpes distribution among issue of a pre-deceased child, descendants of equal degree
will receive an equal or per capita distribution.

In Ontario, the formula for distribution to issue of the intestate is a combination of

per stirpes and per capita distribution.

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STATUTORY REGIME OF DISTRIBUTION 5.5.3

In Quebec, the spouse will receive the value of the family patrimony as a first charge
upon the estate whether the spouse died with a Will or intestate. On intestacy there is
no preferential share for the spouse. If there is a surviving spouse and no issue, other
family members will share the value of the estate in excess of the family patrimony.
For more details regarding family patrimony, see 7.3.3, Family Patrimony.

In New Brunswick, Prince Edward Island, and Newfoundland and Labrador, there is
no preferential share for the surviving spouse.

Details of the rules of intestate distribution deserve further explanation.

5.5.2 Rule 1: Share of Spouse Where No Issue

Where the deceased has a surviving spouse and no children or other issue, the entire
estate will go to the surviving spouse.

[Link] Exceptions

In Quebec, if privileged ascendants (mother or father) and/or privileged

collaterals (brothers and sisters and their descendants of the first degree
(i.e., nieces or nephews of the deceased)) survive the deceased, the
surviving spouse will receive the value of family patrimony and two-thirds
of the remainder of the estate.

The remaining one-third will be divided equally between the privileged

ascendants as a class and the privileged collaterals as a class. Privileged
ascendants are parents, and privileged collaterals are brothers and sisters
and nieces and nephews. Parents will divide their share equally between
them, and brothers and sisters will divide their share equally among them.
If any brother or sister has pre-deceased the testator, the surviving children
will take their parent’s share. Before the formula on intestacy is imposed,
the value of family patrimony will pass to the surviving spouse and not
form part of the assets subject to the distribution formula.

5.5.3 Rule 2: Share of Spouse Where Only One Child

If there is a surviving spouse and only one surviving child or only the surviving issue
of one child who pre-deceased the intestate, the surviving spouse will receive the
spouse’s preferential share, as shown in Figure 5.1, plus one-half of the distributive
share.

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[Link] CHAPTER 5 — INTESTACY

[Link] Exceptions

In Alberta, the surviving spouse or adult independent partner will receive

the entire estate of the deceased unless a surviving child is not also a child
of the surviving spouse. If there is at least one surviving child who is not
a child of the surviving spouse (a step-child of the surviving spouse or
surviving issue of such step-child), the spouse is entitled to the greater of
the preferential share of $150,000 or 50% of the net value of the estate.

In Manitoba, the surviving spouse will receive the entire estate of the
deceased unless the surviving child is not also a child of the surviving
spouse. If there is at least one surviving child who is not a child of the
surviving spouse (i.e., a step-child of the surviving spouse or surviving
issue of such step-child), the spouse will receive a preferential share equal
to $50,000 or one-half of the estate, whichever is greater, and one-half of
any remainder.

In Quebec, instead of a preferential share, the spouse will receive the value
of the family patrimony plus one-third of the remainder of the estate.

In New Brunswick, the surviving spouse is entitled to the marital property

in lieu of a preferential share. The right is a right to specific property, not
just a payment of the value. See 6.3.6 for the definition of marital property
in New Brunswick.

In Prince Edward Island and Newfoundland and Labrador, there is no

preferential share. In these provinces the spouse will be entitled to one-
half of the estate.

Figure 5.1: Spouse’s Preferential Share or Equivalent

Jurisdiction Preferential Share Spouse1 and One Spouse1 and Matrimonial Home
for Spouse1 Child Children and/or Property
British $300,000 if deceased’s 1/2 to spouse See rules for spouse
Columbia descendants are 1/2 to descendants (child with to purchase home
descendants of representation to issue) (see s. 24) from estate
deceased and spouse (ss. 26-33)
Otherwise $150,000

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STATUTORY REGIME OF DISTRIBUTION [Link]

Jurisdiction Preferential Share Spouse1 and One Spouse1 and Matrimonial Home
for Spouse1 Child Children and/or Property
Alberta n/a if descendants are If descendants are descendants n/a. However, see
also descendants of of deceased and the spouse or rights of a married
surviving spouse or adult interdependent partner, all person to life estate
adult interdependent to spouse or adult interdependent in the homestead
partner partner. and personal
Otherwise $150,000 Otherwise, after preferential property of the
(per Regulation) share, remainder to child with deceased under the
representation to descendants (see Dower Act, R.S.A.
s. 66) 2000, c. D-15,
ss. 18-23
Saskatchewan $100,000 1/2 to spouse 1/3 to spouse n/a
(for deaths after June 1/2 to child per 2/3 to children
22, 1990) stirpes per stirpes
Manitoba n/a If the issue of the deceased are also Rights are in addition
the issue of the spouse, all to the to rights to a life
spouse. interest in the family
Otherwise the greater of $50,000 home under the
and 1/2 of the estate to the spouse Homesteads Act,
(s. 2) C.C.S.M., c. H80
The remainder to the issue per
capita at each generation. See
ss. 4-5 and 5.10, Intestacy Rules
Where There Is No Spouse or Issue
(by Jurisdiction), for example
of distribution to issue of a pre-
deceased child.
Ontario $200,000 1/2 to spouse 1/3 to spouse See also rights under
(per Regulation) 1/2 to child 2/3 to children Family Law Act, R.S.O.
If child pre-deceased leaving issue, 1990, c. F.3
to the child’s issue equally among
his or her issue who are of the
nearest degree in which there are
issue surviving.
See s. 47 and 5.10, Intestacy Rules
Where There Is No Spouse or Issue
(by Jurisdiction), for example
of distribution to issue of a pre-
deceased child.
New Brunswick n/a 1/2 to spouse 1/3 to spouse See Marital Property
However, spouse is (widow) (widow) Act, S.N.B. 2012,
entitled to marital 1/2 to child per 2/3 to children c. 107
property. stirpes per stirpes
Newfoundland n/a 1/12 to spouse 1/3 to spouse n/a
and Labrador 1/2 to child per 2/3 to children
stirpes per stirpes

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5.5.4 CHAPTER 5 — INTESTACY

Jurisdiction Preferential Share Spouse1 and One Spouse1 and Matrimonial Home
for Spouse1 Child Children and/or Property
Nova Scotia $50,000 1/2 to spouse 1/3 to spouse Spouse may elect to
1/2 to child per 2/3 to children take spousal home
stirpes per stirpes in lieu or as part of
preferential share.
Includes household
furnishings (s. 4
Intestate Succession
Act)
Prince Edward n/a 1/2 to spouse 1/3 to spouse n/a
Island 1/2 to child per 2/3 to children
stirpes (by stocks) per stirpes (by
stocks)
Yukon $75,000 1/2 to spouse 1/3 to spouse Family home held
1/2 to child per 2/3 to children in trust for spouse
stirpes per stirpes if not otherwise
received as part of
share; household
furnishings go to
spouse (s. 92)
See Part 8 (s. 74) for
common-law spouse
rights to apply for an
allowance
Northwest $50,000 1/2 to spouse 1/3 to spouse Spouse may elect to
Territories 1/2 to child per 2/3 to children take spousal home
stirpes per stirpes in lieu of preferential
share or as part of
preferential share.
Includes household
furnishings (s. 2(5))
Nunavut $50,000 Share equally 1/3 to spouse Spouse may elect to
2/3 to children take spousal home
in lieu of preferential
share or as part of
preferential share.
Includes household
goods and
furnishings (s. 2(5))
1 See 5.12, Definition of Spouse and Common-law Spouse for Purposes of Intestacy Succession (by Jurisdiction),
for definitions of spouse or other relationships recognized for purposes of intestate succession law.

5.5.4 Rule 3: Share of Spouse Where Two or More Children

Where the surviving spouse is also survived by two or more children or their issue, the
surviving spouse will receive the preferential share and one-third of the distributive
share.

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STATUTORY REGIME OF DISTRIBUTION [Link]

[Link] Exceptions

In British Columbia, the surviving spouse receives the preferential share

and one-half of the remainder.

In Alberta and Manitoba, the entire estate will go to the surviving spouse
unless one or more of the children are not children of the surviving spouse.
For Rule 2 exceptions, see [Link], Exceptions.

In Quebec, instead of a preferential share, the spouse will receive the value
of the family patrimony plus one-third of the remainder of the estate.

5.5.5 Rule 4: Children or Issue Only

If there is no surviving spouse but there are surviving children or issue of more
remote degree, the entire estate will be inherited by the children and issue of any
pre-deceased child.

5.5.6 Rule 5: Division of Intestate Estate among Children and Issue

Where children or issue are entitled to a distribution on intestacy, the general rule
is that the portion of the estate to which children or other issue are entitled is
divided among the issue of the intestate on a per stirpes basis, except in Manitoba
and Ontario. Where no spouse survives, the issue will receive the entire estate. Where
there is a surviving spouse, the issue will be entitled to a portion of the distributive
share as described in the rules above. The exceptions to a per stirpes distribution to
issue in Manitoba and Ontario are complex and, in addition to the discussion below,
an illustration is provided at 5.8, Case Studies on Intestate Distribution. Per stirpes
distribution is discussed at 4.4.8, Per Stirpes Division.

[Link] Exceptions

In Manitoba, the same persons are entitled to a share of the estate of

an intestate as would be entitled on a per stirpes distribution. However,
descendants of the same degree always receive an equal share. An equal
share is created for

1. each of the surviving descendants who are of the nearest degree

to the intestate and

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[Link] CHAPTER 5 — INTESTACY

2. each deceased person who is of the same degree as the nearest

degree to the intestate who has issue surviving the intestate.

The share created in respect of any deceased person in the second point
above is re-divided and distributed as if all the surviving descendants of the
nearest degree and all their issue had also pre-deceased the intestate. This
formula results in a per capita distribution at each generation.

In Ontario, the distribution among surviving issue is similar to that of

Manitoba, but not identical, as descendants of the same degree may not
necessarily receive an equal share. The estate is divided per capita at the
generation closest to the intestate that has a surviving member, with an
equal share also being created for any pre-deceased descendant of the
nearest degree who has issue [Link] first division is the same as the
division for Manitoba in point 1 above.

Next, the share of any pre-deceased descendant is distributed in a similar

manner as if that pre-deceased descendant was intestate (i.e., the share in
the first division created in respect of a deceased descendant is divided
into equal shares for the surviving descendants of that pre-deceased
descendant). This differs from Manitoba in that the division of that share
into equal parts is only among that particular pre-deceased descendant’s
issue, resulting in a potentially different distribution to descendants of
equal degree to the intestate.

Once the primary division has taken place, the distribution of the primary
share will be only to descendants of the person for whom that share is
created. In Manitoba, however, the share can be redistributed to issue of
other descendants of the deceased who are of the same degree.

In Manitoba and Ontario, if all children die before the intestate and the
grandchildren either all survive the intestate or some but not all of them
die before the intestate without issue, all surviving grandchildren will share
on a per capita basis.

An example should help to follow this progression. See Figure 5.2.

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STATUTORY REGIME OF DISTRIBUTION [Link]

Figure 5.2: Hero’s Estate3

Papa

Joseph Mary Mohamed

Lenny Robin George Will Jerry

Hero died without a Will and is survived by Mary, one of his three children, and
by five great-grandchildren as shown above.

Primary Division in Ontario and Manitoba

In the above example, the primary division takes place at the first degree since
Hero’s child Mary is alive. Because both of Mary’s siblings are survived by issue,
an equal share is created for each of them also. The primary division is into
three equal shares.

Division Among Hero’s Great-grandchildren in Ontario

In Ontario, Joseph’s one-third share would be divided equally among Joseph’s

grandchildren, Lenny, Robin, and George, so they would each receive one-ninth.
Since both of Joseph’s children have already died, no subdivision of the one-
third share between Joseph’s two children takes place as would be the case
if the distribution were on a per stirpes basis. In Ontario, Mohamed’s share
would be divided equally between Mohamed’s grandchildren, Will and Jerry,
who would each receive a one-sixth share. This is the same as a per stirpes
distribution at least with respect to Mohamed’s share.

3 Lighter grey boxes indicate deceased persons in the family tree.

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5.5.7 CHAPTER 5 — INTESTACY

Division Among Hero’s Great-grandchildren in Manitoba

In Manitoba, each great-grandchild would receive an equal amount. The one-

third share of each of Joseph and Mohamed are added together and divided
by the number of grandchildren such that each of them would receive
two-fifteenths.

5.5.7 Rules Where No Spouse, Children, or Issue

• Parents: In all provinces but Quebec, parents will take next in equal
shares or all to a sole surviving parent. In Quebec, parents (privileged
ascendants) will take one-half and brothers and sisters (privileged
collaterals) take the other half where there is no surviving spouse or
issue, with nieces and nephews (also privileged collaterals) taking the
share of their pre-deceased parents.

British Columbia and Alberta

These two provinces have introduced a parentelic system for

determining intestate beneficiaries. If there is no surviving parent, the
descendants of the parents will take (e.g., siblings of the deceased
with representation to their issue). Unlike the other jurisdictions,
representation continues beyond nieces and nephews.

All Jurisdictions Except British Columbia and Alberta

• Siblings: In every province except Manitoba and Quebec, brothers

and sisters will take after parents. In Manitoba, the estate would be
divided among the issue of the intestate’s parents per capita at each
generation. In Quebec, as noted above, parents and siblings (or their
issue of the first degree) share equally in the event neither spouse nor
issue survive the deceased.

• Nieces and Nephews: In every province but Quebec, nieces and

nephews take after brothers and sisters. In Quebec, nieces and
nephews are also privileged collaterals and if an intestate leaves a
surviving spouse and a niece or nephew, the surviving spouse will be

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STATUTORY REGIME OF DISTRIBUTION 5.5.9

entitled to two-thirds of the estate and the niece and nephew will be
entitled to the remaining one-third.

• More Remote Next of Kin: In all provinces, once all these relatives
are exhausted as potential beneficiaries on intestacy, more remote
relatives of the deceased person who are the closest surviving next
of kin will inherit the estate on an intestacy. This will be based on
“degrees of consanguity,” or how closely related by blood one person
is to another.

• Last Resort Escheat: In all provinces, in the event no such next of

kin exist or can be discovered, the estate of the intestate will escheat
to the Crown. Essentially this means that the provincial government
will inherit the assets of the deceased.

See 5.10, Intestacy Rules Where There Is No Spouse or Issue (by Jurisdiction).

5.5.8 Calculation of Spousal Share where Children have Pre-deceased the

Intestate

Where a child has died before the intestate with issue surviving, that child will be
considered alive for the purpose of determining the spousal share. So, for example,
if the intestate had one child who pre-deceased the intestate but left two surviving
grandchildren, the surviving spouse would be entitled to the preferential share and
one-half of the distributive share, with the other half of the distributive share being
divided equally between the two grandchildren (i.e., one-quarter each). If the intestate
had two children who died first, and each child left one grandchild, the spouse would
receive the preferential share plus one-third of the distributive share and the two
surviving grandchildren would split the remainder of the distributive share, receiving
one-third each.

5.5.9 Rights to the Matrimonial Home

In some provinces there are special rights relating to the matrimonial home.

• In British Columbia, the surviving spouse is entitled to purchase the

spousal home from the estate.

• In Alberta, the Dower Act provides for the surviving spouse to have a
life interest in the “homestead” or its contents.

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5.5.10 CHAPTER 5 — INTESTACY

• In Manitoba, in addition to the distribution on intestacy, the surviving

spouse or common-law partner is entitled to a life interest in the
“homestead,” which is essentially the family home.

• In Ontario, the Family Law Act excludes the value of the matrimonial
home when calculating the deceased’s net family property and if
that deceased spouse owns the home at the date of death his or her
net family property will include the home’s entire value, not just its
change in value during the marriage.

• In Quebec, the family home is included in the family patrimony and,

as a result, one-half of its value, including the furnishings, is credited
to the claim of the surviving spouse against the estate of the deceased
prior to calculation of any amount to be distributed on intestacy.

• In New Brunswick, under the Marital Property Act, the deceased

spouse’s estate cannot make a disposition of an interest in a marital
home unless the surviving spouse consents.

• In Nova Scotia, the Northwest Territories, and Nunavut, the surviving

spouse may elect to receive the home in lieu of or as part of the
$50,000 preferential share and the household furnishings are included
for this purpose as part of the home.

5.5.10 Rights of Common-law Spouses

Common-law spouses are recognised for the purpose of intestate distribution in seven
of the thirteen Canadian jurisdictions, being British Columbia, Alberta, Saskatchewan,
Manitoba,Yukon, the Northwest Territories, and Nunavut.

Common-law spouses are not entitled to distribution on intestacy in Ontario, Quebec,

New Brunswick, Prince Edward Island, Nova Scotia, or Newfoundland and Labrador.4

The definition of common-law spouse is specifically defined for the purposes of

intestate distribution in provinces where this is permitted. For additional information
about common-law spouses, see 6.5.4, Common-law Spouses.

4 However, surviving partners may inherit if they registered as a civil union in Quebec or as a domestic
partnership in Nova Scotia.

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STATUTORY REGIME OF DISTRIBUTION 5.5.11

5.5.11 Determining Common-law Status

It is relatively easy to determine whether or not individuals are [Link] marriage

ceremony and the marriage itself are a matter of public record (assuming the marriage
is not void or voidable for some reason), and similarly a divorce is the subject matter
of a court order and is relatively easy to determine.

On the other hand, the existence of a common-law relationship and its dissolution
can be much more difficult to determine in the particular circumstances. Issues —
such as when cohabitation began, what constitutes a “conjugal” relationship,” or when
the relationship broke down or the couple ceased to cohabit — can be very difficult.
These terms are not generally assisted by the language in the legislation. For example,
the statute may refer to “living together as husband and wife,” or “in a marriage-
like relationship,” or in a “conjugal relationship,” without any further definition. The
legislation often does provide for when the rights and obligations attaching to a
common-law relationship cease by reference to a matter of a length of time after the
relationship or cohabitation ceases.

In general the courts will be reluctant to impose rights and obligations on persons in
a common-law relationship unless their conduct demonstrates commitment between
them. In a British Columbia case,5 the deceased died intestate. During his lifetime he
had a romantic relationship for several years although he and his girlfriend lived in
separate residences and kept their finances separate. The court commented on the
following factors in finding that the girlfriend was not a common-law partner:

• the absence of economic dependence,

• sharing and commitment to a common principal residence, and

• recognition that the defendant and the deceased were part of a family
unit.

These factors were considered in determining whether or not the parties by their
conduct intended to have a committed relationship. Where the legislation provides
for registration of couples to be recognised as common-law spouses, there is usually
provision for termination of the relationship.

5 Kirkwood v. MacMillan, 2008 BCSC 91, 2008 CEAG.

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5.5.12 CHAPTER 5 — INTESTACY

For the definitions of spouse and common-law spouse for the purposes of intestate
succession, refer to 5.12, Definition of Spouse and Common-law Spouse for Purposes
of Intestate Succession (by Jurisdiction).

5.5.12 Multiple Spouses

The recognition of common-law spouses in various jurisdictions, and under the

Income Tax Act, creates the possibility of having more than one spouse. This could
include more than one common-law spouse or a common-law spouse and a married
spouse. Where this situation exists, the rights of the surviving spouse and common-
law spouse may be restricted in the legislation or may not be provided for at all,
leaving uncertainty with respect to how surviving multiple spouses would share on
an intestacy.

Three jurisdictions have specifically recognized the situation where there may be
more than one spouse:

• British Columbia: Where there are two or more spouses, they share
the spousal share in the portions agreed or as determined by the
court (see s. 22 of Wills, Estates and Succession Act ).

• Alberta: Where there is a spouse and an adult interdependent

partner (AIP), if there are no descendants the estate is shared equally.
If there are descendants, the preferential share is shared equally by
the spouse and the adult interdependent partner (see s. 62 of Wills
and Succession Act).

• Manitoba: If there is a spouse and a common-law partner at the time

of death, the person whose relationship is most recent has priority
(see s.3(3) of The Survivorship Act for full details).

In Alberta, the surviving spouse or AIP may be entitled to a life interest in the real
property of the spouse.

In Manitoba, the second spouse or second common-law partner of the deceased

does not acquire rights in the homestead if the property has been occupied by the
deceased and the previous spouse or previous common-law partner unless certain
conditions have been satisfied.

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APPOINTMENT OF ADMINISTRATOR OF AN INTESTATE ESTATE 5.6

5.5.13 Disqualification of a Spouse’s Entitlement

Where spouses have separated, whether married or in a common-law relationship,

questions arise as to whether or not the survivor should still be entitled to receive
from an intestate person’s estate. See 5.11, When a Spouse Is Not Entitled on an
Intestacy, which identifies the jurisdictions that have provided guidance on when
the surviving spouse or common-law spouse may not be entitled to receive from an
intestate’s estate.

It is well-established law that an individual cannot profit from his or her crime. As
a result, a spouse who is convicted of murdering the deceased will not share on
intestacy and will be disentitled to benefit under the Will of the deceased. However, a
conviction must generally be obtained in order for this rule to apply.

5.6 APPOINTMENT OF ADMINISTRATOR OF AN INTESTATE ESTATE

Each jurisdiction has rules that set out who may be appointed to administer the estate
of an intestate. For example, in British Columbia, these rules are set out in the Wills,
Estates and Succession Act at section 130; in Alberta, the Surrogate Court Rules at Rule
11(2); in Ontario, the Estates Act at section 29; and in Nova Scotia, the Probate Act at
section 32.6 Generally the persons who have priority to be appointed follow the same
ordering as the rights to distribution on an intestacy. Generally the following family
members have priority to be appointed and are ranked by priority as follows:

• spouse (or common-law partner where recognised on an intestacy),

• children,

• other descendants ranked by degree (i.e., grandchildren first, great-

grandchildren next, etc.),

• parents, and

• brothers and sisters.

In the province of Quebec, the heirs have the right to be appointed as liquidators
and may appoint a particular person or persons by majority vote. Alternatively, the
person entitled to be appointed may propose that a nominee, usually a trust company,
be appointed. In the absence of application by next of kin to be appointed, in rare

6 For a complete list, see CCH Canadian Estate Administration Guide at ¶13,036.

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5.7 CHAPTER 5 — INTESTACY

circumstances a creditor may be appointed or the last resort would be the Public
Trustee in the jurisdiction.

While the court has discretion with respect to the appointment, a person having
priority will generally be appointed unless that person renounces his or her right.
So, where the wife was accused of murdering her husband who died intestate, the
court granted her application to be appointed over the objections of the father of
the deceased since the wife had been charged but not convicted.7 However, the court
will consider what is in the best interests of preserving the property of the estate
and so they may prefer one person who has the appropriate skills (for example, if the
estate assets include a business) or may refuse to give priority to an applicant who
has a conflict of interest.

5.7 SURVIVORSHIP RULES AND ORDER OF DEATH

Where two or more individuals are in a common accident, or otherwise die within
a short time of each other, the order of death can significantly affect the distribution
of property whether there is a Will or one or more of the persons dies intestate.
However, the outcome may be more arbitrary on intestacy as Wills are often drafted
to provide for more appropriate results where there is a simultaneous death or death
within 30 days.

For example, assume a husband and wife are childless. If they die in a common accident
and the husband dies first, the wife may be the recipient of the husband’s estate and the
wife’s estate in turn may be distributed to her beneficiaries rather than the husband’s.
On the other hand, if the wife dies first, the reverse is true. Where the order of death
can be ascertained, and the second to die is a beneficiary of the estate of the first to
die, the assets of the individual who died first will go through two estates before being
distributed to a beneficiary and potentially subject to probate fees twice. In addition to
the double probate fee burden, in some circumstances seemingly inappropriate results
with respect to the distribution of property can result.

In the example of a childless couple, if they die without Wills, then the parents or
siblings or other family members of the spouse who is last to die will inherit the
wealth of both the husband and wife.

These results do not usually take place if Wills have been drafted because of
survivorship clauses used in Wills. It is common to provide that a primary beneficiary

7 Ruffolo v. Juba-Ruffolo, 2005 BCCA 26, 2005 CEAG.

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SURVIVORSHIP RULES AND ORDER OF DEATH 5.7

inherit only if they survive the testator by 30 days or some other number of days
sufficient to provide for appropriate results where there is a common accident.
Alternatively, a general survivorship clause may be inserted in a Will to the effect
that if any beneficiary dies within 30 days of the death of the testator, the gift to
such beneficiary shall fail and the Will shall be interpreted as if the beneficiary pre-
deceased the testator.

Where the order of death cannot easily be determined, forensic evidence may be used
to obtain a declaration as to which of two persons died first. In Adare v. Fairplay,8
a husband and wife died in their home of carbon monoxide poisoning caused by
a broken gas main in front of their home. It was found that the husband died first
based on autopsies establishing the onset of rigor [Link] statutory presumption,
discussed below, did not apply since the order of death could be ascertained on the
evidence.

Where the order of death cannot be determined, a survivorship rule may be relied
upon in the provincial statutes. The older person is deemed to have died first (order
of seniority) in Prince Edward Island, Nova Scotia, Newfoundland and Labrador,
the Northwest Territories, and Nunavut. In British Columbia, Alberta, Saskatchewan,
Manitoba, Ontario, Quebec, New Brunswick, and Yukon, if the order of death cannot
be determined, each decedent is deemed to have survived the other in determining
the distribution of the estate of the decedent. For example, in our childless couple
case, the husband would have been deemed to survive the wife in determining a
distribution of the husband’s estate and the wife would have been deemed to survive
the husband in determining the distribution of her estate. Thus, neither estate would
go through the estate of the other, double probate would be avoided, and a potentially
more appropriate distribution would be obtained.

Other rules of survivorship may apply under insurance [Link] order of death
can also affect the distribution of property from a registered plan under a beneficiary
designation and the disposition of jointly held property.

In British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, and

Yukon, where property is held jointly with a right of survivorship and the joint
owners die in circumstances where the order of death is unknown, the joint tenancy
is deemed to be severed and is treated as a tenancy in common so that each deceased
owner’s share is distributed through that owner’s estate.

8 [1956] O.R. 188, [1955] O.W.N. 950 (C.A.).

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5.8 CHAPTER 5 — INTESTACY

British Columbia and Saskatchewan also have a 5-day survivorship rule whereby any
persons who die within 5 days of each other are each deemed to have survived the
other. New Brunswick has a similar rule but with a 10-day time frame. Manitoba has a
similar rule that applies only for intestate distribution, but the time period is 15 days
so that in Manitoba any person who dies within 15 days or less after the intestate
shall be treated as if he or she pre-deceased the intestate.

Where the order of death can be determined, the statutory presumptions do not
apply.

In Leach v. Egar (1990), 38 E.T.R. 65 (B.C. C.A.), following her divorce and division
of assets, the former wife and her children were lost at sea and presumed dead.
The former wife and the children all died intestate. The presumption of death
in order of seniority applied. Since the wife is deemed to have died first, her
estate devolved to her children, and since they died intestate as well, their estate
devolved to their father. Consequently, the wife’s estate was inherited by her ex-
spouse, and her other family members were not entitled to anything.

5.8 CASE STUDIES ON INTESTATE DISTRIBUTION

5.8.1 Faith Dies Intestate Survived by All Issue Except Penny (Penny
Dies First)

Figure 5.3: Case Study 1: Widow with Issue9

Faith

Penny Anita Joseph

1/3 1/3

Sam Mark Lisa

1/3

9 Grey boxes indicate deceased persons in family tree.

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CASE STUDIES ON INTESTATE DISTRIBUTION 5.8.3

Faith is a widow with three children, Penny, Anita, and Joseph, as shown in the family
tree in Figure 5.3. Penny has one son, Sam, and Joseph has two children, Mark and Lisa.
Faith and Penny die as the result of a car accident. Penny dies first at the scene of the
accident, and Faith dies the next day in hospital. Faith has no Will. Faith’s estate will
be divided equally between Sam, Anita, and Joseph. Because Penny has died before
Faith with issue surviving at the time of Faith’s death, her one-third share devolves to
her sole issue.

5.8.2 Faith Dies Intestate Survived by All Issue (Penny Survives Faith)

If Penny dies after Faith, the share that otherwise would go to Sam would go to
Penny’s estate to be dealt with under the terms of Penny’s Will or on intestacy when
she eventually dies.

[Link] Exceptions

In British Columbia, Saskatchewan, and Manitoba, Penny may be deemed

to die before Faith if she dies within 5 or 15 days of Faith respectively
(see 5.7, Survivorship Rules and Order of Death). In that case, Sam would
receive Penny’s share of Faith’s estate.

5.8.3 Faith Dies Intestate Survived by Spouse and All Issue Except Penny
(Penny Dies First)

Figure 5.4: Intestate Survived by Spouse and All Issue Except Penny

Faith

Spouse PS
plus 1/3

Penny Anita Joseph

2/9 2/9

Sam Mark Lisa

2/9

If Faith has a surviving spouse (see Figure 5.4), the spouse will receive either one-
third of the estate, or the preferential share (“PS” in diagram) in jurisdictions where

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[Link] CHAPTER 5 — INTESTACY

this applies, plus one-third of the distributive share. The remainder of the estate or
distributive share will be divided into three equal shares so that Sam (who takes
Penny’s share by representation), Anita, and Joseph would each receive two-ninths.

[Link] Exceptions

If the value of the estate is less than the preferential share, the preferential
share will be distributed to the surviving spouse and Sam, Anita, and Joseph
will receive nothing.

In Alberta and Manitoba, if the surviving spouse is the parent of all three
children, Penny, Anita, and Joseph, then the surviving spouse will receive
Faith’s entire estate and Sam, Anita, and Joseph will receive nothing,

If the surviving spouse is a common-law spouse, he or she will only

be entitled to share on intestacy in some provinces. For example, in
Ontario, Quebec, New Brunswick, Prince Edward Island, Nova Scotia, and
Newfoundland and Labrador, a common-law spouse is not entitled to a
distribution on intestacy.10 However, a claim for dependant relief may be
available.

If Faith was separated from her spouse, in some provinces the spouse may
not be entitled to a distribution on intestacy (see 5.5.13, Disqualification of
a Spouse’s Entitlement).

5.8.4 Penny Dies Intestate

If Penny survived Faith (subject to special deemed survivorship rules in British

Columbia, Saskatchewan, and Manitoba), the assets of Penny’s estate would include
the distribution from Faith’s estate. If Penny died after Faith, Sam would receive the
distribution from Faith’s estate.

If Penny has a surviving spouse, the preferential share from Penny’s estate would
be distributed to that surviving spouse first and the distributive share, if any, or the
entire estate if in a province with no preferential share would then be divided equally
between Sam and Penny’s husband.

10 Although surviving partners may inherit if they registered as a civil union in Quebec or as a domestic
partnership in Nova Scotia.

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CASE STUDIES ON INTESTATE DISTRIBUTION [Link]

If Penny were in Alberta or Manitoba, her entire estate, including any amount inherited
from Faith, would go to Penny’s husband and Sam would receive nothing, assuming
that Penny’s spouse is also Sam’s father.

5.8.5 Faith Dies Intestate Survived by Anita and Three Grandchildren

Figure 5.5: Intestate with Grandchildren from Two Different Children of Intestate

Faith

Penny Anita Joseph

1/3

Sam Mark Lisa

1/3 1/6 1/6

If Faith had no spouse and Penny and Joseph die before Faith, then Anita would
receive one-third of the estate. In all provinces but Manitoba, Sam would receive
one-third of the estate, and Joseph’s two children, Mark and Lisa, would each divide
Joseph’s one-third share between them and receive one-sixth each (see Figure 5.5).

[Link] Exception in Manitoba

In Manitoba, the grandchildren each get an equal amount, since on intestacy

beneficiaries of the same degree share equally. Instead of Sam getting twice
what Mark and Lisa received, the distribution would be slightly different. At
the first degree level, the assets of the estate would be divided into three
equal shares and Anita would receive her one-third share. However, the two
remaining equal shares, one for each child who pre-deceased Faith with
issue surviving (i.e., one-third for Penny and one-third for Joseph), would
then be added together and re-divided on a per capita basis among each of
the grandchildren (see Figure 5.6).

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5.8.6 CHAPTER 5 — INTESTACY

Figure 5.6: Manitoba Division Equal to All Issue of Same Degree

Faith

Penny Anita Joseph

1/3

Sam Mark Lisa

2/9 2/9 2/9

To use a numerical example, if the estate is worth $90,000, the share for each of
Anita, Joseph, and Penny would be $30,000. If Penny and Joseph pre-deceased Faith,
a per stirpes division in all provinces except Manitoba would result in Sam receiving
$30,000 (his mother’s share) and Joseph’s children, Mark and Lisa, would each divide
Joseph’s $30,000 share, receiving $15,000 each. However, in Manitoba, Penny and
Joseph’s shares would be added together (two shares of $30,000 or $60,000) and
then divided into three so that each of Sam, Mark, and Lisa would receive $20,000.

5.8.6 Comparison of Distribution in Manitoba, Ontario, and Per Stirpes

Distribution

Figure 5.7: Distribution to Issue in Manitoba and Ontario Compared with a Per Stirpes
Distribution in Other Provinces

Intestate

Child 1 Child 2 Child 3

GC1 GC2 GC3 GC4 GC5 GC6

GGC1 GGC2 GGC3

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INTESTACY RULES WHERE THERE IS NO SPOUSE OR ISSUE (BY JURISDICTION) 5.10

Beneficiary Share in Manitoba Share in Ontario Per Stirpes

Distribution
GC 2 1/6 1/6 1/9
GC3 1/6 1/6 1/9
GC4 1/6 1/6 1/3
GC5 1/6 1/6 1/6
GGC1 1/9 1/12 1/18
GGC2 1/9 1/12 1/18
GG3 1/9 1/6 1/6

5.9 PROVINCIAL LEGISLATION

Jurisdiction Legislation re: Intestate Succession

British Columbia Wills, Estates, and Succession Act, S.B.C. 2009, c. 13, Part 3
Alberta Wills and Succession Act, S.A. 2010, c. W-12.2, Part 3
Saskatchewan Intestate Succession Act, S.S. 1996, c. I-13.1
Manitoba Intestate Succession Act, C.C.S.M., c. I85
Ontario Succession Law Reform Act, R.S.O. 1990, c. S.26, Part II
Quebec Civil Code of Québec, S.Q. 1991, c. 64, Art. 613–702
New Brunswick Devolution of Estates Act, R.S.N.B. 1973, c. D-9
Prince Edward Island Probate Act, R.S.P.E.I. 1988, c. P-21, Part IV
Newfoundland and Labrador Intestate Succession Act, R.S.N.L. 1990, c. I-21
Nova Scotia Intestate Succession Act, R.S.N.S. 1989, c. 236
Yukon Estate Administration Act, R.S.Y. 2002, c. 77, Part 10
Northwest Territories Intestate Succession Act, R.S.N.W.T. 1988, c. I-10
Nunavut Intestate Succession Act, R.S.N.W.T. 1988, c. I-10 (Duplicated
for Nunavut)

5.10 INTESTACY RULES WHERE THERE IS NO SPOUSE OR ISSUE (BY

JURISDICTION)

Where there is no spouse, the estate will be distributed to the children or to their issue
using a per stirpes distribution. Manitoba and Ontario have altered the distribution
slightly. The following table summarizes the rules when there are no spouse or issue.
Students are referred to the legislation for full details.

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5.10 CHAPTER 5 — INTESTACY

Jurisdiction No Spouse or Issue No Spouse, Issue, or No Spouse, Issue,

Parents Parents, Siblings, or
Issue of Siblings
British Columbia To the intestate’s To the descendants See legislation for
parents in equal shares of the parent(s) (with parentelic distribution
or to the survivor (s. 23) representation) (see rules
s. 24)
Alberta To the intestate’s To the descendants See legislation for
parents in equal shares of the parent(s) (with parentelic distribution
or to the survivor (s. 67) representation) (see rules
s. 67)
Saskatchewan To the intestate’s To the brothers and If no siblings, nieces or
parents in equal shares sisters in equal shares nephews, to next of kin
or to the survivor (s. 9) with representation to (ss. 12 -13)
their children (s. 10)
Manitoba To the intestate’s To the issue of the See s. 4(5)-(6) for
parents in equal shares parents per capita at distribution to
or to the survivor each generation paternal and maternal
(s. 4(3)) (ss. 4(4) & 5) grandparents or their
issue; and then to great-
grandparents or their
issue
Ontario To the intestate’s To the brothers and If no siblings, nieces
parents in equal shares sisters in equal shares or nephews, distribute
or to the survivor with representation to among the next of
(s. 47(3)) their children (s. 47(4)) kin of equal degree of
consanguinity to the
intestate equally without
representation (s. 47(6))
New Brunswick To the intestate’s To the brothers and If no siblings, nieces
parents in equal shares sisters in equal shares or nephews, distribute
or to the survivor (s. 25) with representation to among the next of
their children (s. 26) kin of equal degree of
consanguinity to the
intestate equally without
representation (s. 28)
Newfoundland and To the intestate’s To the brothers and If no siblings, nieces
Labrador parents in equal shares sisters in equal shares or nephews, distribute
or to the survivor (s. 7) with representation to among the next of
their children (ss. 8-9) kin of equal degree of
consanguinity to the
intestate equally without
representation (s. 10)
Nova Scotia To the intestate’s To the brothers and If no siblings, nieces
parents in equal shares sisters in equal shares or nephews, distribute
or to the survivor (s. 7) with representation to among the next of
their children (ss. 8-9) kin of equal degree of
consanguinity to the
intestate equally without
representation (s. 10)

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WHEN A SPOUSE IS NOT ENTITLED ON AN INTESTACY 5.11

Jurisdiction No Spouse or Issue No Spouse, Issue, or No Spouse, Issue,

Parents Parents, Siblings, or
Issue of Siblings
Prince Edward Island To the intestate’s To the brothers and If no siblings, nieces
parents in equal shares sisters in equal shares or nephews, distribute
or to the survivor (s. 90) with representation to among the next of
their children (ss. 91-92) kin of equal degree of
consanguinity to the
intestate equally without
representation (s. 93)
Yukon To the intestate’s To the brothers and If no siblings, nieces
parents in equal shares sisters in equal shares or nephews, distribute
or to the survivor (s. 83) with representation among the next of kin
to their children (ss. (s. 86)
84–85)
Northwest Territories To the intestate’s To the brothers and If no siblings, nieces
parents in equal shares sisters in equal shares or nephews, distribute
or to the survivor (s. 5) with representation to among the next of kin
their children (s. 6) (s. 7)
Nunavut To the intestate’s To the brothers and If no siblings, nieces
parents in equal shares sisters in equal shares or nephews, distribute
or to the survivor (s. 5) with representation to among the next of kin,
their children (s. 6) distribute equally among
the next of kin of equal
degree of consanguinity
to the intestate and those
who legally represent
them (s. 8)

5.11 WHEN A SPOUSE IS NOT ENTITLED ON AN INTESTACY

Where spouses have separated, whether married or in a common-law relationship,

questions arise as to whether or not the survivor should still be entitled to receive
from an intestate person’s estate. This table identifies the jurisdictions that have
provided guidance on when the surviving spouse or common-law spouse may not be
entitled to receive from an intestate’s estate.

Jurisdiction Disqualification Rule

British Columbia Two persons cease being spouses if an event occurs that causes
an interest in family property as defined in Part 5 of the Family
Law Act to arise or in the case of a marriage-like relationship, one
or both persons terminate the relationship. (s. 2(2))
Spouses are not considered to have separated if, within one year
of separation, they begin to live together again and the primary
purpose for doing so is to reconcile, and they continue to live
together for one or more periods, totalling at least 90 days.
(s. 2(2.1))

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5.11 CHAPTER 5 — INTESTACY

Jurisdiction Disqualification Rule

Alberta A surviving spouse is deemed to have pre-deceased if: (see s. 63)
a) The spouses had been living separate and apart for more than
two years (subject to exception in s. 63(2))
b) The spouses are parties to a declaration of irreconcilability
under the Family Law Act
c) The spouses are parties to a separation agreement or order
See s. 10 of the Adult Interdependent Relationships Act for
events that will terminate a relationship with an AIP.
Saskatchewan The surviving spouse will not share on intestacy if he or she has
left the intestate and is living in adultery at the time of the death
of the intestate. (s. 20)
Manitoba The surviving spouse will not be entitled: (s. 3)
• If married, then separated and either of the following has
occurred:
◦ application for divorce or equalization of assets; or
◦ division of property prior to death.
• If living common law, then any of the following has occurred:
◦ separation of at least three years;
◦ dissolution of a registered relationship;
◦ an accounting or equalization of assets; or
◦ division of property prior to death.
Ontario The legislation is silent.
New Brunswick The legislation is silent.
Newfoundland and Labrador The legislation is silent.
Nova Scotia The surviving spouse will not share on intestacy if he or she has
left the intestate and is living in adultery at the time of the death.
(s. 17)
Prince Edward Island The surviving spouse will not share on intestacy if he or she is
co-habiting in a conjugal relationship with another person at the
time of death. (s. 99)
Yukon Subject to an order by the court otherwise, a surviving spouse is
not entitled if he or she: (s. 94)
(a) had, immediately before the death of one spouse, separated
for not less than one year with the intention of living separate
and apart; and
(b) had not during that period lived together with the intention
of resuming cohabitation.
Northwest Territories • The survivor is not entitled on an intestacy if: (s. 13)
• There has been an application for divorce;
• The parties are separated and there is either an application for
division of property or an agreement with respect to division
of property;
• The surviving spouse was living in a conjugal relationship
with another person; or
• The intestate had entered a spousal relationship with another
person.

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DEFINITION OF SPOUSE AND COMMON-LAW SPOUSE FOR PURPOSES OF INTESTATE SUCCESSION 5.12

Jurisdiction Disqualification Rule

Nunavut The survivor is not entitled on an intestacy if: (s. 13)
• There has been an application for divorce;
• The parties are separated and there is either an application for
division of property or an agreement with respect to division
of property;
• The surviving spouse was co-habiting with another person; or
• The intestate had entered a spousal relationship with another
person.

5.12 DEFINITION OF SPOUSE AND COMMON-LAW SPOUSE FOR PURPOSES

OF INTESTATE SUCCESSION (BY JURISDICTION)

Generally, the term “spouse” is understood to mean a person married to another

person, including same-sex marriages. In many jurisdictions and for purposes of many
different legal rules, common-law relationships are also recognized. However, in order
to be recognized, they must be defined. For purposes of intestacy laws, only seven
jurisdictions have defined spouse to include a common-law spouse or otherwise
recognized the relationship.

British Columbia, Saskatchewan, Manitoba, Yukon, Northwest Territories,

Nunavut: These six jurisdictions provide a definition of “spouse” that applies
for purposes of intestate succession rules. The definitions include a definition of a
“common-law spouse.”These definitions are included in this table.

Alberta: Alberta legislation specifically recognizes adult interdependent partners

(AIPs) for purposes of intestate distributions. However, an AIP is not included in the
definition of “spouse.”

Ontario: The Succession Law Reform Act includes a definition of spouse for purposes
of the [Link] definition does not include common-law [Link] definition is
included in this table. However, it is important to note that the Act includes a unique
definition of “spouse” for purposes of Part V of the Act, which addresses the rights of
support for dependants where there is a Will or on intestacy. This definition includes
common-law spouses.

New Brunswick, Nova Scotia, Newfoundland and Labrador, Yukon: The

legislation in these provinces refers to a “spouse” of the intestate. The legislation
does not define spouse and, as a consequence, does not recognize common-law
relationships for purposes of the intestate succession laws. However, common-law
spouses may have rights under dependant relief legislation or family law legislation.

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5.12 CHAPTER 5 — INTESTACY

Jurisdiction Definition of Spouse*

*All section references are to the legislation listed in 5.9, Provincial Legislation,
unless otherwise noted.
British Columbia “Spouse” is a person married to the deceased or who has lived with the
deceased in a marriage-like relationship for at least two years (s. 2(1)).
Alberta “Spouse” means the spouse of a married person (Interpretation Act, R.S.A.
2000, c. I-8, s. 28(zz.1).
Alberta law also recognizes an “adult interdependent partner” (AIP) as a
distinct relationship. An AIP is not included in the definition of “spouse.” An AIP
is defined in the Adult Interdependent Relationships Act, S.A. 2002, c. A-4.5, as a
person who has:
(a) lived with the other person in a relationship of interdependence
(i) for a continuous period of not less than 3 years, or
(ii) of some permanence, if there is a child of the relationship by birth
or adoption,
or
(b) entered into an adult interdependent partner agreement with the
other person under section 7.
(2) Persons who are related to each other by blood or adoption may only
become adult interdependent partners of each other by entering into an
adult interdependent partner agreement under section 7.
Saskatchewan “Spouse” means the legally married spouse of the intestate, or a person who
cohabited with the intestate continuously for a period of not less than two
years and at the time of death was continuing to cohabit or had ceased to
cohabit within the 24 months before the intestate’s death (s. 2).
Manitoba A spouse is a married person.
“Common-law spouse” is defined in s. 1(1) as
(a) a person who, with the intestate, registered a common-law
relationship under section 13.1 of the Vital Statistics Act, or
(b) a person who, not being married to the intestate, cohabited with him
or her in a conjugal relationship, commencing either before or after
the coming into force of this definition,
(i) for a period of at least three years, or
(ii) for a period of at least one year and they are together the parents
of a child.
Ontario “Spouse” means either of two persons who,
(a) are married to each other, or
(b) have together entered into a marriage that is voidable or void, in good
faith on the part of the person asserting a right under this Act (s. 1)
[See s. 57 for definition of spouse for purpose of Part V Support of
Dependants]
Yukon A spouse is a married person.
“Common law spouse” means either (s.1)
(a) a person who is united to another person by a marriage that, although
not a legal marriage, is valid by common law, or
(b) a person who has cohabited with another person as a couple for at
least 12 months immediately before the other person’s death.

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DEFINITION OF SPOUSE AND COMMON-LAW SPOUSE FOR PURPOSES OF INTESTATE SUCCESSION 5.12

Jurisdiction Definition of Spouse*

*All section references are to the legislation listed in 5.9, Provincial Legislation,
unless otherwise noted.
Northwest Territories “Spouse” is defined in the Family Law Act and means a person who
(a) is married to another person,
(b) has together with another person entered into a marriage that is
voidable or void, in good faith on the part of the person asserting a
right under this Act, or
(c) has lived together in a conjugal relationship outside marriage with
another person, if
(i) they have so lived for a period of at least two years, or
(ii) the relationship is one of some permanence and they are together
the natural or adoptive parents of a child.
Nunavut “Spouse” means a person who: (s. 1)
(a) was married to the person who died intestate,
(b) was married to the person who died intestate in a marriage that was
voidable or void, and had entered that marriage in good faith, or
(c) was cohabiting, outside marriage, with the person who died intestate,
if they
(i) had cohabited for a period of at least two years, or
(ii) had cohabited in a relationship of some permanence and were
together the natural or adoptive parents of a child.

5-41
 CHAPTER 6
CLAIMS AGAINST ESTATES BY FAMILY MEMBERS

LEARNING OBJECTIVES

6.1 INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-5

6.2 SPOUSAL RIGHTS TO PROPERTY AND SUPPORT . . . . . . . . . . . . . . . . . . 6-6

6.3 PROVINCIAL RIGHTS IN RESPECT OF PROPERTY ON

DEATH OF A SPOUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-7
6.3.1 Alberta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-8
6.3.2 Saskatchewan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-9
6.3.3 Manitoba . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-10
6.3.4 Ontario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-11
6.3.5 Quebec . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-12
6.3.6 New Brunswick . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-13
6.3.7 Nova Scotia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-14
6.3.8 Newfoundland and Labrador . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-15
6.3.9 Northwest Territories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-17
6.3.10 Nunavut . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-18
6.4 ESTATE PLANNING AND THE PROPERTY CLAIM OF A SPOUSE . . . 6-19
6.4.1 Exceptions for Inherited Property, Gifts, and the
Family Home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-19
6.4.2 Protecting an Estate Plan from the Potential Claims of
a Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-19
6.4.3 Protecting an Inheritance of a Beneficiary from the
Potential Claims of a Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-20
6.5 CLAIMS UNDER DEPENDANT RELIEF LEGISLATION . . . . . . . . . . . . . . 6-21
6.5.1 Eligibility for Claim — General Comments . . . . . . . . . . . . . . . . . 6-21
6.5.2 Definition of Dependant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-21
6.5.3 Married Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-22
6.5.4 Common-law Spouses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-22

6-1
 6.5.5 Claims by Children . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-24
[Link] Minors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-24
[Link] Adult Children . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-24
6.5.6 Other Dependants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-25
6.5.7 Contracting Out of Dependant Relief Legislation . . . . . . . . . . 6-26
6.5.8 Court Awards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-27
[Link] Types of Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-27
[Link] Criteria Considered by the Court . . . . . . . . . . . . . . . . . . . . 6-27
[Link] Additional Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-27
6.5.9 Assets Used to Satisfy Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-28
6.5.10 Claims on Behalf of Minors and Incapable Adults . . . . . . . . . . 6-29
6.5.11 Rights of Governments to Make Claims . . . . . . . . . . . . . . . . . . . . 6-30
6.6 DOWER AND CURTESY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-30

6.7 MORAL OBLIGATION: TATARYN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-31

6.7.1 Tataryn and Moral Obligation in Jurisdictions Outside
British Columbia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-35
[Link] Alberta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-35
[Link] Saskatchewan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-35
[Link] Manitoba . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-36
[Link] Ontario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-36
[Link] New Brunswick. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-37
[Link] Prince Edward Island . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-38
[Link] Nova Scotia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-38
6.7.2 General Comments on Tataryn and Its Long-term Impact . . . .6-38
6.8 DEPENDANT RELIEF LEGISLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-40

6.9 SPOUSAL RIGHTS LEGISLATION (FAMILY LAW LEGISLATION) . . . 6-40

6.10 LIMITATION PERIODS — SPOUSAL CLAIMS AND

DEPENDANT RELIEF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-41

6.11 COMMON-LAW RELATIONSHIP CRITERIA BY JURISDICTION . . . . . 6-42

6.12 AGE OF MAJORITY BY JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-42

6-2
6.13 SUMMARY OF WHO QUALIFIES AS A DEPENDANT BY
JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-43

6.14 DEFINITION OF SPOUSE FOR PURPOSES OF

DEPENDANT RELIEF LEGISLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-44

6.15 SUMMARY OF DEPENDANT ENTITLEMENT AND

CRITERIA CONSIDERED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-45

6.16 EXAMPLE OF TYPES OF DEPENDANT RELIEF AWARDS

FOUND IN LEGISLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-47

6-3
 Chapter 6
Claims Against Estates by
Family Members

Learning Objectives

Knowledge Objectives
• Understand the potential claims that can be made against an estate by family
members

Skills Objectives
• Describe the claims that can be made by a spouse or partner under family law
• Describe the claims that can be made under dependant relief legislation
• Explain other claims that may be made by family members

6.1 INTRODUCTION

In addition to creditors for debts of the deceased and the estate, family members may
have an enforceable right to make a claim against an estate. This chapter will deal
with two such claims that are provided for by statute: spouse claims in respect of
property and family member claims for support referred to as dependant relief.

Good estate planning will take potential claims of family members into consideration.
An individual, who does not take into account the legal rights of dependants or other
family members in executing his or her estate plan, will expose his or her estate to
the threat of a claim and litigation, with its accompanying costs, delay, and conflict.
The estate’s legal costs of dealing with a claim and those of a successful claimant
may reduce the assets available for distribution. The plan of distribution of property
on death under the Will may be disrupted. Executors and administrators must also

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6.2 CHAPTER 6 — CLAIMS AGAINST ESTATES BY FAMILY MEMBERS

be aware of these claims and obtain releases or otherwise resolve any potential
outstanding claim as part of their administrative duties. The emotional toll on family
members may leave a family torn [Link] is seldom the legacy an individual would
like to leave.

The overlapping rights of different family members and the competing claims in
respect of property, intestate distribution, and dependant relief can be difficult to
unravel. Priority may be given to specific rights in the legislation, but the details
are beyond the scope of these materials. In general, spousal rights to property
take priority over other claims, but significant differences may still exist among
jurisdictions. For example, spousal rights in Ontario to net family property and in
Quebec to family patrimony take precedence over any distribution in the Will or on
intestacy, but “double dipping” with rights under the Will is not permitted in Ontario,
whereas it is in Quebec.

Although property rights may take priority, the right to dependant relief may exist in
addition to the spousal right to property where the result is inadequate. For example,
in Ontario, it is possible to make a claim for property and make a further claim for
dependant relief with the result that a surviving spouse may be entitled to no less
than the provincial formula for property but may be entitled to an additional amount
under dependant relief.1

6.2 SPOUSAL RIGHTS TO PROPERTY AND SUPPORT

In every province, married persons, and to some extent common-law partners, have
financial rights arising from their relationship and some of these rights are recognised
on death.

In addition to rights to support, division of property, and rights to the matrimonial

home during lifetime, a surviving spouse has a potential claim against the estate of
the deceased spouse or partner. The details vary by province (or territory), as these
rights fall under provincial jurisdiction, but they generally include rights to make a
claim in respect of division of property and a claim in respect of support where a
spouse has not been adequately provided for.

A spouse and dependent child and certain other family members may also have
rights to support that are enforceable during lifetime or on [Link] right in respect
of support from a deceased person is generally available under dependant relief

1 Schnurr, Estate Litigation, 2nd ed. (Eagan, MN: Westlaw, Estates &Trusts Source, 2010) at 4.12.

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PROVINCIAL RIGHTS IN RESPECT OF PROPERTY ON DEATH OF A SPOUSE 6.3

legislation (see 6.8, Dependant Relief Legislation). The right to a claim in respect of
property of a spouse generally arises under family law legislation (see 6.9, Spousal
Rights Legislation (Family Law Legislation)).

In some jurisdictions, such as Manitoba, Ontario, and Quebec, the claim in respect
of property is subject to a specific formula that can be deviated from only at the
discretion of the court where there are special circumstances. In other jurisdictions,
the rule of thumb is that property is to be divided equally between the spouses or
common-law partners, but this also can be varied at the discretion of the court. The
property that is subject to a claim in respect of property also varies by jurisdiction.
In some provinces, such as Ontario, all property including investments and business
assets are included, whereas in other provinces, such as New Brunswick, only
property used or enjoyed by the family is subject to a claim.

The right to make a claim against an estate for support or division of property may
be in addition to the right to a share of the estate of a spouse or common-law partner
who dies without a Will.

The right to make a property claim on death does not exist in British Columbia,
Prince Edward Island, and Yukon.

In Alberta, the surviving spouse may only make a claim if the spouse had a right
to make an application for a division of family property at the time of the death.
Generally this requires that the spouses be separated or divorced at the date of
death. Adult interdependent partners or common-law partners must have entered an
agreement prior to the death in order to make an application.

For the limitation periods to make claims against an estate, see 6.10, Limitation
Periods — Spousal Claims and Dependant Relief.

6.3 PROVINCIAL RIGHTS IN RESPECT OF PROPERTY ON DEATH OF A

SPOUSE

The rules in the provinces that provide for the surviving spouse to make a claim are
briefly summarized below for each jurisdiction.2

STUDY NOTE: Students are responsible for the rules for their jurisdiction only.

2 For a more detailed jurisdiction-by-jurisdiction summary of a spouse’s rights on death where there is a Will,
on intestacy, under family law, and under dependant relief legislation, see Van Cauwenberghe at Chapter 19.

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6.3.1 CHAPTER 6 — CLAIMS AGAINST ESTATES BY FAMILY MEMBERS

Where common-law spouses are not recognized for purposes of the relevant
legislation, it will be necessary to look to the dependant relief legislation and/or
whether or not a constructive trust claim can be made.

6.3.1 Alberta

Definition of Spouse: Legally married persons. Adult interdependent partners may

also agree to a division in a written agreement.

Limitation Period: Within six months of the date the grant of probate or
administration was issued.

Rights: Apply for an order for a division of family property. At the time of death, the
surviving spouse may only make a claim if the spouse was entitled to make the claim
before the date of death. Generally this requires that the spouses were separated
or divorced. Nothing in the Act affects the rights to make an application under the
Dependants Relief Act.3

Property Included: All assets acquired during the marriage.

Property Excluded: The value of certain property at the later of the time of the
marriage or when the spouse acquired the property is excluded for: property
received as a gift or inheritance; property acquired before the marriage; an award or
settlement in favour of the spouse for damages arising in tort (e.g., negligence); and
proceeds of an insurance policy that is not insurance for loss of property and is not
compensation for a loss to both spouses.4

Principle of Division: The court will distribute the property in a manner that
it considers just and equitable.5 The court will consider any benefit that is already
provided for in the Will or under an intestacy if there is no Will.

Marriage Contract: The Act provides for recognition of written agreements

between spouses.6 In addition, agreements between adult interdependent partners
will be recognized.

3 See Alberta’s Matrimonial Property Act (MPA-A), s. 18.

4 See MPA-A, s. 7(2), for specific language.
5 See MPA-A, s. 7(3), and related provisions for further detail. Section 8 identifies matters to be considered.
6 See MPA-A, s. 37, for details.

6-8
PROVINCIAL RIGHTS IN RESPECT OF PROPERTY ON DEATH OF A SPOUSE 6.3.2

Priority: Money transferred to a spouse is deemed to have never been part of the
estate with respect to claims from a beneficiary under a Will or intestacy or dependant
relief.7

6.3.2 Saskatchewan

Definition of Spouse: The definition includes legally married spouses and two
persons who are cohabiting or have cohabited as spouses continuously for a period
of not less than two years.8

Limitation Period: Within six months of the date of the grant of probate or
administration.9

Rights: Apply for an order for a division of family property. Nothing under the Act
affects the right of the surviving spouse to make a dependant relief claim and the
two actions may be joined.10

Property Included: Family property includes any real or personal property owned
by one or both spouses. The family home and household goods are included even if
acquired before the relationship.

Property Excluded: The value of property owned at the commencement of the

relationship and gifts and inheritance before the relationship (except the family
home and household goods) are [Link] courts have a discretion to determine
what is included and what is not.

Principle of Division: Equal division of family property unless unfair or unjust.11

The court may consider the surviving spouse’s entitlement under a Will, but the
legislation specifically provides that the court should not consider the entitlements
under an intestacy.12

Marriage Contract: Inter-spousal contracts are recognized.13

7 See MPA-A, s. 15.

8 See Saskatchewan’s Family Property Act (FPA-S), s. 2, for the full definition.
9 See FPA-S, s. 30(2).
10 See FPA-S, s. 37.
11 See FPA-S, s. 21.
12 See FPA-S, s. 30(3). Section 35 also makes it clear that where a family property order is made, the money paid
or property transferred is deemed to have never been part of the estate.
13 See FPA-S, s. 38.

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6.3.3 CHAPTER 6 — CLAIMS AGAINST ESTATES BY FAMILY MEMBERS

Priority: Money transferred to a spouse is deemed to have never been part of the
estate with respect to claims from a beneficiary under a Will or intestacy, dependant
relief, under the Fatal Accidents Act, or any creditor of the deceased or of the estate.14

6.3.3 Manitoba

Definition of Spouse: Legally married persons and common-law partners who have
registered a common-law relationship under the Vital Statistics Act15 or who have
cohabited in a conjugal relationship for a period of at least three years.16

Limitation Period: Within six months of the date of the grant of probate or
administration.17

Rights: The spouse has a right to an equalization of assets, subject to a variation of

the equal division by the court.18 The spouse’s rights to take under the Will after the
equalization are not affected,19 and the rights are in addition to any rights under the
Homesteads Act.20 The rights under the Act are also paramount to rights under the
Intestate Succession Act.21

Property Included: Generally, the definition includes all property owned by the
spouses or common-law partners, or either of them.22 Specific assets that will be
included if the survivor did not receive adequate consideration include property held
jointly with right of survivorship and registered accounts and life insurance with
designations other than the surviving spouse.23

Property Excluded: The legislation specifically excludes jointly held property

subject to the exception noted above. Also excluded are assets acquired during the
marriage or cohabitation while living separate or unmarried. However, a number
of scenarios are set out where assets may still be caught.24 The legislation also lists

14 See FPA-S, s. 35, for details.

15 Vital Statistics Act, C.C.S.M., c. V60.
16 See Manitoba’s Family Property Act (FPA-M), s. 1, definition, and additional rules set out in s. 2.1.
17 See FPA-M, s. 29, subject to the court granting an extension of time (s. 29(2)). Section 32(1) permits a
distribution before six months if the spouse or common-law partner consents.
18 See FPA-M, ss. 13 and 14; and Part IV.
19 See FPA-M, s.43.
20 See FPA-M, s. 44.
21 C.C.S.M., c. I85. See FPA-M, s. 43.1.
22 See FPA-M, s. 3.
23 See FPA-M, s. 35(1), for full list and details.
24 See FPA-M, s. 37, for more details.

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PROVINCIAL RIGHTS IN RESPECT OF PROPERTY ON DEATH OF A SPOUSE 6.3.4

a number of assets that are excluded, including certain gifts, insurance benefits,
inheritances, and court damage awards.25

Principle of Division: Equal division of family assets. An unequal division may be

made if an equal division would be grossly unfair or unconscionable. An unequal
division of commercial assets may be made if certain criteria is met. The conduct of
the parties is not a consideration for unequal division of any asset unless the conduct
amounted to a dissipation of assets. The court may also vary a trust in the Will in
order to satisfy the share of the spouse on an equalization.26

Marriage Contract: Assets may be excluded by a spousal agreement or common-law

relationship agreement.27

Priority: On death, the division of assets is treated as a debt of the estate. As such, it
takes priority over the Will and any claim for dependant relief.28

6.3.4 Ontario

Definition of Spouse: Persons who are legally married. Common-law spouses are
not recognized for purposes of this statute.

Limitation Period: Six months from the date of death.29 If an election is not made,
the surviving spouse is deemed to have elected to take under the Will or intestate
provisions.

Rights: Upon death, whether the deceased left a Will or the estate is distributed under
the intestacy rules, the surviving spouse may elect to take his or her entitlement
under the Will or intestacy, or take an equalization payment under the Family Law
Act.30

Property Included: Net family property includes all property owned at the date of
death unless excluded. If property was owned prior to the marriage, the increase in

25 See FPA-M, ss. 7 and 8. The details are beyond the scope of this course. However, students are encouraged to
become familiar with the provisions.
26 See FPA-M, s. 41(4).
27 See FPA-M, s. 27(3).
28 See FPA-M, s. 41.
29 See Ontario’s Succession Law Reform Act (SLRA-O), s. 61(1).
30 See Ontario’s Family Law Act (FLA-O), ss. 4-6.

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6.3.5 CHAPTER 6 — CLAIMS AGAINST ESTATES BY FAMILY MEMBERS

value is included. The matrimonial home, or homes, will be net family property no
matter how or when acquired.31

Property Excluded: Net family property excludes the value of property that can be
traced to a gift or inheritance received during marriage. If a gift or an inheritance is
spent or mixed with other family funds, the protection may be lost. If a beneficiary
wants to protect the amount received by inheritance from the potential claims of a
spouse, it is important that the inheritance be preserved in some form and kept in a
separate account so that it is not mixed with other family funds or assets.

Principle of Division: On marriage breakdown or death, there is a right to an

equalization payment for net family property on a 50/50 basis.32

Marriage Contract: Domestic contracts are recognized.

Priority: The spouse’s entitlement is in priority to gifts under the Will, intestate
beneficiary rights, and orders for the support of dependants, except for an order in
favour of a child of the deceased.33

6.3.5 Quebec

Definition of Spouse: Spouses are limited to legally married persons and couples
who have formally entered a civil union.34 De facto spouses are not recognized.

Limitation Period: The Civil Code of Québec does not set out a limitation period.
All spouses or civil union partners are entitled to a division of the family patrimony
on death.

Rights: The total value of the assets included in the family patrimony that are owned
by the spouses is determined. If the deceased owned more than the surviving spouse,
the estate will owe an equalization [Link] the survivor will owe funds
to the estate. Either may renounce their rights at the time of the death.35

31 See FLA-O, s. 4, definitions.

32 For example, if the deceased spouse’s assets totalled $700,000 and the surviving spouse’s assets totalled
$300,000, the total value of family property is $1 million. One-half is $500,[Link], the estate will owe
an equalization payment to the surviving spouse of $200,[Link] surviving spouse, having elected under the
FLA, will no longer take any entitlements under the Will or on intestacy.
33 See FLA-O, s. 6(12).
34 See the Civil Code of Québec (C.C.Q.), art. 521.6, for the authority for a person in a registered civil union to
make an application.
35 See C.C.Q., art. [Link] renunciation must be made by notarial act en minute.

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PROVINCIAL RIGHTS IN RESPECT OF PROPERTY ON DEATH OF A SPOUSE 6.3.6

Property Included: The assets included in the patrimony are limited. They include
the following property: residences of the family or rights that confer use of the
residences, movable property with which residences are furnished or decorated,
motor vehicles for family travel, and benefits accrued during the marriage under a
retirement plan.36

Property Excluded: Anything that is not family patrimony is [Link] includes

the value of investments (other than in pension plans). The net value of the family
patrimony is reduced by the value of assets owned before marriage and property
received by gift or inheritance. Property received by gift or inheritance may be
excluded unless mixed with family patrimony and cannot be traced.

Principle of Division: See Rights above.

Marriage Contract: The right to family patrimony cannot be circumvented by a

marriage contract or a Will.

Priority: This right is an absolute entitlement and the spouse is entitled to the
payment out of the estate in priority to any entitlement under the Will or intestate
distribution, unless the spouse renounces the right.37

6.3.6 New Brunswick

Definition of Spouse: The definition is limited to married spouses.38

Limitation Period: Four months from the date of death.39

Rights: Division of marital property in equal [Link] spouse may also apply for an
order vesting his or her interest in the marital home and household goods necessary
for use and enjoyment.40 See Principle of Division for variation of the Will.

Property Included: Property that is marital property is defined to only include as

family assets property used or enjoyed by both spouses or one or more of the children
while the spouses were cohabiting. It includes the marital home, money used for
family expenses, and shares in a corporation that holds a family asset. Property that is

36 See C.C.Q., art. 415.

37 See C.C.Q., art. 423.
38 See New Brunswick’s Marital Property Act (MPA-NB), s.1, definitions.
39 See MPA-NB, s. 4.
40 See MPA-NB, s. 4.

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6.3.7 CHAPTER 6 — CLAIMS AGAINST ESTATES BY FAMILY MEMBERS

not marital property might be included in the division if a spouse would otherwise
be left destitute.

Property Excluded: Business assets, gifts, and investments are excluded. Assets can
be excluded where it would be unfair or unreasonable otherwise. Inherited property
is excluded along with income generated by the inheritance, no matter when
received, unless it has become marital property (i.e., it has been used or enjoyed
by family).41 For example, a portfolio inherited from a parent could be tainted if the
income is used to support the family.

Principle of Division: A married spouse has a right to an equal division of the

family assets. The division may be adjusted in the discretion of the court based
on circumstances and where an equal division is determined to be inequitable.
Factors that might merit a different division include the duration of the marriage or
relationship, and the extent to which property was acquired by gift or [Link]
court may also vary the terms of the Will further to “best represent the distribution
that the testator would have made if, in the will, the testator had left to the surviving
spouse the property that the surviving spouse will receive under the order of the
court.”42

Marriage Contract: Assets can be excluded by domestic contract.43

Priority: The rights to division of property supersede any right on intestacy or claim
for dependant relief.44

6.3.7 Nova Scotia

Definition of Spouse: Defined as “either of a man and woman who are married to
each other.”45 Note: Despite the definition of spouse in the Act, Nova Scotia counsel
advises that lawyers in the province proceed on the assumption that all legally
married couples are treated the same and that judges will so apply the law.

Limitation Period: Six months from the grant of probate or administration.46

41 See definition of marital property in MPA-NB, s. 1.

42 See MPA-NB, s. 4(8).
43 See MPA-NB, Part 3 beginning at s. 33.
44 See MPA-NB, s. 4(6).
45 See Nova Scotia’s Matrimonial Property Act (MPA-NS), s. 1(g).
46 See MPA-NS, s. 12(2).

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PROVINCIAL RIGHTS IN RESPECT OF PROPERTY ON DEATH OF A SPOUSE 6.3.8

Rights: Apply to have family assets divided in equal shares.47 This right is in
addition to any remaining rights under the deceased spouse’s Will or on an intestate
distribution.48 The legislation is silent on rights to apply for dependant relief.

Property Included: Matrimonial assets are restricted to the matrimonial home or

homes and all other real and personal property acquired during the relationship.49

Property Excluded: Matrimonial assets exclude business assets and property

received by gift or inheritance if it has been kept entirely separate from assets used
by or to support the family.50 Protection is lost, for example, if an inheritance is used
to purchase a family home, pay family expenses, or the income from the inheritance
is used for any family expenses or purposes.

Principle of Division: Equal shares. The division may be adjusted or may include
non-matrimonial assets at the court’s discretion where equal shares would be unfair
or unconscionable; discretion is determined by taking into account a number of
circumstances set out in the legislation.51 The legislation also sets out the types of
orders the court may make.52

Marriage Contract: Marriage contracts that are in writing are recognized.53

Priority: The legislation is silent on priority of the surviving spouse’s entitlements in

respect to claims of beneficiaries, dependants, and creditors.

6.3.8 Newfoundland and Labrador

Definition of Spouse: The definition is limited to married spouses.54

Limitation Period: One year after the first spouse’s death.55

47 See MPA-NS, s. 12(1).

48 See MPA-NS, s. 12(4).
49 See MPA-NS, s. 4, for full details.
50 See MPA-NS, s. 4(1), for full list.
51 Students from Nova Scotia are referred to MPA-NS, s. 13, in order to become familiar with the types of
considerations that the court will consider when asked to make an unequal division of assets.
52 See MPA-NS, s. 15.
53 See MPA-NS, ss. 23 and 24.
54 See Newfoundland and Labrador’s Family Law Act (FLA-NL), s. 2(e), definitions.
55 See FLA-NL, s. 21(3)(c).

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6.3.8 CHAPTER 6 — CLAIMS AGAINST ESTATES BY FAMILY MEMBERS

Rights: Equal division of matrimonial assets. The rights are in addition to rights
under a Will or intestacy.56 Note that the Act creates a joint tenancy with right of
survivorship in the matrimonial home. As a result, title may pass with a grant of
probate of administration.57

Property Included: Matrimonial assets are defined and include all real and personal
property acquired by either or both spouses during the marriage; the matrimonial
home even if acquired before the marriage or by gift,58 settlement or inheritance; and
assets owned by a company that would be matrimonial assets if owned directly by
the spouse.59

Property Excluded: Excluded property includes gifts, inheritances, trusts, or

settlements received by one spouse from a person other than the other spouse and
an appreciation in value during the marriage, personal injury awards except for
the portion representing economic loss, personal effects, business assets, property
exempted by a marriage or separation agreement, family heirlooms, and real and
personal property acquired after separation.60

Principle of Division: A married spouse has a right to an equal division of the

matrimonial assets. The division may be adjusted in the discretion of the court based
on circumstances and where an equal division is determined to be grossly unjust or
unconscionable taking into account a list of factors set out in the legislation, including
income-earning capacity and other financial resources, financial needs, age, duration
of marriage, physical or mental disability, and contribution by the spouses.61

Marriage Contract: Assets can be excluded by a marriage or separation agreement.62

Priority: The legislation is silent on priority of the surviving spouse’s entitlements in

respect to claims of beneficiaries, dependants, and creditors.

56 See FLA-NL, s. 21(1) and (2).

57 See FLA-NL, s. 8.
58 But, see also rights to matrimonial home as joint tenant on death.
59 See FLA-NL, s. 18.
60 See FLA-NL, s. 18(1)(c), and subject to exceptions for certain business assets and the matrimonial home.
61 See FLA-NL, s. 22.
62 See FLA-NL, s. 18(1)(c)(v). See also ss. 62-64 on marriage, cohabitation, and separation agreements. See also
ss. 33 and 34.

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PROVINCIAL RIGHTS IN RESPECT OF PROPERTY ON DEATH OF A SPOUSE 6.3.9

6.3.9 Northwest Territories

Definition of Spouse: Married persons and common-law couples who have been
living together for at least two years or where they are in a relationship of some
permanence and are the natural or adoptive parents of a child.63 The legislation also
addresses situations where there may be more than one spouse and/or common-
law partner by giving the court authority to make an order it considers fair and
equitable.64

Limitation Period: Six months from the date of the grant of probate or administration.65

Rights: The spouse is entitled to an equalization of net family property.66 The spouse
must elect to take under the legislation or the Will or intestate distribution scheme.67
If the spouse is occupying the family home but is not entitled to it, he or she may
continue to occupy the home for 60 days.68

Property Included: Generally all property is included, but the legislation provides
for some exclusions.69

Property Excluded: Assets that may be excluded include those owned before the
marriage or date after which cohabitation is sufficient to be considered a spousal
relationship, gifts or inheritances, life insurance policy proceeds, property excluded
by a domestic contract, and damages received for personal injuries or harm.70

Principle of Division: Equal division of net family property. The court may adjust
the amount. A number of factors that may be considered are set out in the statute.71

Marriage Contract: Marriage contracts are recognized.72

63 See the Northwest Territories’ Family Law Act (FLA-NWT), ss. 1 and 37(17).
64 See FLA-NWT, s. 37(17).
65 See FLA-NWT, s. 38(3).
66 See FLA-NWT, s. 36.
67 See FLA-NWT, s. 37.
68 See FLA-NWT, s. 57.
69 See FLA-NWT, s. 35, for details.
70 See FLA-NWT, s. 35(2), for details.
71 See FLA-NWT, s. 36(6).
72 See FLA-NWT, ss. 3 and 4.

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6.3.10 CHAPTER 6 — CLAIMS AGAINST ESTATES BY FAMILY MEMBERS

Priority: The spouse’s rights are in priority to claims by beneficiaries under a Will or
intestacy or claims for dependant relief.73

6.3.10 Nunavut

Definition of Spouse: Married persons and common-law couples who have been
living together for at least two years or where they are in a relationship of some
permanence and are the natural or adoptive parents of a child.74 The legislation also
addresses situations where there may be more than one spouse and/or common-
law partner by giving the court authority to make an order it considers fair and
equitable.75

Limitation Period: Six months from the date of the grant of probate or
administration.76

Rights: The spouse is entitled to an equalization of net family property.77 However,

the spouse must elect to take under the legislation or the Will or intestate distribution
scheme.78 If the spouse is occupying the family home but is not entitled to it, he or
she may continue to occupy the home for 60 days.79

Property Included: Generally all property is included, but the legislation provides
for some exclusions.80

Property Excluded: Assets that may be excluded include those owned before the
marriage or date after which cohabitation is sufficient to be considered a spousal
relationship, gifts or inheritances, life insurance policy proceeds, property excluded
by a domestic contract, and damages received for personal injuries or harm.81

Principle of Division: Equal division of net family property. The court may adjust
the amount. A number of factors that may be considered are set out in the statute.82

73 See FLA-NWT, s. 37(9).

74 See Nunavut’s Family Law Act (FLA-N), ss. 1 and 37(17).
75 See FLA-N, s. 37(17).
76 See FLA-N, s. 38(3).
77 See FLA-N, s. 36.
78 See FLA-N, s. 37.
79 See FLA-N, s. 57.
80 See FLA-N, s. 35, for details.
81 See FLA-N, s. 35(2), for details.
82 See FLA-N, s. 36(6).

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ESTATE PLANNING AND THE PROPERTY CLAIM OF A SPOUSE 6.4.2

Marriage Contract: Marriage contracts are recognized.83

Priority: The spouse’s rights are in priority to claims by beneficiaries under a Will or
intestacy or claims for dependant relief.84

6.4 ESTATE PLANNING AND THE PROPERTY CLAIM OF A SPOUSE

6.4.1 Exceptions for Inherited Property, Gifts, and the Family Home

Generally each province has laws that may limit the right of a spouse to make a claim
against inherited property on marriage breakdown or [Link] laws are generally
narrowly interpreted and many exceptions exist. For example, it may be necessary to
keep the inheritance separate from other property since the protection can be lost if
the inheritance is mixed with family assets or otherwise used to support the family.
The degree to which tracing assets is required back to the time of the inheritance
varies from jurisdiction to jurisdiction.

Any property used as a residence, including a recreational property, may be subject to

special rights that attach to a matrimonial home, patrimony, or homestead property
depending on the province.

6.4.2 Protecting an Estate Plan from the Potential Claims of a Spouse

Individuals should take the potential claim of a spouse, partner, or dependant into
account when doing estate planning. One strategy is to ensure that the surviving
spouse receives enough to discourage a claim or to provide for at least as much as
the spouse would be entitled to if a claim were made to decrease the risk that a
claim would be successful. However, such strategies cannot be relied upon entirely
to prevent a claim, as the appropriate amount to discourage or avoid a claim cannot
be calculated precisely. Nor can a claim from a disappointed or dissatisfied spouse (or
any other unhappy beneficiary, for that matter) always be avoided or even anticipated.

In some cases the individual may want to take steps to minimise the impact of such a
claim. This may be possible by entering into a marriage contract (sometimes called a
“domestic contract” or a “pre-nuptial agreement,” although it need not be entered into
before marriage) to limit the rights of a spouse or partner. A marriage contract may
not be recognised in all jurisdictions, and in most jurisdictions a contract to waive
rights to support, including dependant relief on death, is not valid.

83 See FLA-N, ss. 3 and 4.

84 See FLA-N, s. 37(9).

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6.4.3 CHAPTER 6 — CLAIMS AGAINST ESTATES BY FAMILY MEMBERS

A marriage contract may be set aside on any number of grounds, including lack of
independent legal advice, undue influence, and failure to fully disclose financial
information. Where the marriage contract produces a patently unjust result, or there
has been a fundamental change in circumstances, litigation may result in spite of a
marriage contract. The courts may look hard in such a case to determine if there is a
claim under the doctrine of resulting or constructive trust or if there is a valid reason
to set the contract aside.

The use of an inter vivos trust may also be effective to shelter assets from a claim
since generally the assets in the trust will not form part of the estate. Beneficiary
designations for insurance and registered plans and the use of jointly held property
with a right of survivorship may also keep assets outside the estate of the deceased
spouse and provide some insulation from a claim. However, in some provinces these
assets are taken into account when examining a claim and the court may have the
authority under provincial law to order that the assets be made available to satisfy a
claim.

6.4.3 Protecting an Inheritance of a Beneficiary from the Potential Claims of

a Spouse

Parents are often concerned that a son-in-law or daughter-in-law will have a claim
against their child’s inheritance. If a child inherits property directly from a parent,
there is nothing to prevent the child from sharing the inheritance with the spouse or
becoming subject to the influence by the spouse regarding the use of the funds. And
if the child dies and leaves his or her estate to the surviving son-in-law or daughter-
in-law, there is nothing to prevent that surviving spouse from sharing the inheritance
with non-family members or disinheriting the grandchildren in favour of a new
spouse.

If a parent is seriously concerned about the potential claim of a child’s spouse on

marriage breakdown, or that the child needs to be protected from voluntary sharing
with the spouse, a protective testamentary trust may be appropriate. For example, a
trust for the child’s benefit during his or her lifetime with a gift over to grandchildren
or other beneficiaries on his or her death will preserve the estate for the benefit of
these other beneficiaries and still give the testator’s child access to the funds during
his or her lifetime. Such a trust may also provide an opportunity for income tax
savings. One way for parents to provide protection for their children’s inheritance
is to leave the property in a trust or possibly for the beneficiary to transfer the
inheritance to a trust.

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CLAIMS UNDER DEPENDANT RELIEF LEGISLATION 6.5.2

6.5 CLAIMS UNDER DEPENDANT RELIEF LEGISLATION

6.5.1 Eligibility for Claim — General Comments

A child or spouse of the deceased, and certain other family members to whom the
deceased may have had a support obligation, may be entitled to make a claim against
the estate under dependant relief legislation for support or maintenance. Historically
such relief was available only to a traditional “legally married” spouse and children
under the age of majority and applied only if there was a Will. Dependant relief
legislation now extends to a broader category of dependants and, except in British
Columbia and Nova Scotia, applies even on intestacy.

Relief is available if the person qualifies as a dependant under the relevant provincial
(or territorial) legislation and if the deceased individual dies without making adequate
provision for such person. Every province and territory in Canada has enacted some
form of dependant relief legislation. A three-step process determines an award under
a dependant relief claim.

1. Does the person making a claim qualify as a “dependant?”

2. Was adequate provision made in the Will of the deceased or as a result

of an intestate distribution?

3. What form of relief and what amount of relief is appropriate?

6.5.2 Definition of Dependant

The legislation in each jurisdiction defines who may qualify to make a claim under
the legislation, generally referred to as a “dependant.” Generally a spouse, common-law
spouse,85 and minor child of the deceased are considered dependants and therefore
are eligible to make a claim for dependant relief. The term “dependant” is used in this
chapter to refer to a person who is entitled to a claim for dependant relief under
the legislation of the particular jurisdiction. However, each jurisdiction has its own
definition of “dependant” for this purpose, and in many cases actual dependence on
the deceased is not a requirement. In some jurisdictions relief may extend to brothers
and sisters, adult children, parents, grandparents, and grandchildren, although
additional criteria, such as actual dependence or receiving support, may apply for
such persons to qualify.

85 Common-law spouses may not make a claim in Nova Scotia (unless registered as a domestic partner) or
Quebec (unless registered as a civil union), or Newfoundland and Labrador.

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6.5.3 CHAPTER 6 — CLAIMS AGAINST ESTATES BY FAMILY MEMBERS

6.5.3 Married Spouse

The legislation in every jurisdiction allows a spouse of the deceased to apply for
relief as a dependant. Traditionally, a spouse was defined as an individual who is
legally married to another person in an opposite-sex relationship. The definition of
“spouse” has been expanded in various jurisdictions over time to include common-
law partners and same-sex spouses and partners.

In Manitoba, Ontario, Prince Edward Island, and Yukon, a former spouse or partner
(i.e., divorced spouse) of the deceased is also entitled to apply for dependant relief
in certain circumstances (usually where the divorced spouse was still financially
dependent upon the deceased at the time of death).

6.5.4 Common-law Spouses

Common-law partners have a right to make a claim for dependant relief on the same
basis as a spouse in all jurisdictions except Quebec (unless registered as a civil union),
Nova Scotia (unless registered as a domestic partnership), and Newfoundland and
Labrador.

The definitions of common-law spouse vary between jurisdictions. There are three
components to each definition:

1. duration of the relationship,

2. nature of the relationship, and/or

3. whether or not the couple has a child (natural or adopted).

The required duration of a relationship ranges from twelve months to three years.
The period of co-habitation required to be eligible to make a claim for dependant
relief, by jurisdiction, is set out below (see 6.11, Common-law Relationship Criteria by
Jurisdiction). The nature of the relationship for the cohabitation period is described
differently across jurisdictions. The description used, by jurisdiction, is also found in
6.11, Common-law Relationship Criteria by Jurisdiction.

The period of cohabitation is reduced where there is a child of the relationship. Some
specifically recognize adopted children. The exceptions vary by jurisdiction. Some
require a “relationship of some permanence.” Others require a period of cohabitation,
but the duration is reduced.

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CLAIMS UNDER DEPENDANT RELIEF LEGISLATION 6.5.4

For a summary of the definitions of spouse, by jurisdiction, for purposes of the

dependant relief legislation, see 6.14, Definition of Spouse for Purpose of Dependant
Relief Legislation. In many cases the definition is the same as the definition under the
family-law legislation discussed above.

Alberta: In Alberta, a common-law spouse is referred to as an “adult interdependent

partner” (AIP).86 In addition to the required three-year cohabitation period, AIPs must
be in a relationship of interdependence with each [Link] requires that they share
one another’s lives, are emotionally committed to one another, and function as an
economic and domestic unit. Furthermore, an unmarried couple who do not meet
the cohabitation requirement, or do not have a child together, may qualify as AIPs if
they enter into an adult interdependent partner agreement.

Manitoba: Couples who do not meet the cohabitation requirement may register
their common-law relationship under the Vital Statistics Act.87 This ensures that the
spouses will have the same rights as a common-law couple who has lived together
for the required period of time.

Quebec: Common-law couples who are not married are referred to under the law as
“de facto couples.” The surviving member of a de facto couple has no rights arising
on death in respect of their relationship for property, intestacy, or dependant relief.
However, de facto couples can enter into a legal institution unique to Quebec that is
referred to as a “civil union.”

Nova Scotia: Common-law couples who are cohabiting or intend to cohabit in a

conjugal relationship may register as domestic partners under the Vital Statistics
Act.88 If the relationship has been registered, the surviving spouse has the same rights
and obligations as married persons on death.

Two people can enter into a civil union if both parties are competent and have
reached the age of majority. A declaration of civil union is made before the Registrar
of Civil Status, who may then issue a formal Act of Civil Union, which is similar to a
marriage certificate. Once a couple has entered into a civil union, they have the same
rights as legally married couples under Quebec law, including the right to apply for
dependant relief.

86 Defined under the Adult Interdependent Relationships Act, S.A. 2002, c. A-4.5.
87 C.C.S.M., c. V60, s. 13.1.
88 R.S.N.S. 1989, c. 494, s. 53.

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6.5.5 CHAPTER 6 — CLAIMS AGAINST ESTATES BY FAMILY MEMBERS

6.5.5 Claims by Children

A child of the deceased may apply for relief in the circumstances described [Link]
definition of a child includes an adopted child and children born outside marriage,
although not all statutes specifically include illegitimate children.

Manitoba and Ontario: A person who was treated as a child by the deceased may
also be included.89

Northwest Territories: A step-child of the deceased is treated as a child.

The rights of children may also depend on whether the child is a minor or an adult.
Adult children are often excluded unless the child is dependant on the deceased
in some way. British Columbia does not have a dependency requirement. A number
of other jurisdictions are silent on whether or not, or when, an adult child may be
eligible to make an application.

[Link] Minors

In all jurisdictions minor children of the deceased are considered

dependants and eligible for dependant relief.90 Applications for a minor
may often be made by a public official on behalf of the minor. Some
jurisdictions permit the parent to make the application for the minor child.
See 6.12, Age of Majority by Jurisdiction, for a list of the ages of majority by
jurisdiction.

Yukon: The age of majority is 19. However, minor children who are 16 or
over qualify as a dependant only if the child is unable, because of mental or
physical disability, to earn a livelihood.91

[Link] Adult Children

Whether or not an adult child may be entitled to make an application

depends on the jurisdiction and the adult child’s circumstances. Many
jurisdictions require an adult child to satisfy a set of criteria that reflects

89 For example, in Ontario, a person to whom the deceased demonstrated a settled intention to treat as a child
of his or her family will be included.
90 See 6.5.10, Claims on Behalf of Minors and Incapable Adults.
91 See Yukon’s Dependants Relief Act (DRA-Y), s. 1, definition of “dependant.”

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CLAIMS UNDER DEPENDANT RELIEF LEGISLATION 6.5.6

some level of dependency or need for further support while attending a

post-secondary institution. The rules are reviewed by jurisdiction below.

Alberta: Adult children are only eligible if they are unable to earn a
livelihood due to a physical or mental disability. Adult children between
18 and 22 who are unable to withdraw from their parents’ charge because
they are full-time students under the Family Law Act and its regulations
are also eligible.92

Manitoba: Adult children are eligible if by reason of illness, disability, or

other cause were, at the time of the deceased’s death, unable to withdraw
from the charge of the deceased or to provide himself or herself with the
necessaries of life, or who was substantially dependant on the deceased.93

Ontario: An adult child may qualify for dependant relief if the child is
a full-time student and has not withdrawn from parental control or the
deceased parent was actually providing support immediately before death.

Saskatchewan, Prince Edward Island, Yukon, Northwest Territories,

and Nunavut: Adult children are eligible if they are unable to earn a
livelihood due to a physical or mental disability.

New Brunswick: An adult child is considered a dependant if unable to

withdraw from the charge of his or her parents or to obtain the necessaries
of life by reason of illness, disability, pursuit of reasonable education, or
other cause.94

6.5.6 Other Dependants

In some jurisdictions, other people in the deceased’s life may qualify as dependants
and be eligible to advance a claim under the applicable dependant relief legislation.
Again, the rules vary. See 6.13, Summary of Who Qualifies as a Dependant by
Jurisdiction, for the additional eligible dependants for each jurisdiction.

STUDY NOTE: Students are responsible for the rules in their jurisdiction.

92 See Alberta’s Wills and Succession Act (WASA-A), definition of dependant at s. 72(b)(v).
93 See Manitoba’s Dependants Relief Act (DRA-M), definition of dependant in s. 1(d).
94 See New Brunswick’s Family Services Act (FSA-NB),s. 113.

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6.5.7 CHAPTER 6 — CLAIMS AGAINST ESTATES BY FAMILY MEMBERS

Manitoba: A brother or sister, parent, grandparent, or grandchild of the deceased

may apply if substantially dependent on the deceased at the time of death.

Ontario: A brother or sister, parent, grandparent, or grandchild of the deceased may

apply if the deceased was actually providing support immediately before death.

Prince Edward Island and Yukon: A parent, grandparent, grandchild, or descendant

may apply if dependent upon the deceased for maintenance and support for at least
three years immediately prior to death.

6.5.7 Contracting Out of Dependant Relief Legislation

Generally it is not possible to contract out of a support obligation to a spouse or

dependant. This restriction extends to dependant relief claims against an estate.
The prohibition has its roots in public policy since the purpose of the legislation
is to provide support for dependants who might otherwise be forced to rely on
government assistance. Contracts between the deceased and a dependant (often
a spouse) that have been considered by the courts relate to agreements between
spouses or common-law partners.

Ontario,95 Prince Edward Island, Nova Scotia, and Yukon: The legislation
specifically makes the waiver of statutory dependant relief rights invalid.

Where there is no statutory prohibition to contracting out of one’s rights under

the legislation, the courts have generally held that a dependant can apply despite
any waiver or release.96 The existence of a domestic contract, marriage contract, or
other waiver or release may also be taken into account, particularly when the court
is determining the form and quantum of relief to be awarded.97 In some jurisdictions,
such as Ontario, the contract, waiver, or release is not enforceable, but its existence is
specifically listed as a factor to be considered, and the courts may be more reluctant
to grant an application where there is a contract renouncing such rights.

Where a couple has separated and a final settlement has been made with respect to
the rights arising from their relationship, there may still be a right to make a claim for
dependant relief. However, the courts may be more inclined to use the terms of the
settlement as a guideline as to what relief, if any, should be granted.98

95 Subject to the discussion in this section, below.

96 See discussion in Feeney at para. 9.23, which reviews differences between provinces.
97 See discussion in Feeney at paras. 9.22-9.25.
98 See Feeney at para. 9.25.

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CLAIMS UNDER DEPENDANT RELIEF LEGISLATION [Link]

6.5.8 Court Awards

[Link] Types of Awards

The legislation gives the court a wide discretion to make any order that
they feel is necessary to provide the dependant with adequate support.
Generally these include a lump sum payment, an annuity for a limited
period or for the life of the dependant, the establishment of a trust for the
benefit of the dependant, or a combination of these.99 Courts tend to prefer
other forms of relief over lump sum payments.100 Examples of the guidance
provided to the courts in legislation are set out below (see 6.16, Example
of Types of Dependant Relief Awards Found in Legislation).

[Link] Criteria Considered by the Court

The courts must determine whether or not the deceased made adequate
provision for the dependant or if the intestate distribution rules are
adequate. The courts are granted wide discretion to inquire into the
circumstances to determine the answer to this question, ranging from the
applicant’s entitlement under the Will or intestacy and assets received
outside of the estate to other factors relevant in the circumstances. The
court also has a wide power to make any order for relief that would be
reasonable, adequate, or just and equitable. For a summary of the criteria
set out in the legislation, see 6.15, Summary of Dependant Entitlement and
Criteria Considered.

The court may refuse to make an order for support even though the
deceased had provided inadequate support to a dependant. This may
occur where, for example, an estate has too few assets to provide adequate
support for all dependants.

[Link] Additional Criteria

Saskatchewan, Manitoba, Ontario, Nova Scotia, and Newfoundland

and Labrador: These provinces have added a list of specific factors

99 Some jurisdictions set out the types of relief that the court may order.
100 For a review of cases and awards for the different jurisdictions, see Widdifield, Chapter 17, Appendix G
“Quantum Tables for Dependant Relief and Spousal Property Claims on Death.” Jurisdictions covered as at
August 2015 are: British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Prince Edward
Island, and Nova [Link] last update to the Appendix appears to have been in 2011.

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6.5.9 CHAPTER 6 — CLAIMS AGAINST ESTATES BY FAMILY MEMBERS

that may be considered in determining whether adequate support has

been made and the amount and duration of any relief. These are always
in addition to the general discretion to consider all circumstances and,
although they vary from province to province, may include:

• needs and standard of living of the dependant;

• obligations of the deceased to others, including other

dependants;

• relationship between the dependant and the deceased and its

duration;

• reasons the deceased did not provide for the dependant;

• needs of other persons;

• size and nature of the estate;

• the conduct of the applicant;

• any agreement, including a marriage contract, between the

deceased and the dependant;

• whether the dependant is receiving support from others,

including government support;101

• any financial contribution made by the dependant to the

deceased; and/or

• intention of the testator.

Quebec: See comments for Quebec above at [Link], Types of Awards.

6.5.9 Assets Used to Satisfy Orders

Generally all property owned by the deceased at the date of death is available to
satisfy a court order under dependant relief legislation. The amount available to
distribute to the beneficiaries under the Will or on an intestacy will be determined
based on the remainder after the liabilities of the deceased and the estate have been

101 In Ontario,“support out of public money” is specifically excluded from the considerations.

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CLAIMS UNDER DEPENDANT RELIEF LEGISLATION 6.5.10

deducted, including payments to spouses under family law entitlements. However,

Ontario, Prince Edward Island, and the three territories do consider property that
was transferred before death or passed outside of the estate.

Ontario: Section 72 of Ontario’s Succession Law Reform Act casts a broader net and
deems the following to be included in the estate of the deceased and available to be
discharged for payment of a dependant relief order:

• gifts mortis causa (made in anticipation of and condition on the

donor’s death);

• deposits in the name of the deceased in trust for another, or in joint

names with the deceased, including those in a bank, savings office,
credit union, or trust company;

• property transferred by the deceased into joint tenancy and owned at

death;

• property transferred by the deceased in trust or to another where the

transfer was revocable by the deceased;

• life insurance proceeds on any policy owned by the deceased; and

• pension benefits or rights, including RRSPs and RRIFs passing under a

beneficiary designation.

Prince Edward Island, Yukon, Northwest Territories, and Nunavut: These

jurisdictions have substantially the same provisions as those included in Ontario,
except for the last item relating to pension beneficiary designations. These
jurisdictions also have provisions that include substantial gifts inter vivos made
within one year of death, or three years in the case of the Northwest Territories and
Nunavut.102

6.5.10 Claims on Behalf of Minors and Incapable Adults

Where a minor child or other incapable adult has a potential claim for dependant
relief, a public official, usually the Public Trustee or Public Guardian and Trustee in
the jurisdiction, will advance the claim. Some jurisdictions may specifically provide

102 See the Northwest Territories’ Dependants Relief Act (DRA-NWT) and Nunavut’s Dependants Relief Act
(DRA-N), s. 21.

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6.5.11 CHAPTER 6 — CLAIMS AGAINST ESTATES BY FAMILY MEMBERS

for this and/or grant authority to a parent or substitute decision maker to initiate the
claim.

6.5.11 Rights of Governments to Make Claims

Some jurisdictions also give certain government agencies the right to make claims
or intervene in [Link] are noted below for students in these jurisdictions.

British Columbia: The Nisga’a Government, and other treaty First Nations
governments, may, where the final agreement provides, commence or intervene in
proceedings where the validity or variation of the Will, or the devolution of cultural
wealth, is at issue.103

Ontario: Government agencies may apply to recover the cost of benefits, assistance,
or other support or maintenance provided to a dependant.104

6.6 DOWER AND CURTESY

“Dower” and “curtesy” are terms that refer to the right of a spouse to receive a life
interest in real property of the other spouse when that other spouse dies.“Dower” is
used when the surviving spouse is female, and “curtesy” is used when the surviving
spouse is male. Dower and curtesy have been abolished in British Columbia, Ontario,
New Brunswick, Prince Edward Island, and Nova Scotia. Dower and curtesy rights
continue to exist in Alberta and Manitoba. Saskatchewan has provisions that require
consent to disposition of the homestead.

Alberta: The Dower Act provides:

18. A disposition by a will of a married person and a devolution on the death

of a married person dying intestate is, as regards the homestead of the
married person, subject and postponed to an estate for the life of the
spouse of the married person, which is hereby declared to be vested in
the surviving spouse.105

Manitoba: The Homesteads Act provides:

21(1) Subject to sections 2.1 and 2.2, when an owner dies leaving a surviving
spouse or common-law partner who has homestead rights in the

103 See British Columbia’s Wills, Estates and Succession Act (WESA-BC), Division 3 — Nisga’a Final Agreement
and First Nations’ Final Agreements (ss. 13-18.3 for details).
104 SLRA-O, s. 26.
105 DA-A. See the legislation for details.

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MORAL OBLIGATION: TATARYN 6.7

property, that person is entitled to a life estate in the homestead as

fully and effectually as if the owner had by will left that spouse or
common-law partner a life estate in the homestead.

21(2) Any disposition of a homestead by the owner’s will is subject to the

spouse’s or common-law partner’s entitlement to a life estate in that
homestead under subsection (1).

22(1) An owner’s spouse or common-law partner may consent to a

disposition of his or her interest in the homestead after the death of
the owner.106

Saskatchewan: Saskatchewan’s Homestead Act107 does not impose a life interest but
does have rules with respect to consent to disposition of the homestead and provides
for a court order.

Example of a Dependant Relief Claim

To illustrate the role that intentions of the testator may play, suppose a testator
made her Will when her estate was worth approximately $1 million. She made
a $200,000 gift to a charitable organisation and the residue of $800,000 to
her spouse. The financial markets suffered a large decline immediately before
the testator died. As a result, her estate was reduced from $1 million to only
$200,000. By the terms of the Will, the $200,000 in the estate will go to charity,
thereby leaving the spouse with nothing. The spouse can apply for support
under dependant relief legislation. In determining whether to allow the
application, the courts will consider the intentions of the testator and that fact
that she had actually intended to leave her spouse the bulk of her estate.

6.7 MORAL OBLIGATION: TATARYN

The existence and enforcement of a “moral obligation” as the basis for a dependant
relief claim has been established in Canada permitting a redistribution of the testator’s
estate even where need is not established. While it is clear that a moral obligation
exists under the Wills, Estates and Succession Act (WESA) of British Columbia, the
extent of the obligation and the degree to which it exists or will be found to exist by
courts in other jurisdictions in Canada is still uncertain. It is fair to say that this is an

106 HA-M. See the legislation for further details.

107 See HA-S, ss. 19 and 20, for more details.

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6.7 CHAPTER 6 — CLAIMS AGAINST ESTATES BY FAMILY MEMBERS

area of law under development, and although some provinces have seemed willing
to apply the principles of moral obligation in making an award, others have rejected
it flatly.

In Tataryn v. Tataryn Estate,108 the Supreme Court found that dependant relief
legislation must be interpreted according to contemporary standards and read in the
light of modern values and expectations and that what is “adequate, just and equitable”
must be viewed in the light of current societal norms. In interpreting statutes, the
court recognised that the statute is “always speaking” and thus what was appropriate
in the past is not meant to restrict the discretion of the court in the present or the
[Link] approach invites a potentially ever-changing basis for relief and uncertain
results.

Once a person was eligible for relief under the legislation, the moral duty test could
be applied, as balanced with but not overruled by the testator’s right to “testamentary
autonomy.” Thus, the concept of moral obligation does not extend the class of
persons who may make a claim, which is confined to the definition in the particular
legislation, but extends the basis upon which an award may be made.

In applying a modern approach to the legislation, the Supreme Court in Tataryn

examined the legislation in its historical perspective and rejected applying a needs
analysis to present-day applications. The court found that need is no longer the
dominating criteria as it may have been when dependant relief legislation was first
introduced in British Columbia in the 1920s. At that time, social conditions were
different; women and children were more vulnerable; the legal rights of married
women and children to property and support were more limited; and the original
purpose of the legislation was to reduce dependence on public relief. Another key
factor in rejecting the needs requirement was the inclusion of adult children in
the category of persons who could apply for relief even though there was no legal
obligation to provide support.

In Tataryn, the Supreme Court of Canada considered an application by one adult son
of the deceased under the British Columbia WESA and found that the distribution
in a testator’s Will should be altered on the basis of a legal obligation owed to the
surviving spouse and a “moral obligation” owed to both the surviving spouse and
the adult children. This case involved a testator and his wife of 43 years. The couple
had two adult sons at the time of his death, John and Edward. The testator wished to

108 [1994] 2 S.C.R. 807.

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MORAL OBLIGATION: TATARYN 6.7

disinherit John and restrict the inheritance left to his wife since he feared she would
pass any property left to her to John.

The Tataryns had lived frugally and saved for their retirement. On Mr. Tataryn’s
death, the bulk of the assets were held in his name, resulting in an estate worth
$315,264.69, consisting of the matrimonial home, a rental property inherited by Mr.
Tataryn from his father, and $122,629.69 in the bank. Mrs. Tataryn had $25,000 in
her own name. The Will provided for a life interest in the matrimonial home to the
wife and a trust for the residue under the control of Edward, with the surviving wife
having a discretionary life interest. After the death of the wife, Edward would receive
everything and John nothing.

The Will contained the following provisions:

I HAVE PURPOSELY excluded my son, JOHN ALEXANDER TATARYN, from any

share of my Estate and purposely provided for my wife by the trust as set out
above for the following reason: My wife MARY and my older son JOHN have
acted in various ways to disrupt my attempts to establish harmony in the
family. Since JOHN was 12 years old he has been a difficult child for me to
raise. He has turned against me and totally ignored me for the last 15 years of
his life. He has been abusive to the point of profanity; he has been extremely
inconsiderate and has made no effort to reconcile his differences with me.
He has never been open to discussion with a view to establishing ourselves
in unity. My son EDWARD is respectable and I commend him for his warm
attitude towards me, his honesty, and his co-operation with me.109

John and the wife brought an application against the estate seeking adequate support
and maintenance under British Columbia’s Wills, Estates and Succession Act. The
Supreme Court of Canada ruled that John and the wife were entitled to relief on
the basis of the testator’s legal duty toward his wife and a moral duty toward his
spouse and adult children. Under the legal duty, the wife was entitled to at least
half the estate and possibly more for maintenance. Under the moral duty, she had
a strong moral claim to the funds set aside for old age. These justified awarding
the wife the bulk of the estate. The court awarded $10,000 to each of Edward and
John and residual interest in the rental property, one-third to John and two-thirds to
Edward, to satisfy their lesser moral claim finding that there was no evidence they
had contributed much to the estate. The wife was to receive title to the matrimonial
home, a life interest in the rental property, and the residue of the estate free from any
trust provisions.

109 Ibid.

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6.7 CHAPTER 6 — CLAIMS AGAINST ESTATES BY FAMILY MEMBERS

The court set out two sorts of current societal norms to address the determination
of what would be adequate, just, and equitable. The first consideration is whether
the deceased has any legal obligation to the applicant, and second is whether the
deceased owes any moral duty toward the applicant.

The court found that an individual has a legal obligation toward his or her spouse and
minor children during his or her lifetime. The legal obligation to a spouse is reflected
in the rights to division of property and support under family law legislation, the
Divorce Act110 of Canada, and under the law of constructive trust. In determining
the dependant relief under the legal obligation, the court should examine, as a
yardstick, any legal obligation the deceased would have had at the time of death if an
application for division of property and support or other provision had been made
during the lifetime of the deceased.

In determining what a testator must do to meet his or her moral obligation or duties,
courts are to resolve the issue considering contemporary morals and values. The
court admitted that in the absence of a clear legal standard, what is required to satisfy
a moral obligation will be different according to the current beliefs and values of
society and may be viewed differently by different people. The court acknowledged
that most people would agree that:

• there is a strong moral obligation to make provision for a dependent

spouse, and

• an adult dependent child is entitled to such consideration as the size

of the estate and the testator’s other obligations may allow.

The court acknowledged that the claim of an adult independent child was more
tenuous. A large body of case law suggests that if the size of the estate permits,
some provision for independent adult children should be made, providing no other
circumstances negate the existence of the moral obligation.

The Tataryn decision also addressed situations where there are multiple legal and
moral claims that conflict. Legal obligations will always take priority over moral
obligations, and different moral obligations are given different weight. For example,
in Tataryn, the court said that the wife was entitled to the bulk of the estate because
of her status as the testator’s spouse and because their marriage was a long one in
which she contributed greatly to the acquisition of the assets in the estate. Although

110 R.S.C. 1985, c. 3 (2nd Supp.).

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MORAL OBLIGATION: TATARYN [Link]

his two sons, John and Edward, also have moral claims against the estate as children
of the testator, their claims are much weaker relative to the wife’s claim and so they
are entitled to a lesser proportion of the estate assets.

6.7.1 Tataryn and Moral Obligation in Jurisdictions Outside British Columbia

Tataryn was a case that originated in British Columbia, and the issues centred around
that province’s Wills, Estates and Succession Act. While the British Columbia courts
have accepted the court’s analysis completely, it has not been strictly followed in
other jurisdictions.

The courts in Alberta, Saskatchewan, Ontario, New Brunswick, and Nova Scotia have
recognised that a dependant relief claim may include a consideration of the moral
obligation owed to the applicant or other dependants of the deceased. However, each
jurisdiction will examine the decision in light of the broad discretion given in the
British Columbia Wills, Estates and Succession Act as it compares with the legislation
in the other jurisdictions.

No cases in Yukon or the Northwest Territories have considered Tataryn.

[Link] Alberta

Following the Tataryn decision, the courts of Alberta considered whether

the principles of that case applied under Alberta’s dependant relief
legislation. The issue was raised in the case of Siegel v. Siegel111 in 1995
and then again in 1998 in Stang v. Stang Estate.112 Both times the court
approved of Tataryn, expressing the general idea that courts should refer
to contemporary societal standards when assessing whether adequate
provisions had been made for dependants.

[Link] Saskatchewan

In Saskatchewan, in Ostrander v. Kimble Estate,113 the court considered

Tataryn and a number of other cases and found that the court could
consider moral obligation, but that the Saskatchewan legislation confined
its application to a needs analysis:

111 (1995), 177 A.R. 282 (Q.B.).

112 [1998] 7 W.W.R. 551 (Alta. Q.B.).
113 (1996), 146 Sask. R. 64 (Q.B.).

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[Link] CHAPTER 6 — CLAIMS AGAINST ESTATES BY FAMILY MEMBERS

In summary, following Tataryn the phrase “reasonable provision”

can no longer be defined as that “which would permit the
dependant to maintain the standard of living enjoyed during the
lifetime of the testator” ... but is to be determined having regard
to the testator’s legal and moral obligations to the dependents and
others within the context of a need maintenance approach and the
provisions of s. 9 of the Act. A more generous award may result.114

[Link] Manitoba

The courts in Manitoba have not followed Tataryn because the legislation,
being based on a needs analysis, is more restrictive than that of the other
jurisdictions. Other jurisdictions have legislation that gives the courts
discretion to grant dependant relief whenever it believed that inadequate
provision had been made by the deceased. In contrast, the legislation in
Manitoba is restricted to assisting those in financial need. Thus the moral
obligation analysis in Tataryn is not applicable. In a case since Tataryn,
for example, the court found that moral duty applicable under previous
legislation had no part in an application under the current Manitoba
dependant relief legislation as the role of the court is limited to responding
to the demonstrated financial needs of the dependant.115

[Link] Ontario

In Ontario, the Cummings116 decision of the Ontario Court of Appeal

examined Tataryn, finding that “adequate provision” was not limited
to a needs-based economic analysis in determining a dependant relief
application and that the moral duty was a relevant consideration in Ontario.
The applicants were the two children of the deceased. The children were
in need of support, but the court refused to set aside the second wife’s
beneficial ownership in the matrimonial home, even though the wife was
not in need of support, on the basis of a moral obligation to the wife. The
question of moral obligation was to be examined in the light of society’s
expectations of what a judicious person would do in the circumstances.

114 Ibid at §34.

115 Lam (Litigation Guardian of) v. Le Estate, [2002] M.J. No. 36 (Q.B.).
116 Cummings v. Cummings, 2003 CanLII 64218, 15 E.T.R. (3d) 81, 223 D.L.R. (4th) 732 (Ont. S.C.); affirmed
2004 CanLII 9339 , 5 E.T.R. (3d) 93, 235 D.L.R. (4th) 474 (Ont. C.A.) (sub nom. Re Cummings Estate); leave to
appeal to Supreme Court of Canada refused.

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MORAL OBLIGATION: TATARYN [Link]

The court observed that society’s expectations are that in addition to

support for children and spouses, spouses will share in each other’s estate
when the marriage is over, and that in examining the reasoning in Tataryn,
these expectations were not confined to British Columbia. This case is
interesting in that the finding of a moral obligation to another person was
the reason for denying relief to the applicant children rather than being a
reason to grant relief.

[Link] New Brunswick

In a number of post-Tataryn cases in New Brunswick, the courts have

indicated their willingness to apply the principles of Tataryn and take into
consideration the moral obligation the deceased owed to dependants in
assessing what constitutes adequate provision.

Currie v. Currie Estate117 and Branch v. Branch Estate118 are two such
cases in which the Queen’s Bench and Court of Appeal of New Brunswick
each considered whether the deceased had satisfied his moral obligations
toward his adult children by making adequate provision for them. In the
Currie case, the deceased had an estranged relationship with his two adult
children and as a result in his Will he left each of them $5.00 and made his
friend the beneficiary of the rest of his estate. The Branch case involved
a deceased with three adult children, the two older children being from a
prior marriage. The deceased provided in his Will for an equal amount to
each of his children, but the youngest child claimed that the deceased had
a moral obligation to provide more for her because he had provided for
the education for the two eldest children during his lifetime in addition
to the testamentary gifts, whereas the youngest child did not receive the
same treatment with respect to her education.

Ultimately, in both Currie and Branch, the courts concluded that the
deceased had fully discharged his moral obligation and declined to vary
the testamentary terms to give the claimant children a greater share of
the estate. These two cases also seem to indicate that the New Brunswick
courts are primarily concerned with protecting testamentary freedom and

117 (1995), 166 N.B.R. (2d) 144 (C.A.).

118 2004 NBQB 258.

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[Link] CHAPTER 6 — CLAIMS AGAINST ESTATES BY FAMILY MEMBERS

will only vary the terms of a Will after finding sufficient justification for
doing so.

[Link] Prince Edward Island

In Prince Edward Island, Tataryn principles were considered in the case of

Keller v. Keller Estate119 and rejected. The court found that the dependant
relief legislation in Prince Edward Island was more restrictive than that in
British Columbia, which precluded the Prince Edward Island courts from
applying Tataryn. The court distinguished the dependant relief legislation
of British Columbia and Prince Edward Island in the following words:

The invitation for the Court to “interfere” with a testator’s wishes is

broader in the British Columbia legislation than it is in the Prince
Edward Island Act. Instead of making such provision it considers
“adequate, just and equitable”, the Dependants of a Deceased
Person Relief Act makes reference only to ordering such provision
as it considers “adequate”.120

The court concluded that the different language used in the two pieces
of legislation means that Prince Edward Island courts may not be able to
apply the Tataryn principles.

[Link] Nova Scotia

In Nova Scotia, in the leading case of Garrett v. Zwicker,121 a case that pre-
dates Tataryn, the Nova Scotia Court of Appeal found that the legal and
moral duty to support a wife and minor children was stronger than the
moral duty to provide for an adult [Link] majority of cases in Nova Scotia
rely on this decision rather than Tataryn in considering moral obligation.122

6.7.2 General Comments on Tataryn and Its Long-term Impact

The Tataryn case enlarged the powers of the courts to grant dependant relief by
allowing courts to consider applications with reference to the deceased’s moral
duties toward the applicant. Courts from other jurisdictions in Canada have applied

119 [2003] P.E.I.J. No. 10 (T.D.).

120 Ibid. at §54.
121 (1976), 15 N.S.R. (2d) 118 (C.A.).
122 CCH Estate Administration Guide at ¶27,205.

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MORAL OBLIGATION: TATARYN 6.7.2

Tataryn to grant dependant relief and have used it as grounds to entirely dismiss a
testator’s intentions by rewriting the Will.123

There is a concern within the estate planning community that Tataryn gives the
courts an overly broad power to rewrite the Wills of testators, thereby introducing
great uncertainty in the field of estate planning. In British Columbia, the principle has
been used to redistribute the testator’s wealth among children in equal shares even
though this was not consistent with the Will. See the example below.

Example of Court in British Columbia Redistributing Inheritance of Adult

Children into Equal Shares

In Dring v. Ziefflie,124 an application was made under the Wills, Estates and
Succession Act in British Columbia. The court redistributed the estate in
equal shares among the five children of the testator on the basis of a moral
obligation to provide equally to all children.

The testatrix died, leaving an estate worth approximately $500,000. Her Will
provided for gifts of $10,000 to each of her three daughters, with the residue
being divided in equal shares among her two sons such that each son was to
receive approximately $235,000 — more than 23 times what each daughter
was entitled to receive.

Two of the daughters brought an application for dependant relief. The court
held that the testatrix had failed to provide adequate support to her daughters
because modern Canadian society believes parents have a moral obligation to
provide equally for their sons and daughters. By giving her daughters only
a fraction of what she gave to her sons, the testatrix had failed to fulfill her
moral obligations.

On this ground, the courts disregarded the terms of the Will and gave 20% of
the estate to each applicant as support. In essence, the court disregarded the
terms of the Will and the intentions of the testatrix on the grounds that she
failed to discharge her moral duties to her daughters.

123 Butts Estate v. Butts (1999), 27 E.T.R. (2d) 81 (Ont. Gen. Div.), where the courts rewrote the deceased’s Will
against his clear intentions.
124 (2004), 10 E.T.R. (3d) 121 (B.C. S.C.).

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6.8 CHAPTER 6 — CLAIMS AGAINST ESTATES BY FAMILY MEMBERS

6.8 DEPENDANT RELIEF LEGISLATION

Jurisdiction Legislation Acronym

British Columbia Wills, Estates and Succession Act, S.B.C. 2009, c. 13 WESA-BC
(Part 4 Division 6 (ss. 60 – 72)
Alberta Wills and Succession Act, S.A. 2010, c. W-12.2 (Part 5) WASA-A
Saskatchewan Dependants’ Relief Act, 1996, S.S. 1996, c. D-25.01 DRA-S
Manitoba Dependants Relief Act, C.C.S.M., c. D37 DRA-M
Ontario Succession Law Reform Act, R.S.O. 1990, c. S.26 SLRA-O
(Part V)
Quebec Civil Code of Québec, S.Q. 1991, c. 64, CCQ
arts. 684–695,
The Survival of the Obligation to Provide Support
New Brunswick Provision for Dependants Act, S.N.B. 2012, c. 111 PDA-NB
Newfoundland and Labrador Family Relief Act, R.S.N.L. 1990, c. F-3 FRA-NL
Nova Scotia Testators’ Family Maintenance Act, R.S.N.S. 1989, TFMA-NS
c. 465
Prince Edward Island Dependants of a Deceased Person Relief Act, R.S.P.E.I. DDPRA-PEI
1988, c. D-7
Yukon Dependants Relief Act, R.S.Y. 2002, c. 56 DRA-Y
Northwest Territories Dependants Relief Act, R.S.N.W.T. 1988, c. D-4 DRA-NWT
Nunavut Dependants Relief Act, R.S.N.W.T. (Nu.) 1988, c. D-4 DRA-N

6.9 SPOUSAL RIGHTS LEGISLATION (FAMILY LAW LEGISLATION)

Jurisdiction Legislation Acronym

British Columbia Family Law Act, S.B.C. 2011, c. 25; N/A on death FLA-BC
125
Alberta Matrimonial Property Act, R.S.A. 2000, c. M-8 MPA-A
Dower Act, R.S.A. 2000, c. D-15 DA-A
Adult Interdependent Relationships Act, S.A. 2002, AIRA-A
c. A-4.5126
Saskatchewan Family Property Act, S.S. 1997, c. F-6.3 FPA-S
Homesteads Act, 1989, S.S. 1989-90, c. H-5.1 HA-S
Manitoba Family Property Act, C.C.S.M., c. F25. FPA-M
Homesteads Act, C.C.S.M., c. H80 HA-M
Ontario Family Law Act, R.S.O. 1990, c. F-3 FLA-O
Quebec Civil Code of Québec, S.Q. 1991, c.64, arts. 414-492 CCQ
New Brunswick Marital Property Act, S.N.B. 2012, c. 107 MPA-NB
Family Services Act, S.N.B. 1980, c. F-2.2, Definitions FSA-NB

125 See s. 11 of MPA-A for eligibility of married spouses. Adult interdependent partners are not included. See
dependant relief legislation.
126 This statute does not provide any specific rights to property. See dependant relief legislation.

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LIMITATION PERIODS — SPOUSAL CLAIMS AND DEPENDANT RELIEF 6.10

Jurisdiction Legislation Acronym

Newfoundland and Labrador Family Law Act, R.S.N.L. 1990, c. F-2, ss. 18-34.1 FLA-NL
Nova Scotia Matrimonial Property Act, R.S.N.S. 1989, c. 275 MPA-NS
Prince Edward Island Family Law Act, R.S.P.E.I. 1988, c. F-2.1; N/A on death FLA-PEI
Yukon Family Property and Support Act, R.S.Y. 2002, c. 83; FPSA-Y
N/A on death
Northwest Territories Family Law Act, S.N.W.T. 1997, c. 18 FLA-NWT
Nunavut Family Law Act, S.N.W.T. (Nu.) 1997, c. 18 FLA-N

6.10 LIMITATION PERIODS — SPOUSAL CLAIMS AND DEPENDANT RELIEF

Jurisdiction Spousal Claims Dependant Relief Claims

British Columbia N/A 180 days from grant of probate
Alberta 6 months from date of grant 6 months from date of grant
(probate or administration)
Saskatchewan 6 months from date of grant 6 months from date of grant
(probate or administration)
Manitoba 6 months from date of grant 6 months from date of grant
(probate or administration)
Ontario 6 months from date of death 6 months from date of grant
(probate or administration)
Quebec N/A127 6 months from date of death
New Brunswick 4 months from date of death 4 months from date of death
Newfoundland and Labrador 1 year from date of death 6 months from date of grant
(probate or administration)
Nova Scotia 6 months from date of grant 6 months from date of grant
(probate or administration)
Prince Edward Island N/A 6 months from date of grant
(probate or administration)
Yukon N/A 6 months from date of grant
(probate or administration)
Northwest Territories 6 months from date of grant 6 months from date of grant
(probate or administration)
Nunavut 6 months from date of grant 6 months from date of grant
(probate or administration)

127 The surviving spouse’s share of the patrimony must be calculated on [Link] 423 permits the spouse to
renounce the rights.

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6.11 CHAPTER 6 — CLAIMS AGAINST ESTATES BY FAMILY MEMBERS

6.11 COMMON-LAW RELATIONSHIP CRITERIA BY JURISDICTION

Jurisdiction Duration Nature of Relationship

British Columbia 2 years Marriage-like relationship
Alberta 3 years Relationship of interdependence
Saskatchewan 2 years Living as spouses
Manitoba 3 years Living in a conjugal relationship
Ontario 3 years Living in a conjugal relationship128
Quebec N/A (must register a civil union)
New Brunswick 3 years Family relationship where one is dependent on the
other
Newfoundland and Labrador N/A (not recognized in legislation)
Nova Scotia N/A (must register as domestic partners)
Prince Edward Island 3 years Living in a conjugal relationship129
Yukon 12 months Living as a couple
Northwest Territories 2 years Living in a conjugal relationship
Nunavut 2 years Living in a conjugal relationship

6.12 AGE OF MAJORITY BY JURISDICTION

Jurisdiction Age of majority*

British Columbia, New Brunswick, Nova Scotia, Newfoundland and Labrador, 19
Yukon, Northwest Territories, Nunavut
Alberta, Saskatchewan, Manitoba, Ontario, Quebec (CCQ, art. 153), 18
Prince Edward Island
* The age of majority is set in each jurisdiction’s Age of Majority Act.

128 See the definition of “cohabit” in FLA-O, s. 1(1).

129 The Interpretation Act provides that the definition of spouse is the definition in s. 29(1)(b) of the FLA-PEI.

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SUMMARY OF WHO QUALIFIES AS A DEPENDANT BY JURISDICTION 6.13

6.13 SUMMARY OF WHO QUALIFIES AS A DEPENDANT BY JURISDICTION

Jurisdiction
STUDY NOTE:

Spouse & Minor

Students are

Adult Child131
Common-law

Grandparent
responsible for

Grandchild
Legislation
Section of
the rules in their

Spouse130

Others132

Sibling
jurisdiction, including

Parent
Child
the information in the
footnotes to this table.
British Columbia s. 2 9 9 9 – – – – –
Alberta s. 72 9 9 9 9 9 – – –
Saskatchewan s. 2 9 9 9 – – – – –
Manitoba s. 1 9133 9 9 9 9 9 9 9
Ontario s. 57 9134 9 9 9 – 9 – 9
Quebec art. 585 9 9 9 – – 9 – –
New Brunswick s. 1135 9136 9 9 – – 9 – –
Newfoundland & s. 2 9137 – 9 – – – – –
Labrador
Nova Scotia s. 2 9138 9 9 – – – – –
Prince Edward Island s. 1 9 9 9 9139 9 9 9 –
Yukon s. 1 9 9 9 9140 9 9 9 –

130 See 6.14 for the definition of common-law spouse for purposes of dependant relief legislation.
131 In many jurisdictions children must be minors or be dependant (as defined in the legislation). British
Columbia, Nova Scotia, and Newfoundland are silent on whether or not dependency is required.
132 Others include great-grandchildren or others the deceased had an obligation to support, including former
spouses. See 6.5.6, Other Dependants, for legislation details and summaries.
133 The definition of child includes a child conceived before, and born after, the death, and a child where the
deceased was in loco parentis at the time of death.
134 In SLRA-O, s. 57, the definition includes a person who the deceased has demonstrated a settled intention to
treat as a child of his or her family.
135 The PDA-NB refers to the definition of dependant in s. 111 of the FSA-NB as “a person to whom the deceased
has an obligation to support under Part VII of that act.”
136 Includes adopted and unborn children. See PDA-NB, s. 1.
137 Child includes adopted and unborn children.
138 Child includes adopted and unborn children.
139 All dependants who are not a spouse, common-law spouse, or children must have been dependent on the
deceased for at least three years immediately prior to the deceased’s death. See DORA-PEI, s. 1, definition of
dependant.
140 All dependants, including divorced spouses, who are not a spouse, common-law spouse, or children must
have been dependent on the deceased for at least three years immediately prior to the deceased’s death. See
DRA-Y, s. 1, definition of dependant.

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6.14 CHAPTER 6 — CLAIMS AGAINST ESTATES BY FAMILY MEMBERS

Jurisdiction
STUDY NOTE:

Spouse & Minor

Students are

Adult Child131
Common-law

Grandparent
responsible for

Grandchild
Legislation
Section of
the rules in their

Spouse130

Others132

Sibling
jurisdiction, including

Parent
Child
the information in the
footnotes to this table.
Northwest Territories s. 1 9141 9 9 – 9142 – – –
Nunavut s. 1 9143 9 9 – 9144 – – –

6.14 DEFINITION OF SPOUSE FOR PURPOSES OF DEPENDANT RELIEF

LEGISLATION

Jurisdiction Definition
British Columbia Married or lived with each other in a marriage-like relationship for at
least 2 years (WESA-BC, s. 2).
Alberta Married or an adult interdependent partner (WASA-A, s. 72(b))
Saskatchewan Wife or husband; Cohabiting as spouses for not less than 2 years or in
a relationship of some permanence, if the parents of a child (DRA-S,
s. 2(1))
Manitoba Spouse or common-law partner where: (i) cohabitation was subsisting
at the deceased’s death, (ii) cohabitation was not subsisting but had
ceased within 3 years of the deceased’s death, or (iii) the common-law
partner was being paid or was entitled to be paid maintenance and
support by the deceased under an agreement or a court order at the
time of the deceased’s death
A common-law partner is a person who (i) registered the relationship
under the Vital Statistics Act or (ii) cohabited in a conjugal relationship
for at least 3 years or (iii) cohabited for at least 1 year and they are
together the parents of a child ((DRA-M, s. 1 definitions)
Ontario Married or have cohabited continuously for a period of not less than 3
years or in a relationship of some permanence, if they are the natural
or adoptive parents of a child (SLRA-O, s. 57 definitions)
Quebec Spouse and civil union spouse
New Brunswick Married or have lived together (a) continuously for not less than
3 years in a family relationship in which one person has been
substantially dependent upon the other for support, or (b) in a family
relationship of some permanence where there is a child born of whom
they are the natural parents (FSA-NB, s. 112(3))
Newfoundland and Labrador Widow or widower. No provisions for common-law spouses (FRA-NL,
s. 3)

141 A child includes a natural child, step-child, conceived but unborn child, and adopted child in accordance with
customary law or under the Adoption Act.
142 A person acting as a foster parent of the children of the deceased. See definition in DRA-NWT, s. 1.
143 A child includes a natural child, step-child, conceived but unborn child, and adopted child in accordance with
customary law or under the Adoption Act.
144 A person acting as a foster parent of the children of the deceased. See definition in DRA-N, s. 1.

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SUMMARY OF DEPENDANT ENTITLEMENT AND CRITERIA CONSIDERED 6.15

Jurisdiction Definition
Nova Scotia Widow or widower and a domestic partner who has registered a
domestic partner declaration under the Vital Statistics Act, R.S.N.S.
1989, c. 494 (TFMA-NS, s. 1 and Vital Statistics Act, s. 54(2)(o))
Prince Edward Island Married or has cohabited with another person for at least 3 years in
a conjugal relationship, or is cohabiting in a conjugal relationship
and are the natural or adoptive parents of a child (Interpretation Act,
R.S.P.E.I. 1988, c. I-8, s. 26(e.2.1) and FLA-PEI, s. 29(1)(b))
Yukon Married or a person who has cohabited with another person as a
couple for at least 12 months immediately before the other person’s
death (DRA-Y, s. 1)
Northwest Territories Married or has cohabited for a period of 1 year immediately before
the time of the death of the deceased and was dependent on the
deceased for maintenance and support, or was cohabiting with the
deceased and between whom one or more children were born (DRA-
NWT, s. 1)
Nunavut Married or lived in a conjugal relationship outside marriage for at
least 1 year and was dependent on the deceased for maintenance and
support (DRY-N, s. 1)

6.15 SUMMARY OF DEPENDANT ENTITLEMENT AND CRITERIA CONSIDERED

Jurisdiction Nature of Entitlement145 Criteria to Be

Considered
British Columbia If a will that does not, in the court’s opinion, See case law
make adequate provision for the proper
maintenance and support of the spouse or
children, the court may make an order for
provision that it thinks is adequate, just, and
equitable in the circumstances (WESA-BC, s. 60)
Alberta If the entitlements of a family member (see See detailed list in
definition) under a will, or the intestate share, s. 93
do not make adequate provision for the proper
maintenance and support of that family
member, the court may make an order for
proper maintenance and support (WASA-A,
s. 88)
Saskatchewan A dependant (see definition) may apply to See detailed list in s. 8
court for an order for reasonable maintenance
(DRA-S, s. 3)
Manitoba If it appears to the court that a dependant is in See detailed list in s. 8
financial need, the could may order reasonable
provision out of the estate for the dependant’s
maintenance and support (DRA-M, s. 2(1))

145 Some statutes also provide for temporary possession of the family home and household [Link] are not
noted in this table. Note that most statutes specifically state that the dependant, or someone on behalf of the
dependant, may make an application.

6-45
6.15 CHAPTER 6 — CLAIMS AGAINST ESTATES BY FAMILY MEMBERS

Jurisdiction Nature of Entitlement145 Criteria to Be

Considered
Ontario If the deceased has not made adequate See detailed list in
provision for the proper support, the court s. 62
may order that such provision as it considers
adequate be made out of the estate of the
deceased for the proper support of the
dependants. The application may be made
on behalf of a dependant by the dependant’s
parent. Certain government agencies who
have been providing certain benefits to the
dependant may also make the application on
behalf of the dependant (SLRA-O, s. 58(1)-(3))
Quebec A creditor of support may make claim for Circumstances
financial contribution from the succession for including support
support (art. 684). A lump sum or instalments and assets under
may be paid (art. 685). The amount is fixed succession (art. 686)
with the liquidator with consent of heirs and
legatees or by the court.
The former spouse is entitled to up to 12
months’ support. Other dependants are
entitled to up to 6 months’ support (art. 688).
The maximum is the lesser of 12 (or 6) months’
support and 10% of the value of the succession.
New Brunswick If a dependant’s resources are not sufficient Entitlements under
to provide adequately for the dependant, a will, intestacy or
judge may order such provision, as the judge otherwise, and
considers adequate, be made out of the estate circumstances of the
of the deceased for the maintenance and case
support of the dependant (PDA-NB, s. 2(1))
Newfoundland & Labrador If the will or intestate share is not adequate All relevant
to provide for the dependant, the judge may circumstances
order adequate provision out of the estate for
the proper maintenance and support of the
dependant (FRA-NL, s. 3)
Nova Scotia If adequate provision is not made in the will All relevant
for the proper maintenance and support of a circumstances; see
spouse or child, a judge has power to order that also power to vary
whatever provision the judge deems adequate order under s. 7
be made out of the estate of the testator for
the proper maintenance and support of the
dependant. The definition of child is not limited
to minors (TFMA-NS, s. 3(1))
Prince Edward Island If adequate provision for the proper Broad scope
maintenance and support of the dependant is See s. 5
not made, the court may order such provision it
considers adequate be made out of the estate
(DDPRA-PEI, s. 2)
Yukon If there is not adequate provision for the proper Broad scope
maintenance and support, the court may order See s. 5
any provision it considers adequate for proper
maintenance and support (DRA-Y, s. 1)

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EXAMPLE OF TYPES OF DEPENDANT RELIEF AWARDS FOUND IN LEGISLATION 6.16

Jurisdiction Nature of Entitlement145 Criteria to Be

Considered
Northwest Territories If the deceased’s Will, or the intestate share, Broad scope
does not make adequate provision for proper See s. 4
maintenance and support, the judge may order
such provisions that are considered adequate
(DRA-NWT, s. 2)
Nunavut If the deceased’s Will, or the intestate share, Broad scope
does not make adequate provision, the court See s. 4
may order such provision as considered
appropriate out of the estate for the proper
maintenance and support (DRA-N, s. 2)

6.16 EXAMPLE OF TYPES OF DEPENDANT RELIEF AWARDS FOUND IN

LEGISLATION

Saskatchewan: A court is authorized to order a trust for the purpose of improving the
dependant’s quality of life without affecting his or her eligibility for public assistance.
Ontario: A court can also make an order for the testator’s estate to repay the dependant’s
debts. The legislation (s. 63(2) of the SLRA-O) states that provision may be made out of
income or capital or both and an order may provide for one or more of the following, as the
court considers appropriate,

(a) an amount payable annually or otherwise whether for an indefinite or limited period
or until the happening of a specified event;

(b) a lump sum to be paid or held in trust;

(c) any specified property to be transferred or assigned to or in trust for the benefit of
the dependant, whether absolutely, for life, or for a term of years;

(d) the possession or use of any specified property by the dependant for life or such
period as the court considers appropriate;
(e) a lump sum payment to supplement or replace periodic payments;

(f ) the securing of payment under an order by a charge on property or otherwise;

(g) the payment of a lump sum or of increased periodic payments to enable a

dependant spouse or child to meet debts reasonably incurred for his or her own
support prior to an application under this Part;

(h) that all or any of the money payable under the order be paid to an appropriate
person or agency for the benefit of the dependant;

(i) the payment to an agency referred to in subsection 58 (3) of any amount in

reimbursement for an allowance or benefit granted in respect of the support of the
dependant, including an amount in reimbursement for an allowance paid or benefit
provided before the date of the order.

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 CHAPTER 7
QUEBEC ISSUES FOR CANADIANS OUTSIDE QUEBEC

LEARNING OBJECTIVES

7.1 A PRIMER ON CIVIL LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-3

7.1.1 Legal Profession in Quebec . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-5
7.2 SITUATIONS WHERE QUEBEC ISSUES MAY ARISE . . . . . . . . . . . . . . . . . 7-5
7.2.1 Real Property or “Immovables” in Quebec . . . . . . . . . . . . . . . . . . 7-6
7.2.2 Moving from or to Quebec . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-7
7.2.3 Beneficiaries in Quebec . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-7
7.3 UNIQUE FEATURES OF SUCCESSION LAW . . . . . . . . . . . . . . . . . . . . . . . . . 7-7
7.3.1 Concept of Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-7
7.3.2 Marriage and Civil Unions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-9
7.3.3 Family Patrimony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-9
7.3.4 Compensatory Allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-11
7.3.5 Other Rights of the Surviving Spouse . . . . . . . . . . . . . . . . . . . . . 7-12
7.3.6 Probate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-12
7.3.7 Wills and Marriage Contracts Prepared in Quebec . . . . . . . . . 7-13
7.3.8 Beneficiary Designations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-13
7.3.9 De Facto Spouses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-14
7.3.10 Jointly Held Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-14
7.3.11 Other Features of Quebec Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-15
[Link] Mandate in Anticipation of Incapacity . . . . . . . . . . . . . . 7-15
[Link] Distribution on Intestacy . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-15
[Link] Revocation on Divorce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-15

7-1
 Chapter 7
Quebec Issues for Canadians
Outside Quebec

Learning Objectives

Knowledge Objectives
• Understand how the law of succession in Quebec may affect estates of persons
living elsewhere in Canada

Skills Objectives
• Identify situations in which the law of Quebec may affect the estate of a person
resident elsewhere in Canada
• Describe the main differences between Quebec law and that of other provinces
as it relates to succession of property

7.1 A PRIMER ON CIVIL LAW1

In Quebec, the civil law governs private law matters, whereas common law applies to
public law, including criminal matters and criminal prosecution. The common law is
based on the system of law developed in England and adopted by all British colonies,
including Canada and the U.S. Civil law has its roots in Roman law and is used
throughout Europe and Latin America. The Quebec Civil Code was first introduced
in Lower Canada (now Quebec) in 1866. It incorporated elements of the 1804
Napoleonic Code from France, the Coutume de Paris (customary law from France
originally introduced in Lower Canada in the 1600s), and some elements of English

1 Students may want to review the material in the Resources/Study Guide on the STEP website under
“Backgrounder on the Canadian Legal System,” including the description of common-law and civil-law
systems.

7-3
7.1 CHAPTER 7 — QUEBEC ISSUES FOR CANADIANS OUTSIDE QUEBEC

common law. Major reform commenced in 1955, culminating in a completely revised

Civil Code of Québec that came into effect in [Link] current Civil Code integrates
some elements of common law, including the law of trusts, and contains 10 books.

1. Persons (individual rights)

2. The Family (marriage, parentage, adoption)

3. Successions (wills, inheritance, estates)

4. Property (possession, land boundaries, right-of-way)

5. Obligations (contract law, civil liability, tort law, sales, leasing)

6. Hypothecs (mortgages and the sale of land)

7. Evidence (burden of proof, rules of evidence)

8. Prescription (statutes of limitations)

9. Publication of Rights (registration of property)

10. Private International Law (resolution of legal issues involving conflict

of laws)

Codification is a unique feature of the civil-law system. The primary source of law is
the code, which is organised in a systematic fashion and covers a broad area of law.
The role of the courts is to apply these laws, but the importance of precedent does
not have the same role in the civil-law system that exists in the common-law system.
In the common-law system, “judge-made law” is created through the development
of precedents based on decisions in past cases and the doctrine of stare decisis,
meaning to abide by or adhere to decided cases. In the common law, following
precedent develops the interpretation and application of law over time.

In common-law jurisdictions, separate “acts” are passed by the provincial legislature to

deal with separate areas of law. For example, each common-law province may have a
separate act with a separate name to deal with family law, Wills, estate administration,
conveyance of real property, and corporate law. In Quebec, to a lesser degree, the
code is supplemented by special statutes in certain areas of the law.

7-4
SITUATIONS WHERE QUEBEC ISSUES MAY ARISE 7.2

7.1.1 Legal Profession in Quebec

In Quebec, law is practiced by lawyers (called “advocates”) and notaries; however,

they have separate roles. Only lawyers may litigate (i.e., appear before the courts) to
resolve a dispute. Lawyers act in an adversarial environment, whereas notaries must
provide information and advice to all parties in a matter or transaction.

Both lawyers and notaries have legal training and attend law school for three years.
However, lawyers proceed to bar admission school and notaries pursue notarial
studies at university for an additional year. Both notaries and lawyers must article (a
kind of apprenticeship) with other lawyers or notaries prior to being admitted to
their profession and becoming licensed to practice.2

Notaries can give legal advice to all parties or sides in a matter, draft legal documents,
authenticate those documents, and keep formal records of transactions that can be
relied upon in future. A large part of a notary’s practice consists of transferring real
property, called “immovables” in Quebec, and a secondary area of practice is Wills,
successions, and estate planning. A notarial Will, which can only be prepared by a
notary, has a unique status compared with other Wills: it is effective immediately
upon the death of the testator and does not require probate.

The role of a notary in Quebec should not be confused with that of a notary public
in common-law jurisdictions. A notary public in a common-law jurisdiction in Canada
does not require the same extensive legal [Link] main function of a notary public
is to administer oaths and affirmations, take affidavits and statutory declarations, and
witness and authenticate documents. They do not give advice nor do they have any
specific authority to draft documents or transfer (convey) or hypothecate (mortgage)
real property. In Quebec, it is usually a commissioner of oaths who administers oaths
and solemn declarations.

7.2 SITUATIONS WHERE QUEBEC ISSUES MAY ARISE

For those advising clients in other jurisdictions in Canada where the legal system is
based on common law, it is important to be aware that Quebec is not only another
jurisdiction within Canada with its own laws as would be the case with any other
jurisdiction in Canada, but also that the entire legal system is fundamentally different.
In addition, the concept of bringing laws into some degree of conformity across the

2 For details regarding notaries in Quebec, see the website of Chambre des notaires du Québec at [Link].
org/.

7-5
7.2.1 CHAPTER 7 — QUEBEC ISSUES FOR CANADIANS OUTSIDE QUEBEC

country, while already given little priority in common-law jurisdictions, is of almost

no interest in the province of Quebec, which prides itself as being a distinct society
with a distinct language, culture, and legal system.

Advisors may make assumptions about the manner in which their clients’ affairs will
be governed under laws across Canada, but these assumptions are always dangerous
as the laws of every province or territory [Link] law of another jurisdiction, other
than the one of residence or domicile, assuming these are both the same, may be
relevant in a number of circumstances.

7.2.1 Real Property or “Immovables” in Quebec

The law of the province or territory may apply to real property or an interest in real
property located in that jurisdiction. If an individual owns real property in Quebec, it
will be necessary to comply with the laws of succession in the province to deal with
the property on the death of the owner.

A grant of probate from the jurisdiction where the deceased was resident and
domiciled at death does not need to be “resealed” in Quebec in order to permit the
executor or administrator to deal with the property and either sell it or distribute it
to the [Link] is no procedure in Quebec similar to resealing or obtaining
an ancillary grant of Letters Probate or Letters of Administration. The probated Will
may be deposited with a notary, who then issues a certified copy. It is also important
to verify if the foreign executor or administrator’s authority extends to property
situated in Quebec; if not, then a liquidator should be appointed by the Quebec court
to deal with the Quebec property.

As it is not possible to have a right of survivorship in Quebec, any joint ownership

of real property (or other property governed by the laws of Quebec) will be in
undivided co-ownership, which is comparable to the concept of tenants-in-common,
and the interest in the property of any deceased owner will pass through his or her
estate and not to the surviving joint owners.

The rules relating to mandates in the event of incapacity are quite unique in Quebec,
and if property, particularly real property, is owned in the province it may be advisable
to have a mandate prepared under Quebec law specifically limited to property in the
province. At the very least, any power of attorney for property should be reviewed to

7-6
UNIQUE FEATURES OF SUCCESSION LAW 7.3.1

ensure it may be utilised to deal with Quebec property subject to the requirement
for homologation.3

7.2.2 Moving from or to Quebec

Whenever an individual moves from one province or territory to another, changing

residence and domicile, a different set of laws will apply to his or her property and
civil rights. For example, this may change or affect the estate planning, planning
for incapacity, rights under family law legislation, and rights and obligations of a
common-law relationship. It is important for individuals to review their Wills, powers
of attorney for property, and personal care and health care directives with a lawyer
in the new jurisdiction to determine whether changes need to be addressed. This is
particularly true for a move to or from the province of Quebec, where laws are so
unique.

Individuals who formerly lived in Quebec may have insurance policies issued in
Quebec. Insurance policies issued in Quebec have unique characteristics that should
be examined. In addition, there may be a marriage contract made under Quebec law
that could affect the devolution of the estate.

7.2.3 Beneficiaries in Quebec

Where an individual has family members or other potential beneficiaries located in

Quebec, the rights of such persons will be subject to the laws in Quebec with respect
to the transfer and ownership of real property in Quebec, matrimonial property
rights, minors, and incapable adults.

7.3 UNIQUE FEATURES OF SUCCESSION LAW

7.3.1 Concept of Trusts4

In general, civil law does not recognise trusts and there is no concept in civil law
of the separation of legal and beneficial ownership of property. However, major
reform of the Quebec Civil Code took place in 1994, at which time new provisions
compatible with civilian property law concepts were introduced into the Quebec
civil law that modernised and expanded the Quebec law of trusts. Although the
source and legal nature of a trust in Quebec differ from the common law, the rules

3 See 1.1.6, Springing Powers of Attorney.

4 Students are reminded that this topic is covered more extensively in Course One, Mark Gillen, Law of Trusts
(Toronto: STEP Canada, 2009) at Chapter 19, A Note on the Trust in Quebec Law.

7-7
7.3.1 CHAPTER 7 — QUEBEC ISSUES FOR CANADIANS OUTSIDE QUEBEC

relating to its operation and consequences are similar but not identical in practice to
that of the common-law trust.5

A general regime for trusts is set out in the new provisions of the Civil Code in Articles
1260 to 1298. A trust is conceived as a “patrimony by appropriation.” Essentially
the “trust patrimony” consists of the property transferred in trust. The concept of
“patrimony” is key to the Quebec trust. Inherent in the concept of patrimony is that
it constitutes a fund comprised of assets and related liabilities that fluctuate over
time. It is ownerless and indivisible. In this sense, a patrimony is very different from
the division of ownership in the common-law system between legal title held by the
trustee and equitable title or interest that attributes to a beneficiary. This does not
exist in Quebec law.

Trusts cannot be created by unilateral declaration in [Link] may be created by

contract, by gift, by Will, or under a specific provision of the law.

Quebec trusts do recognise the triangular relationship between the settlor, the
trustee, and the beneficiary (described as dedication or appropriation to a defined
purpose), as well as the assets that form a patrimony separate from that of the settlor,
beneficiary, or trustee. In addition, as in the common-law jurisdictions, the court has
the role of being available to enforce performance of the trust.

The details of the Quebec trust are beyond the scope of these materials. However, it
should be noted that special provisions are provided for personal trusts (i.e., trusts
that benefit persons), whether individuals or legal persons (corporations). Personal
trusts are limited as to duration. This is similar to the rule against perpetuities or
remoteness of vesting in common-law jurisdictions. However, there is no rule against
accumulation of income as exists in some common-law provinces.

Beneficiaries of Quebec trusts are protected from third party claims of creditors and
others in respect of the patrimony unless there is [Link] property of the trust does
not form part of the settlor’s patrimony and is not available to the settlor’s creditors.
In addition, like the settlor, the beneficiary has no real right in the trust property, and
trust property is a distinct and separate patrimony from that of the beneficiary. The
beneficiary does have a personal claim against the trust for payment of his or her
interest, and it is possible for a creditor to seize this interest that a beneficiary has in
the trust. However, the creditor cannot have any greater rights than the beneficiary to

5 For a detailed discussion of the concept of a trust in Quebec, see Marilyn Piccini Roy, “Demystifying the
Quebec ‘Fiducie’ or Trust,” 11th National STEP Conference, June 19, 2009,Toronto, Ontario.

7-8
UNIQUE FEATURES OF SUCCESSION LAW 7.3.3

enforce rights against the trust. On the level of contractual arrangements, the trustee
of a Quebec trust is not exposed to personal liability unless he or she acted outside
the scope of his or her authority and did not disclose that he or she was acting in his
or her capacity as trustee.

7.3.2 Marriage and Civil Unions

In the province of Quebec, couples who are united by traditional marriage or by “civil
union” are both accorded identical rights and obligations. Marriage is specifically
provided for in the Civil Code, Articles 365 to 521. In addition, in 2002, the Code was
amended to recognise civil unions that are a form of contract that can be entered into
by either same-sex or opposite-sex couples in order to have access to the identical
rights and obligations that exist between married couples.

While those in a civil union have identical rights to family patrimony, distribution on
an intestacy, and dependant relief, there are some differences. Civil union is dissolved
by agreement made before a notary, not divorce. In addition, although couples
married in Quebec will be recognised as married in other provinces in Canada, a civil
union may not be recognised as a marriage per se, and this may have consequences
where the parties own property outside Quebec in jurisdictions where their status
may be uncertain. However, persons in a civil union may qualify to be recognised as
common-law couples where these are recognised in other provinces or territories in
Canada.

7.3.3 Family Patrimony

Married couples and those in a civil union in Quebec have economic rights to the
family patrimony on separation “from bed and board,” divorce, annulment, or death.
Essentially the couple must divide the value of the family patrimony accrued during
the marriage or civil union upon such events and these rights take precedence over
any rights on intestacy, under the Will, or any agreement to the contrary.6 Family
patrimony was introduced in 1989 as defined in section 415 of the Civil Code. It
includes the following:

• all family residences and furnishings but excluding collector’s items,

• vehicles used by the family, and

6 The rights to family patrimony are described in detail at 6.3.5, Quebec.

7-9
7.3.3 CHAPTER 7 — QUEBEC ISSUES FOR CANADIANS OUTSIDE QUEBEC

• benefits under a retirement plan except plans providing death

benefits to the surviving spouse.

One exception from the family patrimony is property received by one of the spouses
by inheritance or gift during [Link] are also deductions for property owned
at the date of marriage and debts.

The calculation of the value of family patrimony is similar to the manner in which
net family property is equalised under Ontario [Link] value of family patrimony that
each spouse owns at the relevant date for division (whether the date of separation,
divorce, or death) is added together and divided by [Link] value of family patrimony
owned individually by each spouse is then compared. The spouse who has less than
one-half of the aggregate family patrimony owned by both is entitled to a payment
from the other or from the estate in the case of death.

There is no specific right in the division of specific property per se. Rather, the spouse
entitled to a payment becomes a creditor of the other spouse, or the estate, for the
amount of the shortfall.

One relatively unique feature of the right to family property on death in Quebec as
compared with the rights to property in most other provinces is the reciprocal nature
of the claim. In Ontario, and all other common-law jurisdictions except Newfoundland
and Labrador, only the surviving spouse may make a claim in respect of property on
death. However, in Quebec (and Newfoundland and Labrador), either the surviving
spouse or the heirs of the deceased can make a claim in respect of family patrimony.7
This could result in the surviving spouse being entitled to a payment or transfer of
property from the heirs or the heirs of the deceased being entitled to a transfer of
property from the surviving spouse.

The calculation requires the value of the amount of family patrimony owned by each
spouse at the time of death to be determined, and from each spouse’s share may be
deducted the value of any family patrimony received by gift or inheritance during
marriage. The amount is then added together and divided by two. If the surviving
spouse has more than one-half of the value of the family patrimony, then the surviving
spouse will benefit. But if the amount is less, the heirs will benefit. Take the example
in Figure 7.1 and assume there are no debts and no deductions for gifts or inheritance
during marriage or property owned upon marriage.

7 See Banque nationale du Canada c. Sciascia-Trapani, 2002 CanLII 39948 (Q.C. C.A.) and Lamarche c. Olé-
Widholm, 2002 CanLII 37315 (Q.C. C.A.) (CanLII en français).

7-10
UNIQUE FEATURES OF SUCCESSION LAW 7.3.4

Figure 7.1: Calculating Family Patrimony

Asset Husband Wife Totals
Family Home $300,000 $300,000
Recreational Property $160,000 $160,000
Furnishings $12,000 $40,000 $52,000
RRSPs $270,000 $65,000 $335,000
Automobiles $15,000 $6,000 $21,000
Total Family Patrimony $457,000 $411,000 $868,000
Payment Required (one-half the difference) ($13,000) $13,000 nil
Balance $434,000 $434,000 $868,000

In the example, the total family patrimony is $868,000 and each spouse should be
entitled to an equal amount (or $434,000). However, the husband has $46,000 more
than the [Link] wife is entitled to a payment of $23,000 so that each has an amount
equal to $434,000.

The right to partition of family patrimony is considered a matter of “public order”

in Quebec, with the consequence that the rights and obligations relating to family
patrimony apply notwithstanding any contract or other agreement to the contrary
(unless the spouses opted out by notarial deed during the grace period from July 1,
1989, to December 31, 1990). A spouse cannot renounce his or her right to partition
the family patrimony before death and on death this right takes precedence over the
Will.

The surviving spouse (or the heirs) will be entitled to a payment from the estate in
respect of the family patrimony first before the rights of any beneficiary are calculated
under the Will. Where the spouse is the beneficiary under the Will of an asset that
forms part of the family patrimony, there may be double entitlement both under the
Will and under the calculation of family patrimony for the purposes of partition. This
“double dipping” is permitted.

7.3.4 Compensatory Allowance

In addition to the partition of family patrimony, a surviving spouse may be entitled to

a compensatory allowance in recognition of his or her contribution in property or
services that enriched the spouse.8 The right to compensatory allowance will often
relate to the value of a business that is not included in family patrimony. Claims for the

8 Civil Code of Québec, S.Q. 1991, c. 64, Articles 427-430.

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7.3.5 CHAPTER 7 — QUEBEC ISSUES FOR CANADIANS OUTSIDE QUEBEC

compensatory allowance are seldom granted. The right to compensatory allowance

must be made in the year following death and is only available to a surviving spouse.

7.3.5 Other Rights of the Surviving Spouse

There are two “matrimonial regimes” for married couples in Quebec, including those
in a civil-law union. Matrimonial regime refers to the rights and obligations arising
under family law. Depending on the date of the marriage or civil union, under either
the community of property regime (for marriage before July 1, 1970) or the regime
of partnership of acquests (for marriage after July 1, 1970), the surviving spouse may
be entitled to division of property in addition to the family patrimony. Details of these
regimes are beyond the scope of this material. However, in most cases, couples will
enter into a pre-nuptial agreement or marriage contract and opt out of these regimes
by a declaration in the document that these rights will not apply, in which case the
regime of separation as to property will apply and the spouses will have no additional
rights to property other than family patrimony.

A surviving spouse is also entitled to the Quebec equivalent of a claim for dependant
relief under the provisions of the Civil Code entitled “The Survival of the Obligation
to Provide Support.”9

7.3.6 Probate

Probate is a process by which Wills or Letters of Administration are formally

recognised by the court. Probate provides evidence of the authority of the executor,
administrator, or liquidator, and third parties are generally protected from relying on
their authority to transfer property if appointed in the grant of probate. In Quebec,
the object of probate is limited to proving that the testator has in fact died, that he or
she was the person who executed the Will, and that the Will is valid as to form.

The scope of the court’s jurisdiction in matters of probate in Quebec is quite

narrow and does not extend to hearing grounds of nullity, such as lack of capacity
or undue influence. The court does not confer authority on liquidators or executors;
their authority derives from the Will and the law. Furthermore, there are no probate
fees levied on the value of the estate assets. In addition, probate is only required for
holograph Wills and Wills made in the presence of two witnesses; it is not required if
the Will has been prepared by a notary.

9 Ibid at Articles 684-695.

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UNIQUE FEATURES OF SUCCESSION LAW 7.3.8

7.3.7 Wills and Marriage Contracts Prepared in Quebec

Notaries are required to retain the original of any notarial Will and codicil.

There is a central registry of Wills in Quebec that retains registration of any Will
prepared in the province by a notary or lawyer except those prepared by a lawyer
where the testator has retained the original.10 It is possible to search this registry for
a Will in Quebec and obtain a Will Search Certificate. This may be helpful in locating
any Will prepared in the province.

The Will registry also records any testamentary disposition made in a marriage
contract since 1994, along with the name of the notary or lawyer who has retained
the original document. Marriage contracts in Quebec must be notarised and registered
and, as for Wills, it is possible to conduct a search to determine if any document exists
in respect of a particular individual.

In circumstances where an individual appears to have died intestate, but once lived
in the province of Quebec, a search should be done to determine if a Will has been
registered in the province or a marriage contract exists that contains a testamentary
disposition.

7.3.8 Beneficiary Designations

In the province of Quebec, beneficiary designations may be made for death benefits
of life insurance policies, but it is not possible to designate a beneficiary for any
registered plan under the Income Tax Act, such as an RRSP, RRIF, TFSA, or RDSP.
Rather, these assets will pass according to the law of succession in the province
of Quebec and cannot be paid directly to a beneficiary. However, beneficiary
designations would be valid if the registered plans are issued by insurance companies
or are validly structured as trusts or fixed-term annuities under the laws of Quebec,
but if they are retirement plans, they still form part of the family patrimony.

Where an individual is resident and domiciled in Quebec, it is not possible to name as

beneficiary of an RRSP, RRIF, TFSA, or RDSP even a beneficiary who is living outside
Quebec. However, it is possible for an individual resident and domiciled outside
Quebec to name a resident of Quebec as a beneficiary of his or her registered plan.

10 For details about Wills and marriage contracts in Quebec, see Practice Note, Marilyn Piccini Roy, “Useful
Information for the Settlement of Estates with Quebec Connections: Will Search Certificates and Marriage
Contracts,” Estates, Trusts and Pensions Journal [Vol. 27, 2007] at 116.

7-13
7.3.9 CHAPTER 7 — QUEBEC ISSUES FOR CANADIANS OUTSIDE QUEBEC

7.3.9 De Facto Spouses

Couples who are not legally married or have not entered into a civil union have
virtually no rights or obligations arising from their relationship in the province of
Quebec.11 On the death of one de facto partner, the surviving de facto partner is not
entitled to family patrimony, compensatory allowance, division of property under any
matrimonial regime, distribution on an intestacy, or dependant relief. In addition, since
the family patrimony rules do not apply, any movable property owned by the couple
(tangible personal property, i.e., household furnishings and other personal effects)
will be deemed owned in undivided co-ownership unless the surviving spouse can
prove he or she is the sole owner of such property.

The absence of any rights on death for de facto couples makes it extremely
important for individuals in such a relationship to plan their estates to ensure the
result on death is according to each party’s wishes and that the surviving partner is
adequately provided for. The lack of legal rights for de facto couples who fail to get
advice and do estate planning is potentially more severe in Quebec than it might be
in other provinces as there is no survivorship feature of joint ownership, nor can any
beneficiary designations be made for RRSPs or RRIFs.

De facto couples who fail to make Wills may face considerable difficulty on the death
of the other partner. For example, even if the home is owned jointly, this will be
without a right of survivorship and the heirs of the deceased partner could force the
surviving partner to vacate the family home.

7.3.10 Jointly Held Property

Jointly held property in Quebec is described as being divided or undivided co-

ownership. In both types of co-ownership, there is no right of survivorship.
Accordingly, it is not possible for the surviving joint owner to automatically inherit
the interest of a deceased joint owner by operation of law as it is in the common-
law provinces. Rather, the property is treated as what in common-law jurisdictions
would be called tenants-in-common and the share of the deceased joint owner will
form part of the estate of the deceased owner and will pass according to the law
of succession in the province of Quebec either under the Will or on an intestacy or
otherwise under the laws of succession in Quebec.

11 There are few exceptions. De facto spouses have rights under pension plans, including the Quebec Pension
Plan and Canada Pension Plan, and are treated as spouses for the purposes of federal income taxation under
the Income Tax Act of Canada. In addition, de facto spouses will be entitled to benefits under no-fault
provisions for auto insurance.

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UNIQUE FEATURES OF SUCCESSION LAW [Link]

7.3.11 Other Features of Quebec Law

Many topics relating to Quebec law are covered under their individual topic areas in
this material. The law of the province of Quebec does have many additional unique
features in addition to those discussed above, some of which are discussed below.

[Link] Mandate in Anticipation of Incapacity

Quebec is the only province where special approval is required before a

springing power of attorney for property, called a “mandate in anticipation
of incapacity,” may be effective. It must be confirmed by a homologation
procedure before a clerk or judge of the Superior Court or a Quebec notary.

[Link] Distribution on Intestacy

Quebec is the only province where the surviving spouse may not inherit
the entire estate of the deceased spouse where there are no children or
other issue. The spouse takes all if no issue, parents, siblings, or nieces
or nephews survive. If parents, siblings, or nieces or nephews of the
deceased survive, the surviving spouse will be entitled to only two-thirds
of the estate and the remainder will be divided among these other family
members according to who survives (i.e., first to parents, then to siblings,
and then nephews and nieces of a pre-deceased sibling).

[Link] Revocation on Divorce

While marriage does not revoke a Will in Quebec, a legacy made to a spouse
before divorce is revoked unless the testator otherwise manifested an
intention of benefitting the spouse. Divorce entails the lapse of gifts made
in contemplation of death by one spouse to the other in consideration of
marriage in a marriage contract. Divorce also has the effect of revoking the
designation of the spouse as liquidator of the succession unless a contrary
intention is demonstrated.

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 CHAPTER 8
OBTAINING THE GRANT OF PROBATE

LEARNING OBJECTIVES

8.1 REQUIREMENT TO OBTAIN PROBATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-3

8.1.1 Authority of the Executor or Administrator . . . . . . . . . . . . . . . . . 8-3
8.1.2 Understanding the Process for Obtaining the Grant. . . . . . . . . 8-4
8.1.3 Benefits of Obtaining the Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-4
[Link] Protect the Executor from a Subsequent
Challenge and Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-4
[Link] Ensure Certain Claims Expire . . . . . . . . . . . . . . . . . . . . . . . . 8-4
8.1.4 Where Grant Is Mandatory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-5
[Link] Where There Is No Will. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-5
[Link] To Deal with Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . 8-5
[Link] To Deal with Property and Third Parties. . . . . . . . . . . . . . 8-6
[Link] To Conduct or Defend Litigation on Behalf of
the Estate or the Deceased . . . . . . . . . . . . . . . . . . . . . . . . . . 8-8
[Link] To Protect the Executor from Potential Liability . . . . . . 8-8
[Link] To Resolve Any Dispute over the Validity of a Will . . . . 8-8
8.1.5 Dealing with the Estate Assets Before the Grant . . . . . . . . . . . . 8-9
8.1.6 Assets Not Requiring the Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-9
8.1.7 Waiver of Probate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-10
8.2 JURISDICTION, OFFICIALS, AND THEIR DUTIES . . . . . . . . . . . . . . . . . . 8-11
8.2.1 Province and Judicial District Where Application for
Grant Is Filed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-11
8.2.2 Role of the Estate Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-11
8.2.3 Role of Court Officials and Judge . . . . . . . . . . . . . . . . . . . . . . . . . . 8-11
8.2.4 Proving the Will in Common Form and Proving the
Will in Solemn Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-12
8.3 TYPES OF GRANTS AND MODERN LANGUAGE . . . . . . . . . . . . . . . . . . . 8-12
8.3.1 Letters Probate (in Ontario, Certificate of
Appointment of Estate Trustee with a Will) . . . . . . . . . . . . . . . . 8-13

8-1
 8.3.2 Letters of Administration (in Ontario, Certificate of
Appointment of Estate Trustee without a Will) . . . . . . . . . . . . . 8-13
8.3.3 Letters of Administration with Will Annexed (in
Ontario, Certificate of Appointment of Estate Trustee
with a Will) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-13
8.3.4 Administration De Bonis Non Administratis (in Ontario,
Certificate of Appointment of Succeeding Estate
Trustee without a Will) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-14
8.3.5 Administration De Bonis Non Administratis with Will
Annexed (in Ontario, Certificate of Appointment of
Succeeding Estate Trustee with a Will) . . . . . . . . . . . . . . . . . . . . . 8-14
8.3.6 Letters of Administration Pendente Lite (in Ontario,
Certificate of Appointment of Estate Trustee during
Litigation) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-14
8.3.7 Ancillary Letters Probate (in Ontario, Certificate of
Ancillary Appointment of Estate Trustee with a Will) . . . . . . . 8-14
8.3.8 Resealing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-14
8.4 PROBATE FEES OR PROBATE TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-15
8.4.1 Probate Fees Are Minimal in Alberta, Quebec, Yukon,
the Northwest Territories, and Nunavut . . . . . . . . . . . . . . . . . . . 8-17
8.4.2 Assets Not Subject to Probate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-17
8.4.3 Effect of Debts on Probate Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-18
8.5 PROCESS TO OBTAIN GRANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-18
8.5.1 Requirements to Apply for a Grant of Probate in
Common Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-18
8.5.2 Locating the Will . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-19
8.5.3 Affidavit of Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-20
8.5.4 Notice Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-20
8.5.5 Applications for a Grant of Administration . . . . . . . . . . . . . . . . . 8-21
8.5.6 Value of the Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-22
8.5.7 Security for the Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-22
[Link] Obtaining the Grant without Paying Probate Fees . . . 8-23
8.6 PROVINCIAL LEGISLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-23

8-2
 Chapter 8
Obtaining the Grant of Probate

Learning Objectives

Knowledge Objectives
• Appreciate the need to obtain probate and the process involved

Skills Objectives
• Explain the requirement to obtain probate
• Identify the property subject to probate fees
• Determine the probate fees payable
• Describe the process for obtaining the grant

8.1 REQUIREMENT TO OBTAIN PROBATE

8.1.1 Authority of the Executor or Administrator

The authority of the executor appointed under the Will arises immediately upon
death of the testator and derives from the Will itself. However, in many cases it will be
necessary for the executor to obtain Letters Probate in order to deal with the assets
of the estate and carry out the duties of the administration of the estate.

Similarly, where there is no Will, the administrator of the estate must obtain Letters
of Administration in order to be appointed as administrator. Unlike the executor
under a Will, no administrator exists until appointed by the court in the Letters of
Administration. The administrator of an estate has no authority until the grant of
Letters of Administration is given by the court. Until an administrator is appointed,
the authority to manage the estate is lodged with the court.

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8.1.2 CHAPTER 8 — OBTAINING THE GRANT OF PROBATE

8.1.2 Understanding the Process for Obtaining the Grant

In this chapter, reference will be made to the “grant” of Letters Probate or Letters of
Administration and the word “grant” will refer to the obtaining of either through the
probate process. Obtaining the grant is a formal process presided over by the court in
the relevant jurisdiction. In some provinces, there are two courts that have jurisdiction
with respect to estates; in such cases the Superior Court may have jurisdiction over
the interpretation of Wills, and the Surrogate or Probate Court may have jurisdiction
over matters of probate and administration. A table at the end of this chapter lists the
legislation and relevant courts for each jurisdiction relating to probate, interpretation
of Wills, and estate administration (see 8.6, Provincial Legislation).

In Ontario, the process of obtaining probate is called obtaining a “Certificate” and

Letters Probate or Letters of Administration are called a “Certificate of Appointment
of Estate Trustee with a Will” or “Certificate of Appointment of Estate Trustee without
a Will,” respectively.

8.1.3 Benefits of Obtaining the Grant

In some cases, it may be possible to administer an estate without the grant of probate.
However, there may be very good reasons for doing so even where it is not absolutely
necessary.

[Link] Protect the Executor from a Subsequent Challenge and Liability

The executor may want to confirm his or her appointment under the Will
to prevent any subsequent challenge to his or her authority or to limit his
or her potential liability in the event a subsequent Will is discovered or the
Will is declared invalid.

[Link] Ensure Certain Claims Expire

Claims in respect of property by a spouse or dependant relief claim may

expire only after the grant. These claims are discussed in Chapter 6, and a
table at the end of that chapter lists the limitation periods for these claims
(see 6.10, Limitation Periods — Spousal Claims and Dependant Relief).
In Saskatchewan, Manitoba, and Nova Scotia, the limitation period for a
claim by a spouse in respect of property runs from the date of the grant.
And in almost all provinces (except for Quebec and New Brunswick), the
limitation period for a claim for dependant relief runs from the date of

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REQUIREMENT TO OBTAIN PROBATE [Link]

grant of probate. If there is no grant, the right to make these claims may
never expire.

The specifics of potential liability for such unexpired claims is beyond the
scope of this course, but potentially the executor, the beneficiaries, and
any undistributed assets of the estate or any trust created under the Will
could be subject to liability. The executor may be able to reduce the risk of
liability with releases. However, in many jurisdictions the right to support
and dependant relief is not subject to waiver or renunciation, and a release
may not completely eliminate the potential exposure resulting from these
claims if an estate is administered without the grant.

8.1.4 Where Grant Is Mandatory

Generally the grant of probate will be necessary under a number of specific

circumstances.

[Link] Where There Is No Will

Where there is no Will, the administrator must obtain Letters of

Administration in order to have [Link] probate process is mandatory
on intestacy.

[Link] To Deal with Real Property

Title to real property, any mortgages or other loans or guarantees secured

with real property, or any other liens against real property are subject to
the land registration system under provincial legislation. It is usually not
possible to transfer, encumber, or otherwise deal with real property of a
deceased person without the grant. In Ontario, it may be possible to deal
with real property under the Registry Act without a Will. However, this is
becoming less frequently possible as the registration of land in Ontario is
being transferred into the electronic registration system.

Where the real property is located outside the province where the
testator resides, it may still be necessary to obtain a grant of probate in
the other jurisdiction. This can be done by a resealing or, in appropriate
circumstances, by an original grant in the other jurisdiction.

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[Link] CHAPTER 8 — OBTAINING THE GRANT OF PROBATE

[Link] To Deal with Property and Third Parties

Banks, financial institutions, transfer agents for shares of public

corporations, and other third parties will not permit a transfer of property
into the name of the executor or administrator without the grant because
of potential liability. There will be no protection from the claims of others
in the event property is transferred on the instructions of an executor
without a grant if subsequently there is a successful challenge to his or her
authority under the Will. However, if the Will has been probated, there is
statutory protection for acting on the instructions of the executor whose
appointment is confirmed in the grant, even if subsequently the grant is
revoked or otherwise set aside.

For example, the Bank Act1 provides that proof of the grant of probate
“is sufficient justification and authority” for the transfer of the property.
Similarly the Trustee Act2 of Ontario provides:

Revocation of erroneous grant

Validity of prior acts
47. (1) Where a court of competent jurisdiction has admitted
a will to probate, or has appointed an administrator, even
though the grant of probate or the appointment may be
subsequently revoked as having been erroneously made, all
acts done under the authority of the probate or appointment,
including all payments made in good faith to or by the personal
representative, are as valid and effectual as if the same had been
rightly granted or made.

1 Bank Act, S.C. 1991, c. 46, s. 460.

2 Trustee Act, R.S.O. 1990, c.T.23.

8-6
REQUIREMENT TO OBTAIN PROBATE [Link]

Example of Grant Being Revoked

Jennifer died in 2010 with a family home worth $300,000, a RRIF with National
Bank for $143,000 with no beneficiary designation, and GICs and mutual funds
with CIBC in the amount of $90,000. Her executor will find that National Bank,
CIBC, and the Registrar for Land in the province where Jennifer resided will all
require the grant in order to permit the executor to deal with these assets as
part of the administration of the estate.

Assume that Tom is appointed as Jennifer’s executor under her Will. When
Jennifer dies, Tom obtains the grant of probate and proceeds to have all the
assets of the estate transferred to his name as executor. Tom commences
administrating the estate, liquidating the assets, paying the liabilities, and
making distributions. Subsequently, it is discovered that Jennifer was suffering
from an advanced state of dementia at the time she made the Will under which
Tom was appointed. As it turns out,Tom is Jennifer’s next door neighbour who
pressured her into signing the Will appointing him as executor and naming
him as one of the beneficiaries. Jennifer’s daughter, Gina, has possession of an
earlier Will. Gina successfully applies to the court to set aside the Will under
which Tom is appointed and obtains the grant of Letters Probate in respect of
the earlier Will appointing her as executor on the basis that the more recent
Will is invalid.

If any loss has resulted in respect of the assets of the estate under Tom’s control
— for example, if Tom has dissipated the assets, distributed them to a person
who is not a beneficiary under the invalid Will, or a loss has otherwise been
incurred — Gina will not have a cause of action against CIBC, National Bank, or
the Land Registrar of the province since they acted under the authority of the
grant.

In the event any of them had transferred the property to Tom on only the basis
of a copy or a notarial copy of the Will, without the grant having been obtained,
there could be exposure to liability for an amount at least equal to the value of
the assets transferred under Tom’s instructions.

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[Link] CHAPTER 8 — OBTAINING THE GRANT OF PROBATE

[Link] To Conduct or Defend Litigation on Behalf of the Estate or the

Deceased

It will not be possible for the estate to defend or pursue any claim without
the grant.

[Link] To Protect the Executor from Potential Liability

Just as the grant protects third parties who deal with the executor, if the
executor has obtained a grant, the executor will be protected from claims
of others who purport to have authority under another Will or testamentary
document. This does not mean the executor will have protection for his or
her own negligence in carrying out their duties but rather will be protected
vis-à-vis acting as executor per se. The authority of the executor once the
grant is obtained cannot be disputed, unless a further application is made
before the court that issued the grant requesting that the grant be set aside
and stating the basis on which the grant should not have been obtained.

[Link] To Resolve Any Dispute over the Validity of a Will

The Will may be invalid for any number of [Link] could include the
fact that, for example:

• a more recent Will exists that revokes the Will, or there is a

codicil to the existing Will that appoints different executors;

• the testator lacked capacity;

• the testator was subject to undue influence or fraud with

respect to the document; or

• there were errors of execution that cannot be repaired by the

court under substantial compliance legislation, where available.

Where probate has been granted, the Will is presumed to be valid and
third parties may rely on the grant unless it has been revoked. When the
application is made for probate, the validity of the Will may be formally
challenged and the grant will not be made until the challenge is either
withdrawn or adjudicated upon. Where the grant is based on the Will
proven in common form, a subsequent challenge may be filed to revoke the

8-8
REQUIREMENT TO OBTAIN PROBATE 8.1.6

grant, in which case a new grant will be issued; and if there is another Will
it will be based on the new Will being proved in solemn form.A Will proved
in solemn form can be challenged only in limited circumstances (see 8.2.4,
Proving the Will in Common Form and Proving the Will in Solemn Form).

8.1.5 Dealing with the Estate Assets Before the Grant

Probate fees must be paid and the original Will must be located before the grant can
be [Link] potentially produces a catch-22 situation where the executor needs
the grant to open a safety deposit box or to access accounts in a financial institution.

The executor may also need to pay funeral expenses before obtaining a grant since
it takes time to gather the information and have the documents prepared in order to
apply for the grant and additional time for the court office to process the application
and issue the grant.

Many financial institutions will deal with the executor on a limited basis before the
grant is issued. For example, the financial institution may agree to draw a cheque
payable to the funeral home or payable to the Treasurer of the province drawn on the
account in order that the funeral expenses and probate fees may be paid.

Before the grant is issued the executor may want to manage any investment accounts
with brokerage firms or investment [Link] the grant, this may pose some
problems. However, if the instructions are conservative, designed to preserve capital,
or the investments are only being managed in the ordinary course, the financial
institution may permit the executor to give instructions and manage the accounts on
an interim basis until the grant is issued. Conditions may be imposed similar to those
that might be required in order to waive probate.

8.1.6 Assets Not Requiring the Grant

The following items may be transferred without the grant:

• Canada Pension Plan survivor benefit,

• personal effects,

• automobiles (with some exceptions — for example, in British Columbia,

probate is required for vehicles with a value in excess of $25,000),

8-9
8.1.7 CHAPTER 8 — OBTAINING THE GRANT OF PROBATE

• shares of private corporations, and

• any amounts passing outside the estate by virtue of:

◦ property held jointly with a right of survivorship as long as the

deceased is not the sole surviving owner immediately prior to
death,

◦ life insurance passing under a beneficiary designation, or

◦ registered plans such as an RRSP, RRIF, or TFSA passing under a

beneficiary designation.

8.1.7 Waiver of Probate

Where the estate is small or the account with a particular financial institution is under
a certain dollar limit, it may be possible to deal with the estate assets without probate.
Most financial institutions in Canada will agree to transfer assets without probate, but
the conditions may vary and may include specifics as outlined below.

• The account is under a certain dollar limit. As a rule of thumb, banks

may waive probate where the accounts do not exceed $30,000 as a
maximum amount.

• For Canada Savings Bonds, if they do not exceed $20,000 and if the
individual applicant is entitled to the entire estate or if the estate
passes to the surviving spouse, the limit is $75,000. Probate is not
required to transfer these assets.

• In other situations, where the amount is over the institutional dollar

limit, waiver may be granted on additional terms, such as providing
security, indemnities, and/or retaining the funds or investments at the
financial institution.

8-10
JURISDICTION, OFFICIALS, AND THEIR DUTIES 8.2.3

8.2 JURISDICTION, OFFICIALS, AND THEIR DUTIES

8.2.1 Province and Judicial District Where Application for Grant Is Filed

The application for probate is normally made in the province where the deceased
resided at the time of death or was domiciled3 at the time of death. The legislation
in each province may further dictate the particular judicial district where the
application should be made. These rules will generally follow a priority of criteria
such as the place of residence of the deceased or, if not resident in the province, in
the judicial district where the property of the deceased was located.

8.2.2 Role of the Estate Registrar

The district court where the application for the grant is made may be managed by
a local estate registrar, who is responsible for making administrative decisions and
supervising the application procedure. The local registrar may be required to give
notice to a central registrar for the province of any application for probate in order
to ensure multiple grants are not given for the same deceased person. In Ontario, for
example, no grant may be issued until the local registrar has received a certificate
from the Estate Registrar for Ontario that no other application for a grant has been
made for that deceased person.

8.2.3 Role of Court Officials and Judge

The application for the grant along with all supporting documents, including security
or proof of security (where required) and payment of probate fees, is usually filed on
an over-the-counter basis at the relevant court office. Once the application is filed, the
court officials will review the application and the documents to make sure everything
required is included and that the Will is in a proper condition and has been executed
in accordance with the provincial requirements. If the application fails to conform
with any of the requirements, the applicant will be contacted and required to repair
the deficiencies by filing amended documents or submitting additional documents or
information before the grant will be issued.

Once the application is complete and errors or deficiencies addressed, a judge will
normally review the application and sign the order to issue the grant on an in camera
basis — that is, without any public hearing or even the requirement that anyone

3 Generally in this material, the individual is assumed to be resident and domiciled in the same jurisdiction.
However, the domicile of an individual may change the relevant jurisdiction for probate and the applicable
law. See 14.3, Domicile and Residence, for clarification of residence versus domicile.

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8.2.4 CHAPTER 8 — OBTAINING THE GRANT OF PROBATE

appear in person before the judge. This non-contentious process of obtaining a grant
is called “proving the Will in common form.”

8.2.4 Proving the Will in Common Form and Proving the Will in Solemn Form

Where the Will is proved in common form, it is valid and third parties may rely on the
authority of the grant unless it is subsequently revoked. A grant proved in common
form may be subject to challenge at a subsequent time by a formal action brought to
revoke the grant of probate on the basis that the Will was not valid.

A Will may also be proved in solemn form, in which case it cannot be challenged
subsequently except in limited circumstances. This normally occurs only where
there is a dispute over the validity of the Will or there is some question as to the
validity of the Will that the executor wants reviewed by the court. Additional steps
may be required to obtain the grant in solemn form, including more onerous notice
requirements and a formal court hearing before a judge. For example, if the capacity
of the testator is in question, a formal hearing may be required and witnesses called
before the grant can be issued. In such a case, if the Will is found to be valid and the
grant issued, it will be proved in solemn form.

Proof in solemn form protects the Will from a later action to revoke the grant unless
it is discovered that the Will was revoked or the grant in solemn form was obtained
by fraud. Due to the permanent nature of the grant proved in solemn form, the
process is more formal. A grant proved in solemn form may be requested even where
a grant has been proved in common form, where there is a dispute over the validity
of the original grant. The Will proposed to be probated may be subject to protest by
a beneficiary, who files a caveat with the court office after receiving notice of the
application for the grant. Alternatively, once the grant is obtained by proving the Will
in common form, someone may commence an action for revocation of the grant. In
both these cases, the executor will be required to prove the Will in solemn form.

The more formal procedures and rules in respect of any hearing required will be
prescribed under the relevant provincial rules for a Will to be proved in solemn form.

8.3 TYPES OF GRANTS AND MODERN LANGUAGE

In addition to a grant of Letters Probate made to an executor with a Will, there are
a number of other grants that may be made. For example, Letters of Administration
is the name of the grant to an administrator where there is no Will, but there are
other variations of grants listed below. These have confusing legal names, using Latin,

8-12
TYPES OF GRANTS AND MODERN LANGUAGE 8.3.3

although many provinces now use more modern descriptive language for these
different types of grants.

In Alberta, the Latin has been removed from the legislation relating to estate
administration and been replaced by gender-neutral plain language. “Personal
representative,” for example, is the term used to describe executors with a Will,
administrators without a Will, and trustees whether male or female.

In Ontario, “estate trustee” is used to describe an executor or an administrator

whether male or female, eliminating the now archaic and awkward Latin terms
“executor,”“executrix,”“administrator,” and “administratrix.”

8.3.1 Letters Probate (in Ontario, Certificate of Appointment of Estate

Trustee with a Will)

This is a grant given by a court certifying that the Will that is attached to the grant has
been duly proved and registered with the court and verifying the executor’s authority
named under the Will.

8.3.2 Letters of Administration (in Ontario, Certificate of Appointment of

Estate Trustee without a Will)

This is a grant where the deceased died intestate. When issued, this grant authorises
the person appointed, called the “administrator” (or, in Ontario, the estate trustee
without a Will), to administer the estate.

8.3.3 Letters of Administration with Will Annexed (in Ontario, Certificate of

Appointment of Estate Trustee with a Will)

This is similar to Letters Probate since there is a Will but made to a person other
than an executor named in the Will. This may be required if the executor has died,
is unable to act, or has renounced his or her appointment. In rare cases, such as
with a homemade or holograph Will, the testator may have neglected to appoint an
executor. In any of these situations another person not named in the Will may apply
for this grant. The application process is similar to that for Letters Probate, although
there may be additional requirements. For example, in Ontario, security is required
if the applicant is not named as the executor in the Will, although, as in most cases,
the court has the authority to waive this requirement. As with an intestate estate,
someone must apply to administer the estate and be appointed by the court as part
of the probate process (see 5.6, Appointment of Administrator of an Intestate Estate).

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8.3.4 CHAPTER 8 — OBTAINING THE GRANT OF PROBATE

8.3.4 Administration De Bonis Non Administratis (in Ontario, Certificate of

Appointment of Succeeding Estate Trustee without a Will)

Where Letters of Administration have already been issued and it is necessary to

appoint a new administrator, the original grant must be surrendered and a new
application for a grant made.

8.3.5 Administration De Bonis Non Administratis with Will Annexed (in

Ontario, Certificate of Appointment of Succeeding Estate Trustee with a
Will)

This is similar to where Letters Probate have been issued and the sole remaining
executor dies. The court will appoint another person to administer the estate. This
grant is not issued if the executor dies before Letters Probate were obtained, in which
case Letters of Administration with Will Annexed should be issued (see 8.3.3, Letters
of Administration with Will Annexed (in Ontario, Certificate of Appointment of Estate
Trustee with a Will)).

8.3.6 Letters of Administration Pendente Lite (in Ontario, Certificate of

Appointment of Estate Trustee during Litigation)

This is a grant of probate made by the court in order to preserve the assets of the
estate when there is a legal action to resolve a dispute over the validity of the Will.
Pendente lite means “during litigation.”

8.3.7 Ancillary Letters Probate (in Ontario, Certificate of Ancillary

Appointment of Estate Trustee with a Will)

Ancillary Letters Probate are issued where the original grant has been issued by a
foreign non-British court and the deceased owned property in the province. This
grant is required in order to administer the assets located in the province.

8.3.8 Resealing

Where a grant is made by a British court or another province or territory in Canada,

the original grant given in a particular province may be resealed in another province.
This permits the transfer of property outside the jurisdiction where the grant was
originally made. Where the grant is resealed, it has the same force and effect as if it
had been originally granted in that jurisdiction.

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PROBATE FEES OR PROBATE TAXES 8.4

8.4 PROBATE FEES OR PROBATE TAXES

Generally probate fees or probate taxes must be paid in order for the grant to be
issued.

While probate fees vary across Canada, it is important to recognise not only the
potential liability in the particular jurisdiction where the individual is resident but
also in other jurisdictions in Canada where relevant. For example, it may be necessary
to obtain probate (or a resealing of the original grant) and pay probate fees or taxes in
another jurisdiction if the deceased owned property, especially real property, outside
the province or territory of residence.

Until Eurig,4 the fees for obtaining probate were considered just that — probate “fees.”
However, in Eurig, the constitutionality of the Ontario probate fees was challenged
on the basis that since the amount of the fee bore no relation to the service provided
(i.e., they were not a flat rate but rather were based on the value of the estate), the
fees were actually a tax. Since taxes could not be imposed by regulation, this would
have invalidated all probate fees charged in Ontario since they were imposed by
regulation. Similar analysis applied to other province’s probate fee regimes as well.

The Supreme Court of Canada agreed but permitted retroactive amendment to the
legislation in order to permit the province to incorporate the fees into the actual
statute. Other provinces followed suit, with the result that in Ontario “probate fees”
are now called “estate administration taxes,” although in other provinces they are still
commonly referred to as “probate fees.” In this chapter they are referred to variously
as probate fees or probate taxes, although technically they are only fees in the
provinces that charge nominal amounts.

The amount of probate taxes by province and probate fees by province are included
in Figures 8.1 and 8.2.

Figure 8.1: Sliding Scale Probate Fees and Taxes by Jurisdiction

Jurisdiction Estate Value Fee Rate on the Balance Example: On
Range $1,000,000
British Columbia Under $25,000 Nil n/a
Probate Fee $25,000–$50,000 $208 Plus $6/$1,000 (0.6%)
Over $50,000 $358 Plus $14/$1,000
(1.4%) $13,658

4 Re Eurig Estate, [1998] 2 S.C.R. 565.

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8.4 CHAPTER 8 — OBTAINING THE GRANT OF PROBATE

Jurisdiction Estate Value Fee Rate on the Balance Example: On

Range $1,000,000
Saskatchewan Probate n/a n/a $7/$1,000 (0.7%)
Fee $7,000
Manitoba Probate Fee Under $10,000 $70 n/a
Over $10,000 $70 Plus $7/$1,000
(0.7%) $7,000
Ontario Estate Under $1,000 Nil n/a
Administration Tax Under $50,000 Nil $5/$1,000 (0.5%)
Over $50,000 $250 Plus $15/$1,000
(1.5%) $14,500
New Brunswick Probate Under $5,000 $25 n/a
Tax $5,000–$10,000 $50 n/a
$10,000–$15,000 $75 n/a
$15,000–$20,000 $100 n/a
Over $20,000 Nil $5/$1,000 (0.5%) $5,000
Newfoundland and Under $1,000 $60 n/a
Labrador Probate Fees Over $1,000 $60 Plus $5/$1,000 (0.5%) $5,000
Nova Scotia Probate Under $10,000 $83.10 n/a
Tax $10,000–$25,000 $208.95 n/a
$25,000–$50,000 $347.70 n/a
$50,000–$100,000 $973.45 n/a
Over $100,000 $973.45 Plus $16.45/$1,000
(1.645%) $15,778.45
Prince Edward Island Under $10,000 $50 n/a
Probate Fees $10,000–$25,000 $100 n/a
$25,000–$50,000 $200 n/a
$50,000–$100,000 $400 n/a
Over $100,000 $400 Plus $4/$1,000
(0.4%) $4,000

Figure 8.2: Fixed Rate Probate Fees by Jurisdiction

Jurisdiction Estate Value Range Fee
Alberta, Northwest Territories, and Nunavut $10,000 and under $25
$10,000–$25,000 $100
$25,000–$125,000 $200
$125,000–$250,000 $300
Over $250,000 $400
Quebec Notarial Will Nil
Other Wills $95
Yukon $25,000 or under Nil
Over $25,000 $140

8-16
PROBATE FEES OR PROBATE TAXES 8.4.2

8.4.1 Probate Fees Are Minimal in Alberta, Quebec, Yukon, the Northwest
Territories, and Nunavut

In Alberta, the Northwest Territories, and Nunavut, the maximum probate fees are
$400 on estates worth $250,000 and over.

In Quebec, no probate fees are required on a notarial Will since probate is not
required and the fee to probate any other type of Will is $95.

In Yukon, probate fees are a maximum of $140 on estates in excess of $25,000.

In all other provinces, however, probate fees based on a percentage of the value of
the assets of the estate without any maximum and based on the Eurig decision are
properly described as probate taxes. Depending on the value of the estate, the costs
can be significant, with Nova Scotia now surpassing Ontario as the jurisdiction with
the highest rate of probate taxes. Probate fee planning is the subject of Chapter 9.

8.4.2 Assets Not Subject to Probate

The assets that are subject to probate are only those that pass through the estate and
under the administration of the Will or under the administration of the grant without
a Will.

As a matter of jurisdiction, real property located outside the province is generally

excluded from the calculation of probate fees since levying probate fees on real
property outside the province would be beyond the powers of the province under
the rules relating to conflicts of laws and under Canada’s Constitution. In some
provinces real property outside the province is expressly excluded, whereas in others
it is excluded by practice.

Assets not subject to probate should not be confused with assets that do not require
probate to be administered or managed by the executor or administrator. If probate
is required, the value of all assets of the estate, even those that do not require probate
in order to transfer title, must be included in the value of assets of the estate upon
which the fees are calculated.

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8.4.3 CHAPTER 8 — OBTAINING THE GRANT OF PROBATE

8.4.3 Effect of Debts on Probate Fees

Normally liabilities of the deceased are not deducted from the value of the estate in
determining the amount of probate fees. However, there are exceptions. Usually any
amount that is secured against real property may be deducted.

In Ontario, the forms specifically indicate that “insurance payable to a named

beneficiary or assigned value if a property held jointly and passing by survivorship,
or real estate outside Ontario” will be excluded. This is consistent with property
passing outside the estate being excluded from probate fees and real estate outside
the province being excluded. In addition, in Ontario, the value of the estate is subject
to the estate administration tax reduced by “the actual value of any encumbrance on
real property that is included in the property of the deceased person.”5 Similar and
other exclusions exist in other jurisdictions.

Mortgages and other encumbrances on real property can also be deducted from the
amount subject to probate in British Columbia (practice of court registrar), New
Brunswick (statutory), and Nova Scotia (regulations). Generally this is the practice in
all jurisdictions.

All debts and liabilities against property in the jurisdiction may be excluded from the
calculation in the Northwest Territories and Nunavut.

Alberta calculates its minimal probate fees on the net estate after deduction of all
debts and encumbrances.

In British Columbia, an administrative policy permits any security registered under

the Personal Property Security Act to be deducted from the value of assets subject to
probate.

8.5 PROCESS TO OBTAIN GRANTS

8.5.1 Requirements to Apply for a Grant of Probate in Common Form

While the details of the rules vary from province to province, the application for
probate in the common-law provinces is very similar.6 The estate solicitor will attend
to preparing the necessary documents, sending notices and filing the required

5 Estate Administration Tax Act, 1998, S.O. 1998, c. 34, s. 1, definition of “value of the estate.”
6 Probate of Wills in Quebec is rare. These requirements do not address Quebec requirements where probate
may be required.

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PROCESS TO OBTAIN GRANTS 8.5.2

documents with the court. If the executor is a corporate trustee, or has retained a
corporate trustee as agent for the executor, the corporate trustee will usually attend
to sending the required notices and preparing the inventory of assets.

The following documents will usually be required for the application:

• the formal application requesting the court to issue the grant,

• the original signed Will (or notarial copy of a notarial Will from
Quebec),

• proof that notices of the application, and prescribed information,

have been sent to all beneficiaries and other parties as required,

• an affidavit of execution of the Will (where required),

• a list of assets, and the fair market value, at date of death,

• a listing of liabilities at date of death,

• a listing of beneficiaries and their entitlement,

• the renunciation of any executor who is not a party to the application,

• proof of bond or security if the executor is resident outside Canada,

and/or

• payment of the relevant probate fees or taxes.

British Columbia: A Certificate of Wills Notice Search is also required.

Ontario: An Estate Information Return must be filed with the Ministry of Finance
within 90 calendar days following the issuance of the Certificate of Appointment of
Estate Trustee.

8.5.2 Locating the Will

It is necessary to file the original signed Will in order to obtain probate. However, if
the original cannot be found, the rules usually provide for proving a lost Will, although
this will require additional steps and paperwork. The original Will is similar to a
signed cheque, in that there should only be one original. This will prevent confusion

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8.5.3 CHAPTER 8 — OBTAINING THE GRANT OF PROBATE

if an executor may already have possession of the original Will or be able to obtain
it from friends or from among the papers of the deceased. If the original is kept in a
safety deposit box at a financial institution, it may be difficult to gain access since the
financial institution will normally require proof of the grant in order to permit the
executor to have access to the safety deposit box. However, this can usually be sorted
out with the financial institution on terms, such as providing a death certificate and
having a representative of the financial institution present when the box is opened.
In British Columbia, there is specific legislative provision for accessing the box prior
to probate.7

In British Columbia and Quebec, Will Registries are kept and a search can be
conducted. If the testator has ever lived in Quebec, it may be appropriate to search
the various registers there for Wills or marriage contracts (see Chapter 7 for details).
An inquiry may also be made at the office of the solicitor for the testator. If no Will
can be found and there is no evidence of a lost Will, it may be necessary to proceed
as on intestacy.

8.5.3 Affidavit of Execution

In some provinces, the solicitor who prepared the Will prepares an Affidavit of
Execution shortly after the Will has been executed and keeps it with the original Will.
If this has not been done, the Affidavit of Execution may need to be obtained prior to
obtaining the grant. Special rules exist in the event the Affidavit of Execution cannot
be obtained from the witness.

8.5.4 Notice Requirements

Each province has rules that set out who must be notified of an application for a
grant. Generally the rules are similar and require notice be sent to:

• all beneficiaries, whether specifically named or a class of beneficiaries,

• those who would be beneficiaries if there was an intestacy (British

Columbia),

• spouses and dependants entitled to apply to vary the Will,

• a surviving spouse who has been separated from the deceased for a
specified period,

7 Estate Administration Act, R.S.B.C. 1996, c. 122, s. 118.

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PROCESS TO OBTAIN GRANTS 8.5.5

• if the beneficiary is a minor, to the minor’s parent(s) or guardian(s)

as well as the province’s Public Guardian and Trustee (Ontario: the
Children’s Lawyer), and/or

• if the beneficiary is or may be an incapable adult, the adult’s legal

representative if there is one (e.g., property guardian or, in some
cases, an attorney under an enduring power of attorney) as well as
the province’s Public Guardian and Trustee.

Legislation sets out the information that must be included in the [Link] will often
include a copy of the Will. In some jurisdictions, if the beneficiary is only entitled to
a legacy, the information required may be limited to an excerpt from the Will setting
out the entitlement.

The notice will also set out the first date after which an application for the grant can
be made. This allows the recipient to make inquiries and obtain legal advice if there
are questions about the recipient’s rights or there are questions about the validity of
the Will.

8.5.5 Applications for a Grant of Administration

Although anyone can apply for a grant of administration, legislation usually sets out a
hierarchy based on family relationships (e.g., spouse, children, siblings, etc.).

If an application for a grant of administration is required, much of the same

information is required as for a grant of probate. Requirements include:

• an affidavit stating that a Will could not be located, with applicable

evidence of efforts made, and explaining the applicant’s relationship
to the deceased;

• where the named executor has renounced, a renunciation signed by

the executor or evidence as to why a named executor is not able to
accept the appointment;

• renunciation by those with priority over, or equal priority to, the

person applying for the grant;

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8.5.6 CHAPTER 8 — OBTAINING THE GRANT OF PROBATE

• confirmation that notices have been delivered to all intestate

beneficiaries entitled to share in the estate (see Chapter 5) and others
as required by the applicable legislation;

• asset, liability, and beneficiary information as above;

• proof of bond or other security if applicable; and

• payment of the relevant probate fees or taxes.

8.5.6 Value of the Estate

The value of the estate must be estimated in order to obtain the grant and to calculate
the amount of the probate fees or taxes payable. Where the assets of the estate are
complex, it may be possible to obtain a grant with an estimated value or with the
value to be ascertained and pay the probate fees or taxes based on that value, pending
a later finalisation of the valuation of the assets.

8.5.7 Security for the Administration

Corporate trustees are not required to post security when administering an estate
with or without a Will. Executors named in a Will also do not have to post security. If
the executor lives outside Canada, security may be required.

When there is no Will, security is required for all personal administrators. The
court has discretion to waive security where it is satisfied that the interests of all
beneficiaries and creditors will be protected. Security may be waived where:

• there are no debts,

• the value of the estate is small,

• the applicant is the beneficiary, or

• all parties or their representatives are potentially beneficially

interested in the estate consent.

Security may be in the form of a bond, or other arrangements may be possible

depending on the assets. If the beneficiary(ies) include minors or an incapable adult,
security will usually be required.

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PROVINCIAL LEGISLATION 8.6

[Link] Obtaining the Grant without Paying Probate Fees

Some provinces provide special rules for obtaining the grant in advance
of paying probate fees. For example, in Ontario, the grant may be issued
before payment of the estate administration tax where the judge is satisfied
that the grant is urgently required, financial hardship would result without
the grant, and sufficient security is given. Such applications should be used
as a last resort as they are not readily granted unless the circumstances are
severe.8

8.6 PROVINCIAL LEGISLATION

Jurisdiction Legislation re: Probate Fees

Court of Jurisdiction over Probate and Estates
British Columbia Supreme Court Rules, B.C. Reg. 221/90, Appendix C, Schedule 1;
Probate Fee Act, S.B.C. 1999, c. 4, s. 2
Supreme Court
Alberta Surrogate Rules, Alta. Reg. 130/95, Schedule 2
Court of Queen’s Bench
Saskatchewan Administration of Estates Act, S.S. 1998, c. A-4.1, s. 51(2)
Court of Queen’s Bench
Manitoba Law Fees and Probate Charge Act, C.C.S.M., c. L80, Schedule
Court of Queen’s Bench
Ontario Estate Administration Tax Act, 1998, S.O. 1998, c. 34, s. 2(6)
Superior Court of Justice
Quebec Tariff of Court Costs in Civil Matters and Court Office Fees, c. T-16,
r. 11.3, s. 17
Superior Court
New Brunswick Probate Court Act, S.N.B. 1982, c. P-17.1, Schedule A
Court of Queen’s Bench and the Probate Court
Prince Edward Island Probate Act, R.S.P.E.I. 1988, c. P-21, Part IV
Estates Section of the Supreme Court
Newfoundland and Labrador Services Charges Act, S.N.L. 1998, c. S-13.2, s. 4
Supreme Court
Nova Scotia Probate Act, S.N.S. 2000, c. 31, s. 87
Supreme Court and the Probate Court
Yukon Rules of Court (effective Sept. 15, 2008), Appendix C, Schedule 1
Supreme Court
Northwest Territories Probate, Administration and Guardianship Fees Regulations,
R-005-2002, Schedule
Nunavut Court Fees Regulations, R-010-2007, Sched. B

8 See Re Ethier Estate (2000), 35 E.T.R. (2d) 219 (Ont. S.C.).

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 CHAPTER 9
PROBATE FEE PLANNING

LEARNING OBJECTIVES

9.1 INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-5

9.1.1 Caution, Caution, Caution: Probate Fee Planning Is
Only Part of the Planning Process . . . . . . . . . . . . . . . . . . . . . . . . . . 9-5
9.1.2 Example of Consequences of Bad Planning with
Jointly Held Property and Elderly Parents . . . . . . . . . . . . . . . . . . . 9-6
9.1.3 More Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-7
[Link] Capital Gains on Principal Residence . . . . . . . . . . . . . . . . 9-7
[Link] Tax Payable by Joint Owners . . . . . . . . . . . . . . . . . . . . . . . . 9-7
9.1.4 Disruption of the Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . 9-7
[Link] Example of Disruption of Distribution . . . . . . . . . . . . . . . 9-8
[Link] Jointly Held Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-9
[Link] Beneficiary Designations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-9
9.1.5 Diminishing Return of Probate Fee Planning . . . . . . . . . . . . . . . . 9-9
9.2 OTHER BENEFITS OF REDUCING THE VALUE OF THE ESTATE. . . . . 9-10
9.2.1 Privacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-11
9.2.2 Executor Fee Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-11
9.2.3 Savings on Legal Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-11
9.2.4 Protection from Claims of Spouses in Respect of
Property and Dependant Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-12
9.2.5 Protection from Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-12
9.3 PROBATE FEE PLANNING STRATEGIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-12
9.3.1 Objective of Planning Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . 9-12
9.3.2 Reduce Value of Assets in the Estate . . . . . . . . . . . . . . . . . . . . . . . 9-13
9.3.3 Life Insurance Beneficiary Designations . . . . . . . . . . . . . . . . . . . 9-13
[Link] Estate Is Default Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . 9-13
[Link] Protection from Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . 9-14
[Link] Liquidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-14

9-1
 [Link] Trusts for Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . 9-14
[Link] Insurance Proceeds Payable to the Estate . . . . . . . . . . . 9-15
9.3.4 Beneficiary Designations for Registered Plans . . . . . . . . . . . . . 9-15
[Link] Tax Consequences of Beneficiary Designations . . . . . 9-16
[Link] Provincial Legislation Governs Beneficiary
Designations for Registered Plans . . . . . . . . . . . . . . . . . . 9-17
[Link] Creditor Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-17
9.3.5 Limitations of Beneficiary Designations Where Trusts
Are Created . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-17
9.3.6 Multiple Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-18
[Link] Many Wills; One Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-18
[Link] Origin of Multiple Will Strategy . . . . . . . . . . . . . . . . . . . . . 9-19
[Link] Multiple Wills Outside British Columbia and
Ontario. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-20
[Link] Drafting Multiple Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-20
9.3.7 Property Held Jointly with a Right of Survivorship . . . . . . . . . 9-21
[Link] Types of Joint Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-21
[Link] Joint Ownership with a Right of Survivorship
and Probate Fee Planning . . . . . . . . . . . . . . . . . . . . . . . . . . 9-22
[Link] Joint Ownership with a Spouse . . . . . . . . . . . . . . . . . . . . . 9-22
[Link] Tax Consequences of Creating Joint Accounts. . . . . . . 9-23
[Link] Problems with Jointly Held Property with
a Right of Survivorship: Conflict between
Surviving Owners and Beneficiaries of the Estate . . . 9-23
[Link] Disadvantage: Difficulty with Severance . . . . . . . . . . . . 9-24
[Link] Other Problems with Jointly Held Property
with a Right of Survivorship . . . . . . . . . . . . . . . . . . . . . . . . 9-24
9.3.8 Effect of Presumption of Advancement and
Presumption of Resulting Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-26
[Link] The Presumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-26
[Link] Documenting Intention . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-27
[Link] Effect of Pecore and Madsen on Presumption
of Resulting Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-27

9-2
 [Link] Probate Fee Planning Causes Litigation Where
Intention of Deceased Ambiguous: Neufeld
and the Doctrine of Resulting Trust . . . . . . . . . . . . . . . . . 9-28
9.3.9 Alter Ego Trusts and Joint Partner or Common-law
Partner Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-29
9.3.10 Uses of Corporations in Probate Fee Planning . . . . . . . . . . . . . 9-32
[Link] Matching Assets with Debt in a Corporation . . . . . . . . 9-33
[Link] Facilitating the Use of Multiple Wills . . . . . . . . . . . . . . . . 9-33
9.3.11 Other Will Substitutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-33
[Link] Inter Vivos Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-33
[Link] Inter Vivos Trusts Other than Alter Ego or
Joint Partner or Common-law Partner Trusts . . . . . . . 9-35
9.3.12 Eliminating the Need for Probate. . . . . . . . . . . . . . . . . . . . . . . . . . 9-35
9.4 USING A HOTCHPOT CLAUSE TO ADJUST FOR
DISTRIBUTIONS OUTSIDE THE ESTATE . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-37
9.4.1 Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-37
9.5 EXAMPLES OF PROBATE FEE PLANNING CASE STUDIES . . . . . . . . . 9-38
9.5.1 Example of Planning for Husband and Wife — Ronald
and Nancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-38
9.5.2 Example of Planning with Husband and Wife — Fred
and Wilma. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-38

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 Chapter 9
Probate Fee Planning

Learning Objectives

Knowledge Objectives
• Understand the benefits of probate fee planning

Skills Objectives
• Identify probate fee planning strategies
• Describe the advantages and disadvantages of probate fee planning strategies

9.1 INTRODUCTION

An examination of the table of provincial probate fees in Chapter 8 (see Figure 8.2)
will demonstrate the motivation for engaging in probate fee planning.

Generally probate fees will not be a planning priority in Alberta, Quebec, Yukon,
the Northwest Territories, and Nunavut. In these jurisdictions the fees are nominal.
However, if an individual lives in one of these jurisdictions but has real property in one
of the other provinces that impose higher fees (i.e.,“probate tax”), some consideration
may be given to probate fee planning regarding that extra-provincial property.

Probate fee planning may have other benefits besides reduction of fees.

9.1.1 Caution, Caution, Caution: Probate Fee Planning Is Only Part of the
Planning Process

Probate fees are easily understood, as they are similar to sales tax. They represent a
flat rate — or almost flat rate — upon the value of an estate. The simplicity of the

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9.1.2 CHAPTER 9 — PROBATE FEE PLANNING

tax betrays the complex consequences that are set into motion when attempting
to reduce the liability. This is one aspect of estate planning that many people are
aware of and where, often to their detriment, individuals engage in ill-advised self-
help. It is the case of a little knowledge being dangerous. Any discussion of probate
fee planning must be predicated with this caution: the tail should not wag the dog.

Many probate fee planning strategies can be implemented easily and without the
benefit of a solicitor or legal advice (perhaps with the exception of transfers of real
property). These include making beneficiary designations and transferring property
into joint names. Individuals often succumb to the temptation of self-help, as taking
action without advice to reduce the potential probate fee bill on death can be
irresistible.

In no other area of estate planning are there so many misconceptions and so many
mistakes made — perhaps with the exception of self-made Wills, though homemade
probate fee planning and Wills often accompany each other. Even though there may
be a reduction of probate fees, unintended consequences are often encountered.
These may increase the cost of administering the estate, result in lost opportunities
for tax planning, or alter the distribution plan to beneficiaries. In many cases doing
nothing would have produced the far better result. Probate fee planning must be
viewed not in isolation, but only as one objective in the estate planning process.
Implementation of any probate fee planning steps must be consistent with the other
objectives.

9.1.2 Example of Consequences of Bad Planning with Jointly Held Property

and Elderly Parents

It is not unusual for the children of elderly parents, or the sole surviving parent, to
scramble as the parent’s health deteriorates to do some “quick and dirty” probate fee
planning. This usually results in the children convincing the parent to transfer assets
into joint names with the children with a right of survivorship. Assets transferred
often include investment accounts, the principal residence, and family cottage. In
addition, the parent is urged to update the beneficiary designations for RRIFs and
insurance policies to make each child a co-beneficiary.

If nothing goes wrong, that is, no child dies before the parent, and the parent dies
within the year rather than living for a number of years, the planning may not have
any harmful effects. However, few professionals would implement an estate plan that
could potentially lead to the following results:

9-6
INTRODUCTION

• more income tax being payable than probate fees are saved and

• the client’s indented distribution of wealth will be thwarted if certain

future events intervene before he or she dies.

9.1.3 More Income Tax

[Link] Capital Gains on Principal Residence

If the principal residence has been transferred, the principal residence

exemption may be compromised since there are now multiple owners
who must claim the exemption for the years of ownership to the exclusion
of any other property if the entire gain is to be sheltered. If children have
their own residences, they may be giving up the exemption on their own
property for some years, or the gain on the home previously owned solely
by the parent will not be fully sheltered.

[Link] Tax Payable by Joint Owners

Children may be in higher tax brackets than the parent, and there is a
risk with this kind of planning that the Canada Revenue Agency (CRA)
will assess the children on their portion of the income from the jointly
held property. In addition, a transfer of property by gift to children may be
viewed as a disposition at fair market value, resulting in tax on capital gains
at the time property is transferred into joint [Link] legal consequences
of joint accounts are no longer certain as a result of the Pecore and Madsen
decisions, leading to uncertainty about the tax results as well. See [Link],
Effect of Pecore and Madsen on Presumption of Resulting Trust.

9.1.4 Disruption of the Plan of Distribution

Inappropriate probate planning may also result in the entire distribution of the
individual’s estate being disrupted and the frustration of testamentary intentions
(i.e., wealth will not be divided or distributed in accordance with the wishes of the
individual).

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[Link] CHAPTER 9 — PROBATE FEE PLANNING

[Link] Example of Disruption of Distribution

An example may provide insight into the potential distribution difficulties.

Bertha’s husband passed away six years ago. Bertha has two children,
Vivian and Bob. Vivian has two children, 12 and 15, and is currently
separated from her husband. Vivian and her brother, Bob, are the co-
executors of Bertha’s estate.

A couple of years ago, after discussions with Bertha’s financial

advisor, Vivian and Bob convinced Bertha to transfer her $1,000,000
investment account at BBF Securities into joint names with a right
of survivorship in order to save probate fees. Vivian and Bertha are
killed together in a car accident while Vivian is driving Bertha to
chemotherapy treatment.

Bertha’s estate consists of her home and furnishings worth

approximately $400,000 and bank deposits and GICs worth another
$50,000. Bob, as the sole surviving owner of the joint investment
account, will receive the $1,000,000. Under the terms of Bertha’s Will,
the residue is to be divided equally between Vivian and Bob with a gift
over for any pre-deceased child’s share to their issue in equal shares
per stirpes. Accordingly, the residue of the estate is divided equally
between Bob and his sister’s two children. Although Bob receives the
entire $1,000,000, Vivian’s children may claim no gift was intended
and Bob is holding the account in trust for Bertha’s estate (see the
Pecore and Madsen decisions).

In addition, Bertha had a RRIF worth $160,000. She designated Vivian

and Bob as the beneficiaries and since Bob is the sole surviving
beneficiary, he also receives the RRIF without having to share any
of the value of it with Vivian’s children. The estate will also have to
pay the tax on the RRIF, further reducing the inheritance of Vivian’s
children.

This fact situation demonstrates the difficulty of using Will substitutes to

implement probate fee planning.

9-8
INTRODUCTION 9.1.5

There are other probate fee planning strategies that could have been
employed in this case. If Bertha is at least 65 she could have used an alter
ego trust to hold her investment assets and shelter them from probate. She
also could have changed her Will to include a hotchpot clause to adjust
the distribution of her estate to take into account property passing to any
beneficiary outside her estate as a result of her death. A more sophisticated
discussion of various techniques will follow later in this chapter.

[Link] Jointly Held Property

With jointly held property it is not possible to provide for succession as

it is in a Will. In a Will, if the intended beneficiary dies before the testator,
provision may be made for a gift over to other beneficiaries. If the intended
beneficiary is a child, the gift over is often to the surviving issue of the
deceased child. However, if the property is jointly held, and the intended
beneficiary dies, the property will always pass by operation of law to the
other surviving joint owner or owners. This may not always be the result
intended if there is an “out of order” death (i.e., a transferee joint owner
dies before the original sole owner of the property).

[Link] Beneficiary Designations

Beneficiary designations may also be problematic. In most cases, unless

contingent beneficiaries are designated, the surviving beneficiaries in a
designation will take the entire property. Even if contingent beneficiaries are
designated, it is not possible to provide for the same complexity or number
of alternate beneficiaries that may be included in a Will. There are limits
on the extent to which gifts over can be structured through a contingent
beneficiary designation. For example, in the case discussed above, Vivian’s
children have not attained the age of majority. It is not possible to structure
a detailed testamentary trust in a beneficiary designation in the same way
this can be done in a Will.

9.1.5 Diminishing Return of Probate Fee Planning

The greater the value of the estate, the greater the probate fees. In proceeding with
any probate fee planning, a cost/benefit analysis is relevant. For example, in the case
of Bertha, a $1,000,000 investment account could be transferred into an alter ego
trust. However, the legal costs and other potential costs — such as annual filing of

9-9
9.2 CHAPTER 9 — PROBATE FEE PLANNING

trust tax returns, transfer taxes, or other transfer fees, and ongoing legal and tax
advice — have to be weighed against the probate fee savings. This will depend on a
number of factors.

• How much are the probate fees in the particular province?

• Are there other assets that could be transferred to the alter ego trust
or other benefits that could be obtained from the strategy suggested?

• Does the client have tolerance for complexity?

• Is the individual able to understand and make decisions about

sophisticated planning strategies?

• Is the individual comfortable paying for professional advice to

properly consider and implement the planning strategies?

• Does the plan involve continuing costs and filing requirements?

• What is the total cost of implementing the plan?

• Are there other cost saving or tax saving strategies that are more
appropriate or produce better savings?

• Will family members understand and appreciate the strategy and

take the appropriate steps to follow the plan after the death of the
testator?

9.2 OTHER BENEFITS OF REDUCING THE VALUE OF THE ESTATE

Reducing the value of the estate, or structuring one’s affairs to avoid probate
altogether, has potential benefits other than probate fee savings. These include the
following:

• privacy,

• executor fees savings,

• savings on legal fees,

9-10
OTHER BENEFITS OF REDUCING THE VALUE OF THE ESTATE 9.2.3

• protection from claims of spouses in respect of property and

dependant relief, and

• protection from creditors.

9.2.1 Privacy

The application for probate, including the supporting documents that show the value
of the estate and the contents of the Will, are a matter of public record. Obtaining
probate exposes the entire contents of the Will and the value of the assets of the
estate to public scrutiny. Many individuals and their families would prefer not to have
this information available to the public. Even in jurisdictions where probate fees are
not a factor, inter vivos trusts and other Will substitutes may be used by wealthy
families or those for whom privacy is a priority to transfer assets on death outside the
estate.

9.2.2 Executor Fee Savings

The costs of executor fees are usually based on the value of the assets of the estate
under administration. Significant reduction in the value of the estate or the assets
passing under the Will can reduce executor’s [Link] is not normally an issue where
the executor is the beneficiary or where the executor is a family member who may
not be taking compensation. However, depending on the complexity of the assets
and the nature of the estate, it may be appropriate even for a family member to
charge fees, especially where there are other beneficiaries who are not executors. In
addition, where a trust company is an executor, reducing the value of the estate may
reduce the fees. Executor’s fees are typically a maximum of 5% of the value of assets
under administration.

Corporate executors (i.e., trust companies), who agree with the testator to be
appointed as the executor during the testator’s lifetime, will usually enter into a
compensation agreement that provides for a declining rate of fees based on the value
of the estate. For example, the fees on the first $1,000,0000 of value may average out
to 4.5%, may decrease to 3% on the next $1,000,000, and reduce to 2% of the value
on the balance of the value of the estate.

9.2.3 Savings on Legal Fees

Most legal fees for administering estates are based on an hourly rate for the services
provided by the solicitor. However, in some jurisdictions solicitors may charge a

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9.2.4 CHAPTER 9 — PROBATE FEE PLANNING

percentage of the value of the assets of the estate. For example, this is the case in
New Brunswick and some counties in Nova Scotia.

9.2.4 Protection from Claims of Spouses in Respect of Property and

Dependant Relief

An individual may wish to reduce the value of his or her estate to shelter assets from
the claims of a spouse in respect of property or for a claim in respect of dependant
relief. The extent to which such planning is effective varies under the law of each
jurisdiction and is beyond the scope of these materials. However, it should be noted
that the clawback of certain assets is specifically provided for in some provinces.
Dependant relief legislation in Ontario, Prince Edward Island, the Northwest
Territories, and Nunavut gives the courts authority to access insurance and lump sum
pensions in order to make an appropriate award.

9.2.5 Protection from Creditors

Life insurance proceeds and RRSP and RRIF plans that pass by beneficiary designation
outside the estate of the insured or annuitant, as the case may be, are protected
from creditors of the deceased (except the CRA in certain instances and dependant
relief claims in some provinces). If these pass through the estate, however, creditor
protection will be lost. Thus it is a very valid planning strategy, quite apart from
probate fee planning, to ensure that to the extent possible creditor protection is
provided for these assets.

9.3 PROBATE FEE PLANNING STRATEGIES

9.3.1 Objective of Planning Strategies

Since probate fees are levied on the value of the estate, almost all probate fee planning
strategies are designed to accomplish either of the following objectives:

• reduce the value of assets in the estate subject to probate or

• have all assets that require probate pass outside the estate so that
probate is not required at all on death.

There are many assets that do not require probate, and it is possible to arrange one’s
affairs to remove certain assets from the estate. However, it is important to realise
that once probate is required, the value of all the assets in the estate, whether probate

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PROBATE FEE PLANNING STRATEGIES [Link]

is required in order to transfer those particular assets or not, must be included in

the value of the estate for the purpose of calculating probate fees. This includes any
jointly held property that is intended to be distributed under the terms of the Will.
The only exception to this “all or nothing” rule is where multiple Wills are used to
divide the assets of the estate into a probatable estate and a non-probatable estate.

9.3.2 Reduce Value of Assets in the Estate

The value of assets passing through the estate may be reduced by any number of Will
substitutes, including:

• beneficiary designations for life insurance and registered retirement

plans,

• joint property with a right of survivorship,

• use of a corporation to deduct the value of debt,

• inter vivos gifts, or

• inter vivos trusts.

In addition, multiple Wills can be used in some provinces to isolate assets passing
through the estate that do not require probate in a separate Will.

9.3.3 Life Insurance Beneficiary Designations

Naming a beneficiary for life insurance will ensure the proceeds pass outside the
estate, assuming the estate is not the named beneficiary. The insurance legislation of
each jurisdiction governs the rules relating to beneficiary designations. Where there
is a named beneficiary, the proceeds of the policy do not become part of the estate
and are not subject to the debts of the insured. It is a good practice to name an
alternate beneficiary, or a succession of alternate beneficiaries, in the event the first
named beneficiary dies before the insured. In addition to reducing probate fees, there
are a number of additional advantages of naming a beneficiary for insurance.

[Link] Estate Is Default Beneficiary

If no beneficiary is designated, or the designated beneficiary dies before

the insured and no alternate beneficiary is named, the proceeds will fall
into the estate to be administered under the Will or on an intestacy. In

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[Link] CHAPTER 9 — PROBATE FEE PLANNING

such a case, the proceeds will be subject to probate fees and lose creditor
protection. For this reason it is wise to name alternate beneficiaries where
possible.

[Link] Protection from Creditors

Provincial insurance legislation protects insurance proceeds from creditors

of the insured. A beneficiary designation in a Will for insurance may also
exclude the claims of creditors. However, the designation contained in the
Will should state that it is made in accordance with the relevant insurance
legislation. The designation should also be located in the Will before the
property of the deceased is conveyed to the executors in trust.

[Link] Liquidity

Beneficiaries will receive the funds quickly and not be tied up with
the delays and procedures required in the administration of the estate.
Funds will be available immediately to support any of the dependants of
the deceased. The funds may also be used to provide liquidity for estate
expenses, including funeral and burial costs, probate fees, and income
taxes for the terminal return. However, care should be exercised in using
insurance proceeds to pay the debts of the deceased or the estate since the
funds legally belong to the beneficiary. Payments by the beneficiary may
not be repaid if the estate turns out to be insolvent. In addition, payments
on behalf of the estate may taint the testamentary status of the estate or
any trust created in the Will, and tax advice should be obtained.

[Link] Trusts for Insurance Proceeds

It may be possible to name a trustee for insurance proceeds. Funding a

trust with life insurance proceeds may be accomplished by drafting a
trust document to create a trust that will come into existence when death
occurs and the life insurance is paid to the trustee. Such trusts are called
“executory trusts.” Alternatively the terms of the trust may be contained
in the beneficiary designation itself, typically when the beneficiary
designation is located within the Will.

If the designation is in the Will and the insurance proceeds are to be held
in trust, care must be exercised to keep the insurance proceeds outside the
estate.

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PROBATE FEE PLANNING STRATEGIES 9.3.4

[Link] Insurance Proceeds Payable to the Estate

Where insurance proceeds are payable to the estate, the practice of life
insurance carriers has in the past been to require Letters Probate or Letters
of Administration as a condition of payment to the executor. Letters Probate
were sought in order to protect the insurer from liability in the event the
Will appointing the executor turned out to be invalid. Where there are no
other assets of the estate that require probate, this requirement would have
the effect of subjecting the entire value of the estate to probate fees.

This requirement was litigated in the unreported Ontario decision of

Rozon v. Transamerica Life Insurance Co. of Canada.1 The court found
that the insurance company did not have the right to require Letters
Probate as a condition of payment. The insurance company was protected
from subsequent liability under the wording of the Ontario insurance
legislation as long as it had no actual notice of a competing claim to the
insurance proceeds at the time of the payment. The liability in respect of
the insurance proceeds if there was a subsequent claim would be that of
the payee executor under the invalid Will.

While the Rozon case may enable some estates to avoid probate fees, it
also demonstrates the difficulties executors face. Without Letters Probate,
executors may be exposed to liability if the Will is [Link] preferred
strategy would be to name a beneficiary wherever possible.

9.3.4 Beneficiary Designations for Registered Plans

If the proceeds of the registered plan pass outside the estate by virtue of a beneficiary
designation, the assets are not subject to probate fees. This result is specifically
provided for in British Columbia and Prince Edward Island, and is the practice in
other jurisdictions. It is the practice also to include beneficiary designations for
registered plans in the Will to exclude the proceeds from the assets of the estate
subject to probate fees or [Link] beneficiary designation in a Will is only effective
for any registered plans or insurance in existence at the time of the execution of the
Will.

1 Court No. 98-CV-8449, unreported, November 30, 1999 (Ont. C.A.), dismissing unreported, March 15, 1999
(Ont. Gen. Div.).

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[Link] CHAPTER 9 — PROBATE FEE PLANNING

Many of the comments relating to designation of insurance apply equally to

beneficiary designations for registered plans, including those relating to liquidity;
default beneficiary, including designations in Wills; and trusts for proceeds. However,
creditor protection is not automatic for registered plans.

[Link] Tax Consequences of Beneficiary Designations

One important difference with designations of registered plans is the

income tax treatment. Generally life insurance proceeds are received tax-
free by the beneficiary as most policies are tax-exempt. However, RRSPs and
RRIFs are fully taxable on death unless a rollover to a qualified beneficiary
is [Link] plan proceeds must be reported on the terminal tax return,
and the resulting tax is a legal liability of the estate as a debt of the deceased.
The plan proceeds on death will be paid to any named beneficiary in full
without any deduction or withholding taxes.

The inherent tax liability in making beneficiary designations for registered

plans must be taken into account when the beneficiary designation is made.
It is a common misconception that the tax is a liability of the beneficiary.
Failure to understand the tax treatment of the plan proceeds could result
in unintended consequences, including:

• an unintended windfall for the beneficiary who received the

plan proceeds on a gross basis,

• depletion or elimination of the interest of a beneficiary under

the Will due to the tax liability on the plan payable by the estate,

• personal liability for the executor or administrator in respect of

unpaid tax liability if he or she makes a distribution without a
clearance certificate, and

• surprise collection assessment on the beneficiary by the CRA if

the estate does not pay the tax.

Since the proceeds do not pass through the estate, the executor may not
even be aware of the payment and must make inquiries as part of the
administration process to determine if there are any tax consequences to
the estate.

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PROBATE FEE PLANNING STRATEGIES 9.3.5

The CRA also has the right to collect any unpaid tax from the beneficiary
of the registered plan if the estate fails to make full payment. This could
happen where the executor fails to pay the tax or the estate has no assets.
Essentially the tax rules ensure that beneficiary designations cannot be
used to evade collection of tax on registered plans.

[Link] Provincial Legislation Governs Beneficiary Designations for

Registered Plans

The legislation permitting such beneficiary designations is provincial. Each

jurisdiction permits beneficiary designations for RRSPs, RRIFs, and Tax-
Free Savings Accounts (TSFA). Quebec only allows direct beneficiaries on
insurance products. For both registered plans and insurance, the legislation
generally provides for naming a direct beneficiary or a trustee, and a later
designation automatically revokes a previous designation.

[Link] Creditor Protection2

Creditor protection for registered plans on death is limited. During a

lifetime there is protection under federal bankruptcy law effective July 7,
2008, for the assets of a bankrupt (except for any contributions made in
the 12-month period prior to bankruptcy). However, this protection is
not available on death. British Columbia and Prince Edward Island have
legislated creditor protection for the proceeds of registered plans on death.
In all jurisdictions, there is protection on death to the extent the assets in
the plan are life insurance products.3 This would include segregated funds.

9.3.5 Limitations of Beneficiary Designations Where Trusts Are Created

Although it may be possible to make a beneficiary designation that creates a trust for
the proceeds of insurance or a registered plan, this is often not ideal. It is not possible
to do so on the beneficiary form prepared by the relevant financial institution and
must be done in a separate document, usually in a Will. A formal trust may be drafted
to be funded upon the death of the individual under a beneficiary designation. As
noted above (see [Link], Trusts for Insurance Proceeds), this is called an executory
trust.

2 For a detailed summary of creditor protection for registered plans during a lifetime and after the death of
the annuitant, see CCH Estate Planning Guide at ¶8440a, Appendix I: Provincial Creditor Protection of
Registered Plans.
3 Royal Bank of Canada v. North American Life Assurance Co., [1996] 1 S.C.R. 325, 96 DTC 6157.

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9.3.6 CHAPTER 9 — PROBATE FEE PLANNING

Where the trust is created in a beneficiary designation in a Will, there is a risk that
the proceeds may be considered part of the assets of the estate even where there is
a specific statement that it is intended that the assets will be held in a separate trust.
This could have serious consequences, including not only additional probate fees but
also loss of creditor protection (particularly for insurance, where creditor protection
is available across Canada), a potentially even more serious result as the latter could
result in a much greater loss.

Two decisions from Saskatchewan, Re Carlisle Estate4 and Sun Life Assurance Co.
of Canada v. Taylor,5 have resulted in debate among practitioners as to whether
a beneficiary designation for life insurance will cause the policy proceeds to be
included in the assets of the estate. Details of these cases and their possible impact
on beneficiary designations on probate fee planning across Canada are beyond the
scope of these materials. Legal advice should be obtained, and the better course may
be to use an executory trust separate from the Will or use a trust to hold the insurance
policy with the trustees of the trust named as beneficiaries. At the very least, if the
designation is in the Will, the trustees should be specifically named even if they are
the same persons as the executors.

9.3.6 Multiple Wills

One probate fee planning strategy is to isolate the assets that require probate in a
separate Will. Generally, this strategy is called multiple Wills, as the individual may
need to have two Wills prepared. The primary Will generally will include assets that
cannot be transferred without probate. These would include accounts at financial
institutions, real estate, shares of public corporations, and any other assets requiring
[Link] secondary Will will deal with all other [Link] intention is that only
the primary Will will be probated, thereby sheltering all the assets that pass under the
secondary Will from probate fees. The multiple Will strategy requires careful drafting
with respect to defining the separate assets that each Will governs, ensuring that gifts
are not made twice, that debts are paid in full even if the assets from one Will are
insufficient, and normally the executor should be the same persons.

[Link] Many Wills; One Estate

Where multiple Wills are drafted, there is still only one estate. In Ontario,
naming the same executors is generally the practice in order to avoid any

4 2007 SKQB 425 (CanLII).

5 2008 SKQB 402 (CanLII).

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PROBATE FEE PLANNING STRATEGIES [Link]

potential conflicts with respect to managing and administering the estate

as a whole. Interestingly, in British Columbia, the governing legislation (the
Wills, Estates and Succession Act) requires the appointment of separate
executors under the two Wills. It is also important in executing multiple
Wills to ensure that the revocation clause in each prevents the other one
from inadvertently being revoked. In addition, if there are assets outside
of the jurisdiction, it may be appropriate to do a further Will in respect of
those assets or they can be included in the primary Will. When probate is
granted, the primary Will can be resealed in the other jurisdiction to deal
with those assets.

[Link] Origin of Multiple Will Strategy

The multiple Will strategy has been blessed in Ontario as a result of the
Granovsky6 case. The deceased executed a primary and secondary Will.
The primary Will covered all assets except those in the secondary Will,
and the secondary Will dealt with shares in private corporations and
debts owed by the private corporations to the deceased. The value of the
assets passing under the secondary Will was approximately $25,000,000.
Accordingly, the use of the secondary Will resulted in a probate fee savings
of approximately $375,000. The province disputed the use of the primary
and secondary Wills in the Granovsky case, but based on the provisions of
the Estates Act, the court supported a limited grant where only the value
of the property affected by the grant needed to be disclosed. The relevant
section of the Estates Act, subsection 32(3), read as follows:

A valuation of limited grant — Where the application or grant is

limited to part only of the property of the deceased, it is sufficient
to set forth in the statement of value only the property and value
thereof intended to be affected by such application or grant.

Ontario originally appealed the decision but subsequently abandoned the

appeal and, much to the surprise of estate practitioners, did not pass new
legislation to prohibit the practice of multiple Wills in the province.

In British Columbia, the Wills, Estates and Succession Act specifically

permits multiple Wills to be used. The executor administering the primary
probate Will is only required to disclose assets falling into that Will, and the

6 Granovsky Estate v. Ontario (1998), 21 E.T.R. (2d) 25 (Ont. Gen. Div.).

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assets in the secondary Will are not disclosed because the executor is not
in charge of them.

[Link] Multiple Wills Outside British Columbia and Ontario

The use of multiple Wills in provinces other than British Columbia and
Ontario, at present, is rare. The effectiveness of the multiple Will strategy is
uncertain in many of the other provinces, where it is as yet untested.

In Nova Scotia, subsection 85(2) of the Probate Act specifically refers to

the value of assets passing by “a Will or Wills or that are transferred or will
be transferred to a trust under a Will or Wills.” The general view is that this
prevents the use of multiple Wills in Nova Scotia to reduce probate fees.
The legislation was amended to include this wording post-Granovsky, and
appears to have been intended specifically to prevent the multiple Wills
strategy from being effective in Nova Scotia.

This is regrettable, since Nova Scotia now has the unenviable distinction
of being the highest probate tax jurisdiction in Canada, at 1.53% of assets
over $100,000. In this respect, Ontario has now been deposed from this
position, which it held since the New Democratic Party (NDP) government
under Bob Rae tripled probate fees in Ontario in 1992. This opened a
new era of probate fee planning popularised in the media across Canada,
resulting in the Eurig7 decision and the declaration by the Supreme Court
of Canada that the fees were indeed a tax and not in respect of any service
provided.

[Link] Drafting Multiple Wills

Drafting multiple Wills can be difficult and may merit the skill of an
experienced estate solicitor. Multiple Wills may be used to achieve
objectives other than probate fee savings. For example, separate Wills are
frequently used to deal with assets in separate jurisdictions. In drafting
multiple Wills, special attention should be paid to some specific conditions.

1. Revocation clauses must ensure that the Wills do not revoke

each other. Sometimes mutual non-revocation clauses are
included. More caution may need to be exercised in preparing a

7 See 8.4, Probate Fees or Probate Taxes.

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PROBATE FEE PLANNING STRATEGIES [Link]

codicil where multiple Wills are in use. In some circumstances

it may be preferable simply to re-execute multiple Wills rather
than do codicils.

2. In applying for probate, it may be necessary to prove that the

secondary Will did not revoke the primary Will. Generally this
can be done by filing an affidavit.8

3. It may be necessary to use crossover debt clauses so that the

assets under one Will can be used to pay liabilities arising in
respect of property in the other. For example, if a residence or
vacation property is mortgaged and it is intended that clear title
will pass to a beneficiary, it may be necessary to provide for the
assets of the other Will to be utilised to pay the mortgage.

4. Similarly, if shares of a private corporation pass under the

secondary Will to a family member, the assets governed by the
primary Will may be needed to pay the income tax in respect of
those shares.

9.3.7 Property Held Jointly with a Right of Survivorship

[Link] Types of Joint Ownership

There are two types of joint ownership — with and without survivorship.
With a right of survivorship, the property passes to the surviving owner
or owners on the death of a joint owner. This is called “joint with a right
of survivorship,” or where the property is real estate, title is taken as “joint
tenants.” Property held jointly with a right of survivorship passes outside
the estate to the surviving joint owners by operation of law. Upon the
death of the last surviving joint owners, the entire value of the property
will be included in the estate of the last to die, subject to the terms of his
or her Will and probate fees. This type of ownership can be very effective
to pass ownership of property on death without probate fees.

Joint ownership with a right of survivorship does not exist in the province
of Quebec.

8 See Re Kerzner Estate, [2008] O.J. No. 3262 (S.C.).

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[Link] CHAPTER 9 — PROBATE FEE PLANNING

Joint ownership without a right of survivorship is treated as a partial

ownership of property. Each joint owner’s share becomes property of his
or her estate on death and is dealt with under the terms of the Will. If the
property is real estate, title is taken as “tenants-in-common.”

[Link] Joint Ownership with a Right of Survivorship and Probate Fee

Planning

Individuals often hold property jointly with a right of survivorship to

avoid probate fees on death because such property passes outside the
estate of the deceased joint owner to the surviving owners. While this
may be an effective estate planning strategy, all the consequences of
transferring property into joint names must be considered. These include
the consequences discussed here, and those discussed later in the chapter
relating to inter vivos gifts at [Link], Inter Vivos Gifts, including the
effect that property passing outside the estate will have on the distribution
scheme contemplated in the Will. If the intention is for the surviving joint
owner to transfer the property to the estate trustee to be divided and
administered as part of his or her estate, the property is technically subject
to probate fees, if the estate requires probate. There may also be no way to
ensure the surviving joint owner will fulfill his or her obligation to dispose
of the property as intended.

[Link] Joint Ownership with a Spouse

Spouses commonly hold much of their property jointly with a right of

survivorship. This is a very convenient way for couples to pass property
to the surviving spouse. A minimum of paperwork is required and probate
fees can be avoided because the property does not pass through the estate
of the first spouse to die. In addition, there are no Canadian income tax
consequences to transferring ownership of property between spouses —
either into joint names or from one spouse to another,9 including common-
law and same-sex spouses who are treated identically to married spouses
under the Income Tax Act after at least 12 months of cohabitation. Joint
property between spouses is appropriate where the spouse would
otherwise be the sole beneficiary under the Will. However, it may not be

9 There could be U.S. consequences if the property is real property in the U.S. or the transferor is a U.S. citizen.

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PROBATE FEE PLANNING STRATEGIES [Link]

appropriate where there are other beneficiaries, such as children of a first

marriage.

[Link] Tax Consequences of Creating Joint Accounts

The CRA has generally taken the position that where property is transferred
into joint names, there is a deemed disposition as to the proportionate
share of the property conveyed and that there is another disposition on
death. For example, a transfer into joint names from a mother to her two
children would result in a disposition for proceeds of disposition equal
to two-thirds of the fair market value at the time of the transfer. On the
mother’s death, there would be a deemed disposition for proceeds of
disposition equal to one-third of the fair market value of the property upon
death, assuming both children were still alive. If one child had died in the
interim, the proceeds would be equal to one-half of the fair market value
on death.

The income tax consequences of a transfer of survivorship only under

the new concepts created by the Pecore and Madsen decisions are
not clear (see [Link], Effect of Pecore and Madsen on Presumption of
Resulting Trust). The CRA’s position may remain the same as for other
transfers into joint names even where only a right of survivorship passes
on death. However, it may be possible to argue that the disposition, if any,
on the creation of this type of joint account should be for a lesser value
(potentially zero), with the capital gain being realised upon the death of
the original owner.

In addition, there is a specific tax rule that a transfer of an interest in real

property reserving a life interest is a disposition at fair market value. There
is no specific rule relating to transfers while retaining a life interest in
personal property (i.e., property other than land or an interest in land).

[Link] Problems with Jointly Held Property with a Right of Survivorship:

Conflict between Surviving Owners and Beneficiaries of the
Estate

Conflict can arise during the administration of the estate of a person who
has transferred property into joint names with a right of survivorship.
Disgruntled beneficiaries under the Will may claim that the property should

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be part of the estate rather than passing to the surviving owner and often
argue there should be a resulting trust (see [Link], The Presumptions).

Conflict may occur between the surviving spouse and children of a previous
relationship where property was held jointly with the new spouse and the
children claim it should be part of the estate. There may also be potential
for conflict among the children and other beneficiaries where property is
held jointly with one or more children and the children never contributed
to the purchase of the property.

[Link] Disadvantage: Difficulty with Severance

It may not be possible to sever the joint tenancy unilaterally. When a joint
tenancy is severed, the ownership of the property is treated as a tenancy-
in-common. This situation would enable each joint owner to dispose of the
interest in the joint property by Will. In Walker v. Dubord,10 a terminally ill
woman was unable to sever her interest in investment certificates and bonds
that were held jointly with a right of survivorship with her husband of 37
[Link] court reviewed the law of joint tenancy and acknowledged that in
British Columbia the common-law rule had been altered by statute so that an
interest in land could be severed unilaterally by a conveyance. However, this
could not be done with any interest in jointly held personal property.

[Link] Other Problems with Jointly Held Property with a Right of

Survivorship

In addition to the potential conflicts discussed above, there are a host of

other problems that may arise, and it’s important to be aware of all potential
consequences. In general, property should be transferred into joint names
with a right of survivorship only when an immediate gift is [Link]
are many considerations.

• All joint owners may have immediate and full access to the
property.

• Assuming a “right of survivorship” the property passes to the

surviving owners on the death of one joint owner, bypassing
the deceased’s estate and possibly conflicting with distribution

10 (1992), 1992 CanLII 2095, 45 E.T.R. 209 (B.C. C.A.).

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PROBATE FEE PLANNING STRATEGIES [Link]

plans in their Will. The property may become part of the estate
if the status of the joint account is challenged.

• If property is held jointly with a right of survivorship with

children and there is an “out of order death,” family members may
be disinherited. For example, a person’s grandchildren will not
receive the share of property owned jointly by the person and his
or her children if one of the children dies first. On the death of
the parent, the property will pass only to the surviving children.

• The property may become subject to the claims of creditors of

all joint owners.

• The property may become subject to the claim of a spouse of a

joint owner if there is a marriage breakdown.

• A transfer into joint names, unless to a spouse, creates a “deemed

sale” for income tax purposes on the portion passed to another
joint owner. The death of a joint owner generates another
deemed disposition on the accrued gain on that person’s share.

• All joint owners must declare their portion of the income and
capital gains from the jointly held property.

• A portion of the “principal residence exemption” will be lost if

the jointly owned property is a principal residence and other
joint owners have their own residence on which they will claim
the exemption.

• Special caution must be exercised if any of the joint owners is

a U.S. citizen, U.S. resident, or green card holder because of the
potential liability for U.S. gift tax and U.S. estate tax.

• The co-operation and signature of all joint owners may be

required to make any change in ownership.

• Where there is a joint account with a parent and children, when

the parent passes away the account will remain joint with
a right of survivorship unless the property is transferred into
ownership without a right of survivorship.

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9.3.8 CHAPTER 9 — PROBATE FEE PLANNING

9.3.8 Effect of Presumption of Advancement and Presumption of Resulting

Trust

[Link] The Presumptions

The law of resulting trusts is fully covered in the Law of Trusts course of
the STEP Diploma Program. It is discussed here again as the presumptions
may apply to Will substitutes used to reduce probate fees, including gifts,
jointly held property, and beneficiary designations.

At common law, the presumption of a resulting trust applied to the

gratuitous transfer of property unless the presumption of advancement
applied. As a result, when the donor died, the executor or others having an
interest in the estate could argue that the property was held in trust by the
recipient owner for the benefit of the estate and that the property should
pass to the heirs of the donor.

There is a presumption of advancement at common law upon gifts of

property to a spouse, or from a parent to a minor child, and later was
extended to transfers by a parent to an adult child. The effect of the
presumption of advancement is that a gift is presumed, and in the absence
of any evidence to the contrary, no interest in the property is retained by
the donor. The presumption of advancement displaces any presumption of
resulting trust so that no resulting trust back to the donor will be imposed
and the recipient will not be required to account to the heirs of the donor.

The presumption of advancement has been altered by statute in many

provinces. For example, in Ontario and also in Nova Scotia, the presumption
of advancement between spouses has been abolished except with respect
to property held as joint tenants or monies held on deposit in both names.11

The presumptions may apply where property is transferred without

consideration,12 including direct “gifts” (although the presumption of
advancement assumes there is not a true gift) and transfers of property from
one owner into joint names of the owner and [Link] presumptions do

11 Under Ontario’s Family Law Act, R.S.O. 1990, c. F3, s. 14.

12 Consideration is a requirement of an enforceable contract. It includes any amount received in payment no matter
what the value, including any right, interest, profit, or benefit accruing to one party, reciprocal undertakings or
some forbearance, detriment, loss, or responsibility, given, suffered, or undertaken by the other.

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PROBATE FEE PLANNING STRATEGIES [Link]

not apply to transfers with consideration, even where the consideration is

inadequate.13

[Link] Documenting Intention

The presumption of resulting trust or presumption of advancement can be

rebutted by evidence of the transferor’s intention. However, in the absence
of evidence to the contrary, the presumptions apply. To avoid uncertainty
and litigation that may result to determine whether these doctrines
apply, the intention as to the application of these presumptions on the
gratuitous transfer of property should be clearly documented in writing.
Some practitioners include a statement in the testator’s Will verifying his
or her intention with respect to the succession of ownership of jointly
held property or the effect of other transfers made by the testator. It may
also be appropriate to include a statement about beneficiary designations.
The transfer of property into joint names (or even by gift) could be done
to achieve any number of objectives.

If a client wishes to add a child as a true joint owner of an asset, it is

recommended that they sign an agreement indicating that is their intention.
If, on the contrary, the intention is that the child will administer the assets
under the terms of the Will or convey them back to the executor to do so,
this should also be documented.

If the intention is simply to grant the child greater control over the assets
for effective management as the parent starts to age or become infirm, it
may be more appropriate to give the child a power of attorney.

[Link] Effect of Pecore and Madsen on Presumption of Resulting Trust

Two cases of the Supreme Court of Canada14 have altered the law of
presumption of advancement and resulting trust and the nature of jointly
held property.

These cases, Pecore and Madsen, have abolished the presumption of

advancement between a parent and an adult child but preserved the

13 The saying is that “equity presumes bargains not gifts.”

14 Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, and Madsen Estate v. Saylor, 2007 SCC 18, [2007] 1 S.C.R.
838.

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[Link] CHAPTER 9 — PROBATE FEE PLANNING

presumption for transfers by a parent to a minor child. Where jointly held

property passes to the child upon the death of the parent, the child will
be holding that asset in trust for the estate of the parent, and therefore the
asset is to be distributed according to the parent’s Will.

In addition, the nature of property interests held in a joint tenancy have

been altered by Pecore and Madsen. The Supreme Court found that
when property is transferred gratuitously into joint names with a right
of survivorship, there could be a gift at the time of the transfer (this is
consistent with the law before these decisions) or there could be a gift
only of survivorship that takes place upon the death of the transferor. The
gift of survivorship only is an entirely new legal concept whereby the
beneficial ownership of the property remains solely with the transferor
during his or her lifetime. The result of such a gift is that the joint owner
who is a transferee has no interest in the property until the death of the
transfer, at which time he or she has an absolute right to the property.

The decisions since Pecore have been very fact-specific, with the courts
finding that particular facts rebut the presumption in many cases.

[Link] Probate Fee Planning Causes Litigation Where Intention of

Deceased Ambiguous: Neufeld and the Doctrine of Resulting
Trust

Homemade probate fee planning often leads to ambiguity regarding

intention that cannot be rectified once the individual has died. Not only
does this lead to considerable family dissention but also subjects the
estate to the cost of litigation that exponentially surpasses the value of any
probate fee planning and/or cost of legal advice that might have prevented
the dispute. The Neufeld15 decision is a prime example.

In her homemade Will the testator left one-half of the residue of her estate
to each of her two surviving brothers. At the time of death the deceased
held Canada Savings Bonds worth $81,000 and shares worth $9,098, both
in her own name. However, in dispute were the following assets:

• three savings certificates in the amounts of $17,000, $11,500,

and $7,000;

15 Neufeld v. Neufeld (2004), 2004 BCSC 25 (CanLII), 5 E.T.R. 188 (S.C.).

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PROBATE FEE PLANNING STRATEGIES 9.3.9

• a bank account with $3,000; and

• a RRIF worth $43,000.

Prior to death the deceased transferred ownership of the savings certificates

and bank account from her own name into joint names with one brother.
At the same time she named this same brother as the beneficiary of the
RRIF. The other brother argued that these amounts were part of the estate
on the basis of a resulting trust and that they should be split 50/50 between
the two brothers, or, in the alternative at least, the tax payable by the
estate on the RRIF should be paid by the first brother who was the named
beneficiary.

The court considered the plaintiff’s argument that the deceased, who knew
she was terminally ill, carried out an estate plan designed to avoid payment
of probate fees and [Link] court found that this was the intention of the
testator based on the evidence and that the defendant had not provided
sufficient evidence to rebut the presumption of resulting trust.

The court found that the presumption of resulting trust applied not just
to the jointly held property but also to the beneficiary designation of the
RRIF.

In the result the assets in dispute were held by the defendant brother in
trust for the estate of the deceased.

9.3.9 Alter Ego Trusts and Joint Partner or Common-law Partner Trusts

Individuals who have attained age 65 may settle a trust on a rollover basis where the
settlor is entitled to the net income during his or her lifetime and no one other than
the settlor is entitled to the capital during his or her lifetime. Generally these trusts
do not have any income tax benefits. However, they are very effective for probate
fee planning as any property in the trust passes to the beneficiary of the trust on the
death of the settlor and not under the settlor’s Will.

Other benefits of alter ego trusts may include privacy, protection from creditors,
claims of family members, or as a convenient alternate to managing property under
a power of attorney, particularly where the settlor has been diagnosed with a
debilitating mental condition such as Alzheimer’s disease. In some cases it is possible

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9.3.9 CHAPTER 9 — PROBATE FEE PLANNING

to establish the trust with trustees in another province where income taxes are lower.
This is achieved under the tax rules by electing to have the income paid or payable
to the beneficiary taxed in the trust. It may also reduce the clawback of Old Age
Security for the individual.

Not all property can or should be transferred to an alter ego trust:

• Registered Plans. These must remain in the name of the annuitant.

• Qualified Farm Property or Qualified Shares of a Small

Business Corporation. An alter ego trust cannot claim the capital
gains exemption, nor can it allocate the capital gain to a beneficiary
on the death of the settlor.

• Other Rollovers: None of the rollovers otherwise available on death

will be available for property in the trust. This includes the spousal
rollover and intergenerational rollover of farm property.

• U.S. Real Property. U.S. real property may be subject to gift tax.

• Property that May be Subject to U.S. Estate Tax. There may be a

mismatch of U.S. tax and Canadian tax credits in the alter ego trust.

Other adverse consequences may result from transferring or holding property in an

alter ego trust. Legal and tax advice are essential, and the trust document must be
professionally drafted to ensure the desired objective is achieved and any unintended
consequences are avoided or addressed. Generally these materials assume that an
individual is a resident of Canada and not a U.S. citizen. However, it should be pointed
out that an alter ego trust is not generally recommended for a U.S. citizen because of
the adverse U.S. tax consequences.

Charitable giving through an alter ego trust is problematic. A limited donation credit
may be available if the trust qualifies as a charitable remainder trust; this requires that
there be no right to encroach on capital during the lifetime of the settlor. A donation
credit on death will be available only if there is a discretion regarding the donation
and the gift does not exceed the credit limit of 75% of income in the year of death.
The 100% donation credit limit available for individuals in the year of death does not
apply.

An alter ego trust can also be the beneficiary of life insurance.

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PROBATE FEE PLANNING STRATEGIES 9.3.9

Care must be taken in both drafting and administering these trusts so that they are
not tainted for income tax purposes, thereby converting the rollover of property
upon settlement of the trust into a taxable [Link] could occur if the trust lends
money to persons other than the settlor, or makes gifts or otherwise confers a benefit
on any person other than the settlor.

It is also possible to set up a joint partner trust or common-law partner trust for the
benefit of the settlor who is over 65 and his or her spouse, including a common-
law spouse for income tax purposes (12 months’ cohabitation). Where both spouses
want to set up joint partner trusts, they can settle one trust with both of them as
beneficiaries as long as they are both at least 65 years old. The rules are similar for
both alter ego and joint partner trusts, and for the latter all income must be payable to
the settlor or his or her spouse during their joint lifetime and no one other than the
settlor and his or her spouse may benefit from the capital during his or her lifetime.

In general the income tax consequences of an alter ego trust are outlined below.

• There is a rollover on transfer of property to the trust on settlement

of the trust as long as the settlor is 65 years of age or over.

• The 21-year deemed disposition rule does not commence until the
death of the settlor, or the last death of the settlor and his or her
spouse in the case of a joint partner trust.

• There is a deemed disposition at fair market value of all property on

the death of the settlor, or the last death of the settlor and his or her
spouse in the case of a joint partner trust.

• The trust will be subject to the top marginal tax rate on any income
taxed in the trust. This will apply, for example, on the deemed
disposition occurring on the death of the settlor and/or his or her
spouse.

• The trust is a separate taxpayer, and this may result in a mismatch

as between the trust and the settlor or his or her spouse in relation
to various credits and other tax attributes and accounts and may
complicate or compromise loss utilisation.

In addition to the potential adverse tax consequences, other potential disadvantages

of an alter ego or joint partner trust need to be [Link] use of these trusts are

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9.3.10 CHAPTER 9 — PROBATE FEE PLANNING

more complex and more expensive than other probate fee planning strategies and
should not be contemplated unless the individual has a tolerance for complexity, is
comfortable with the trust structure whereby he or she no longer owns the property,
and has done the cost/benefit [Link] comfort level of family members who may
be the trustees and also the executors under the Will is also a factor.

The plan of distribution under the Will must be coordinated with the plan of
distribution under the trust. This may be particularly challenging if a large portion of
the testator’s wealth is in the trust.

Additional costs include the cost of implementation and administering the ongoing
trust, which could include transfer taxes, conveyance costs, legal fees, accounting
fees, and trustee fees. Also, there are ongoing compliance requirements, including
preparing and filing an annual tax return and accounting to the beneficiaries. The
settlor will still need a Will to deal with any assets still owned personally, and the
administration of the estate will likely be more complicated.

9.3.10 Uses of Corporations in Probate Fee Planning

Using a corporation to hold assets has many consequences that are not discussed
here. These include legal consequences, rights of shareholders, tax implications, and
costs of professional fees and corporate and tax compliance. The use of a personal
holding company should not be considered without professional advice. Where the
individual already has an existing private corporation, the use of a corporation to
facilitate probate fee planning may be a less onerous decision since, among other
considerations, many of the costs of a corporation are already being incurred.

The transfer of property to the corporation may be done on a rollover basis by

making an election under section 85 of the Income Tax Act as long as shares are taken
back as consideration and the value of other non-share considerations, including any
assumption of debt, does not exceed the tax cost of the property transferred. If the
property transferred includes shares of a private corporation, the value of non-share
consideration cannot exceed the tax paid up capital of the shares transferred to the
corporation. Tax advice is essential. The use of a corporation may create double tax
on the assets in the corporation and on the shares held in the transferee corporation.
Although there are strategies to reduce or eliminate this potential double tax burden,
they are complex, expensive, and not always fail-proof.

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PROBATE FEE PLANNING STRATEGIES [Link]

Not all property is suitable to be transferred to a corporation. As a general rule

personal use property, such as a home or cottage, should not be transferred to a
corporation because of the shareholder benefit rules. Real property that is inventory
may not be transferred on a rollover basis.

[Link] Matching Assets with Debt in a Corporation

If an individual has debt that is not secured against real property, it will
not be credited against the value of the assets subject to probate. If the
debt is transferred to a corporation, it may indirectly reduce probate
fees. For example, assume a wealthy executive has a share portfolio
worth $1,200,000 and an investment loan of $700,000. If the portfolio
is transferred to the corporation in exchange for the debt, only the net
value of the property in the corporation, in the form of shares held by the
individual, will be subject to probate fees on death.

[Link] Facilitating the Use of Multiple Wills

Multiple Wills can be used to shelter the value of shares in a private

corporation from probate fees. To the extent that property is held in a
corporation, it may be sheltered from probate fees. Multiple Wills are not
effective in all jurisdictions, as discussed at [Link], Multiple Wills Outside
British Columbia and Ontario.

9.3.11 Other Will Substitutes

A number of other strategies may be used to pass property outside the estate.

[Link] Inter Vivos Gifts

Generally it is not recommended to save taxes or probate fees by giving

property [Link] probate fee savings should not be the sole motivation of
making a [Link] should be very wary of discussing a gifting plan with
any client or individual. Caution should be exercised especially where the
individual is elderly and may be subject to the pressure of family members
or others who wish to benefit under the guise of probate fee savings.
These cautions also apply to the creation of joint accounts. Independent
legal advice should be obtained, and if there is any question regarding the
capacity of the donor, an assessment should be recommended.

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[Link] CHAPTER 9 — PROBATE FEE PLANNING

If real property is being transferred, it may be preferable to protect the

donor by structuring the gift as a sale with a mortgage that is forgiven
on death, particularly if the donor wants to continue using the property.
Alternatively the gift may be accompanied by a life interest granted back to
the donor. Either of these will accomplish the probate fee savings.

The potential donor must consider the following:

• loss of control over the property;

• the property is no longer available to the donor;

• will there be sufficient assets after the gift in the event of an

emergency, change in financial position, or change in health
condition;

• the property will be exposed to the creditors of the recipient;

• the property may be subject to claims of a spouse under family

law;

• if the recipient dies, the property will pass under his or her
estate and be subject to the claims of the recipient’s family
members;

• the gift will be a disposition at fair market value for Canadian

income tax purposes unless it is to a spouse or common-law
partner;

• there may be U.S. gift tax if the donor is a U.S. citizen (or if the
property is U.S. real property, but this would not be subject to
probate fees or taxes in any event);

• there may be legal fees and other transfer costs;

• the effect of the gift on distribution of the estate both in the

Will and outside the estate; and

• the effect of the gift on the recipient.

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PROBATE FEE PLANNING STRATEGIES 9.3.12

Notwithstanding these considerations, many individuals want to make

inter vivos transfers of wealth to their children or other family members.
Family members will not have to wait until the donor is dead to enjoy the
benefits and the donor can see and appreciate the enjoyment of others that
is made possible by his or her bounty. If any of the above considerations
counsel against an inter vivos gift, it may be better to use loans that can
be forgiven on death or a discretionary family trust where some degree of
control over transfers to the beneficiaries may be exercised by the trustees.

[Link] Inter Vivos Trusts Other than Alter Ego or Joint Partner or
Common-law Partner Trusts

Inter vivos trusts will also shelter assets from probate fees. Even if the
individual has not attained age 65, trusts are often used during lifetime
to fund support for special needs beneficiaries, to set aside funds for
grandchildren or children, to fund education or other expenses, and to
income split.

Providing the inter vivos trust is not an alter ego or joint partner or
common-law partner trust, and the attribution rule in subsection 75(2) of
the Income Tax Act does not apply, the following are some of the more
important tax consequences:

• there will be no rollover on transfer of property into the trust,

• the trust will be subject to the 21-year deemed disposition rule,

• there will be no disposition on transfer of property to a

Canadian resident beneficiary, and

• there will be no disposition on the death of the settlor.

9.3.12 Eliminating the Need for Probate

In some cases it may be possible to have all assets otherwise requiring probate pass
outside the [Link] strategy has its limitations and may only be appropriate where
the value of wealth is modest and the plan of distribution is simple.

The individual should still have a Will as a backstop to deal with:

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9.3.12 CHAPTER 9 — PROBATE FEE PLANNING

• assets subsequently acquired;

• assets not requiring probate, such as personal effects, vehicles, private

corporation shares, and small bank accounts;

• any insurance or registered plans that may fall into the estate because
designated beneficiaries have all died before the testator; and

• jointly owned property where all other joint owners died before the
testator.

There are some drawbacks to this strategy. If the estate is stripped of most of the
wealth, or consists of assets that are intended to be distributed in specie, or are not
liquid (such as shares of a private corporation), how will expenses normally paid by
the estate be funded? Expenses will include:

• income taxes on registered plans passing outside the estate,

• income taxes on the deemed disposition of jointly held property,

• other income taxes payable in the terminal return,

• funeral and burial costs, and

• debts owing by the deceased at the time of death.

It may be difficult to control the division of wealth among beneficiaries where most
of the assets are transferred through Will [Link] value of specific assets, such
as jointly owned property and investment accounts, and registered plans, can vary
and it may be difficult to equalise the distribution with a hotchpot clause if few assets
remain in the estate.

If there is an alter ego or joint partner or common-law partner trust, it may be

possible to use the funds in that trust to pay estate expenses and fund any adjustment
to a beneficiary’s share through a hotchpot clause. If there is life insurance, a life
insurance trust could also be used as a source of funds to pay expenses and equalise
or redistribute wealth to achieve the succession objectives. The succession problems
associated with other probate fee planning strategies are not usually a problem with
trusts since gifts over can be provided for in the trust document in the same way as
would be provided in a Will.

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USING A HOTCHPOT CLAUSE TO ADJUST FOR DISTRIBUTIONS OUTSIDE THE ESTATE 9.4.1

With the exception of inter vivos trusts, Will substitutes also have limited ability
to accommodate gifts over where some beneficiaries have already died. Alternate
beneficiaries may be provided for in beneficiary designations, but complicated gifts
over to surviving issue on a per stirpes basis require a formal trust.

9.4 USING A HOTCHPOT CLAUSE TO ADJUST FOR DISTRIBUTIONS

OUTSIDE THE ESTATE

The use of hotchpot clauses is discussed at [Link], Hotchpot Clause. These can be
very effective in probate fee planning to ensure that the plan of distribution intended
by the estate is effective whether property passes through the estate or outside the
estate. Hotchpot clauses may be included in Wills and inter vivos trusts.

A hotchpot clause can only adjust the share of any beneficiary to the extent they are
assets of the estate. Where the majority of the assets are passing outside the estate, a
hotchpot clause may not be able to fully remedy any disproportionate distribution.
Perhaps running through an example would be useful.

9.4.1 Example

Eva is a widow and has four children. Her youngest child, Daniel, asked her for financial
assistance. Eva gave Daniel $20,000 but wanted to ensure that when her estate is
distributed, this gift will be taken into account. If Eva’s Will divides the residue of her
estate equally among her children, and the residue is $100,000, a hotchpot clause
would ensure that when Eva’s estate is distributed, each child will have received an
equal [Link] final distribution to each child is calculated as follows:

Value of residue for distribution: $100,000

Add Daniel’s gift for hotchpot calculation: $ 20,000
Total for distribution: $120,000
25% of the total available due to each child: $ 30,000
Adjust Daniel’s entitlement for $20,000 already received.
Daniel receives: $ 10,000
Distribution due to each of the remaining children: $ 30,000
Total Distributed from the estate ($10,000 + 3*$30,000): $100,000

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9.5 CHAPTER 9 — PROBATE FEE PLANNING

9.5 EXAMPLES OF PROBATE FEE PLANNING CASE STUDIES

9.5.1 Example of Planning for Husband and Wife — Ronald and Nancy

Ronald and Nancy are husband and wife. They have put all assets in joint names
with a right of survivorship, including the family home and all investment accounts.
In addition they have named each other as the beneficiary of registered plans and
insurance. When Ronald dies leaving Nancy a widow, no assets pass through his
estate and probate will not be required. However, when Nancy dies, probate fees will
be payable on her estate on any property passing through her estate on her death.

This type of planning is appropriate for probate fee savings on the first death if:

• Ronald and Nancy are each other’s sole beneficiaries and

• neither of them is concerned about protecting capital for other

beneficiaries.

For example, if Ronald had children from a previous marriage and wanted to guarantee
that they benefit from his estate, either on his death or after Nancy has died, he may
not want to leave his entire estate to Nancy. Nancy may change her Will at any time,
disinheriting Ronald’s children. In addition, Ronald may want to preserve his assets
for the children he and Nancy had together and protect Nancy’s inheritance from the
potential claim of a new husband in the event Nancy remarried.

However, if Ronald and Nancy die in a common accident, depending on the order
of death, or the deemed order of death, there may be probate fees payable in one
or both of their estates. For example, if one dies first, there will only be probate fees
payable by the estate of the second to die (subject to special survivorship rules in
British Columbia, Saskatchewan, and Manitoba; see 5.7, Survivorship Rules and
Order of Death). If they are deemed to each survive the other, as is the rule in some
provinces where order of death is not known, assets for which there is a beneficiary
designation for insurance or registered plans will pass through the estate of the
owner of the policy or the annuitant, unless a contingent beneficiary was named and
be subject to probate fees.

9.5.2 Example of Planning with Husband and Wife — Fred and Wilma

Fred has an investment account with $150,000 and a home worth $400,000 that
he owns jointly with his wife, Wilma. The remainder of his wealth is represented

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EXAMPLES OF PROBATE FEE PLANNING CASE STUDIES 9.5.2

by his shares in Fence & Widget Inc. (FW), a private corporation that operates an
active business in Canada. Fred is the sole common shareholder of FW, and Wilma
owns preference shares worth $500,000. Fred’s accountant thinks FW is worth $2.5
million. Both Fred and Wilma are officers and directors of FW. Fred and Wilma each
have RRSPs worth $300,000 and have designated each other as beneficiaries. Other
than vehicles and personal effects, Fred and Wilma have no other property. Fred and
Wilma have Wills that leave everything to each other, with a gift over to their children,
and a further gift over to their children’s issue.

If Fred dies first, the home and RRSP will pass to Wilma and not be subject to probate
fees. It is not necessary to obtain the grant of probate to transfer the shares of FW
to Wilma since it is a private corporation and generally the officers and directors (in
this case, Wilma) will not require probate in order to formally transfer the shares into
the name of the executor or the beneficiary under the Will. However, the investment
account cannot be transferred without probate. As a result, the shares of FW must
be included in the declaration of value of the estate on the probate application and
probate fees must be paid on the full amount of the assets passing under the estate,
including the value of Fred’s common shares in FW. In effect, the one asset requiring
probate in order to be transferred, because the financial institution will require
probate, will hold the estate hostage for probate fees on the entire value of assets
passing under the Will.

Fred and Wilma could avoid probate fees on the first death if the investment
account is transferred into joint names with a right of survivorship. The family-law
consequences would have to be considered. For example, if Fred inherited the funds
in the investment account, they may lose protection from the property claim of a
spouse if transferred into joint names. The transfer should be income-tax-neutral
because transfers between spouses take place on a rollover basis and the income tax
on the income generated from the investments must continue to be reported by Fred
as a result of the attribution rules.

Probate fees on the second death (i.e., upon the death of the survivor of Fred and
Wilma) could be reduced by using multiple Wills if they live in a province where they
can be utilised to reduce probate fees. Alternatively an alter ego or joint partner trust
could be used depending on their age (i.e., in each case the transferor must have
attained the age of at least 65).

There will be probate fees payable on the death of the survivor of Fred and Wilma on
the investment account, the home, and the shares of FW.

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 CHAPTER 10
ADMINISTRATION OF TRUSTS AND ESTATES

LEARNING OBJECTIVES

10.1 INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-3

10.2 ROLE OF EXECUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-5

10.2.1 Acceptance by Executor and Interaction with
Co-Executors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-5
10.2.2 Understanding the Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . 10-6
10.2.3 Delegating Duties and Seeking Professional Advice. . . . . . . . 10-6
10.2.4 Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-8
10.2.5 Maintaining an Even Hand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-8
10.2.6 Standard of Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-9
10.2.7 The “Prudent Investor” Rule and Investments . . . . . . . . . . . . . . 10-9
10.2.8 Managing a Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-9
10.2.9 Problems with Closely Held Corporations . . . . . . . . . . . . . . . .10-10
10.2.10 Interpreting the Will and Obtaining Advice and
Direction of the Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10-11
10.2.11 Agent for Executor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10-12
10.3 ROLE OF THE SOLICITOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10-13

10.4 THE EXECUTOR’S YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10-14

10.5 INSOLVENT ESTATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10-15

10.6 TRUST ADMINISTRATION COMPARED WITH ESTATE

ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10-15

10.7 ADMINISTERING TRUSTS CREATED IN A WILL . . . . . . . . . . . . . . . . . . .10-17

10.8 T3 TRUST INCOME TAX AND INFORMATION RETURN . . . . . . . . . . .10-18

10-1
 Chapter 10
Administration of Trusts and Estates

Learning Objectives

Knowledge Objectives
• Understand the role and duties of various persons in administering estates

Skills Objectives
• Describe how trusts created under a Will are set up and administered
• Describe the role of executor, solicitor for the estate, and agent for executor
• Identify issues applicable to insolvent estates
• Identify the unique issues relevant to administration of estates versus trusts

10.1 INTRODUCTION

The administration of estates is a broad topic. Obtaining the grant is covered in

Chapter 8. Intestate distribution is covered in Chapter 5. A detailed list of the steps
in estate administration is included in Chapter 11. The obligation to maintain records
and accounts is covered in Chapter [Link] of estates, preparation of the terminal
return of a deceased person, and preparation of trust tax returns is covered in the
Taxation of Trusts and Estates course in the STEP Diploma Program. This chapter will
cover most of the remaining topics, which include the role of the executor and the
solicitor in estate administration.

Much of the law relating to executors as trustees, including their general duties and
obligations, is covered in the Law of Trusts course in the STEP Diploma Program, and
reference should be made to those materials for a complete discussion of the role of
the executor.

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10.1 CHAPTER 10 — ADMINISTRATION OF TRUSTS AND ESTATES

While the rules relating to estate administration are contained in provincial legislation,
the principles relating to estate administration are very similar across Canada. The
objective of this material is not to enable the student to actually administer an estate
but to understand the process and the tasks that must be carried out in order to settle
an estate. The actual procedures, court forms, and statutory provisions applicable in
each province, and their unique attributes, will not be included in this chapter except
by way of specific provincial examples to illustrate the concepts discussed.

Contentious proceedings, including estate litigation, are not included in these

materials. However, the prospect of litigation during the administration of the estate
cannot be overlooked. The standard of perfection that beneficiaries may expect from
executors is an unwelcome surprise to the executor who may see him- or herself as
acting as a gracious volunteer.

Family members may be included as executors or administrators and asked to take

shortcuts in the administration, often without legal advice, or may be inclined to take
such shortcuts of their own accord to save time and costs, or to “keep it simple.”They
do so at their peril as this is an invitation to disaster. Beneficiaries inevitably complain
about some aspect of estate administration, whether it be about delay in distribution,
lack of accounting or communication, perceived mismanagement of property, or
unfair treatment. An executor who has failed to act in accordance with the standard
of care required, or even if they have, may learn the hard way that the appointment
is a burden not a privilege. When beneficiaries are already predisposed to be hostile
toward the executor or other beneficiaries due to family conflict, the executor may
be the target of numerous accusations, with litigation not far behind.

The prospect of litigation, with the permanent scars it leaves on families, the resulting
delay in distribution and management of the estate, and the diversion of estate assets
to pay legal costs (sometimes for all parties), is good reason for the executor to obtain
all the advice required and ensure that the estate administration is pristine.

The discussion in this chapter refers mainly to executors; however, in most cases
the discussion is also applicable to administrators and other personal representatives,
and in a more general way to trustees of an inter vivos trust. For a specific discussion
of the differences between trust administration and estate administration, see 10.6,
Trust Administration Compared with Estate Administration.

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ROLE OF EXECUTOR 10.2.1

10.2 ROLE OF EXECUTOR

10.2.1 Acceptance by Executor and Interaction with Co-Executors

An executor who is appointed in a Will has no obligation to accept the appointment.

When the application for the grant is made, any executor named in the Will who does
not wish to accept the appointment may renounce his or her appointment. If none of
the executors wish to act, another person will have to apply, although the provisions
of the Will should be examined to determine if alternate executors have been named.

Once an executor has commenced to act, however, even before the grant is issued,
renunciation can only be made with the approval of the court. Unfortunately many
executors start out with the best of intentions, discovering only after they have
commenced to act that they should have renounced at the outset. This underscores
the requirement for an executor to obtain advice at the outset to assess what is
involved and determine whether or not to accept the appointment. The executor
should be warned to not deal with the assets, represent themselves as the executor,
or ask others to act on his or her authority as executor until the decision has been
made to act. Otherwise, the unconditional right to renounce is forfeited and personal
liability may result from losses relating to administration of the estate.

A person may wish to renounce at the outset, for example, if the estate is insolvent,
or if the person intends to make a claim against the estate, in which case he or she
should not continue to act in any event because of conflict of interest.

Another factor in considering whether to accept the appointment is the ability to co-
operate and work with the other executors. Unless the Will states otherwise, or there
is a tie-breaker rule under the provincial statute, executors must make decisions
unanimously. Estates can be difficult to manage where executors frequently disagree.
Generally courts will not break a deadlock where executors do not agree and the
only remedy may be to find a compromise unless the conduct of the co-trustee
warrants his or her removal. The ability to get along with a co-executor must be
balanced with the person’s desire to have a role in the administration of the estate. A
court will generally refuse to remove an executor on the grounds of a poor or hostile
relationship with a co-executor or beneficiary even where the administration of the
estate is stalled, unless there is specific malfeasance on the part of the executor.

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10.2.2 CHAPTER 10 — ADMINISTRATION OF TRUSTS AND ESTATES

10.2.2 Understanding the Fiduciary Duty

The executor’s role is mainly administrative, particularly in an immediately

distributable estate. Where ongoing trusts are created in the Will such as for minor
children or a surviving spouse or otherwise, the executor may also be the trustee of
these testamentary trusts (although the testator is free to appoint separate trustees
for testamentary trusts). The specific tasks to be completed to settle the estate are
included in Chapter 11.

In carrying out his or her duties, the executor has a fiduciary duty. This means the
executor must always act in good faith for the best interests of the beneficiaries. The
general duties of trustees, including executors, and fiduciary duty are covered in the
Law of Trusts course in the STEP Diploma Program.

10.2.3 Delegating Duties and Seeking Professional Advice

The executor need not carry out all his or her administrative duties personally. The
Will may also provide authority for the executor to delegate some of his or her duties,
such as the authority to manage investments that cannot normally be delegated.1
Professionals may be retained to carry out or assist with some of the tasks. These
might include the following:

• a lawyer to obtain the grant of probate, advise the executor, handle

the sale or transfer of certain assets, maintain estate accounts, and
assist with passing of accounts;

• a tax advisor (lawyer or accountant) to advise on the tax aspects

of estate administration, do post-mortem tax planning, and advise
regarding the clearance certificate;

• an accountant to assist with financial statements and tax returns for

any corporations held by the deceased, prepare tax returns for the
deceased and the estate, and any alter ego or joint partner trust;

• an appraiser to provide valuations for real estate and other assets; and

• an agent for executor (usually a trust company) to carry out some of

the administrative duties.

1 The prohibition against the delegation of a trustee’s duties is covered in the Law of Trusts course in the STEP
Diploma Program.

10-6
ROLE OF EXECUTOR 10.2.3

Details of the role of the solicitor are included below. Notwithstanding the ability of
the executor to delegate administrative tasks and seek advice (see 10.3, Role of the
Solicitor), the executor cannot delegate his or her decision-making obligations. This
would include the power to exercise discretion to distribute income or encroach
on capital, or whether to sell property or distribute in specie, or to decide what
price should be accepted on a sale. The executor cannot shirk his or her fiduciary
duty by delegating responsibility. The executor must select and retain professionals
or agents who have the appropriate expertise and must supervise their work. The
executor will be responsible for the acts of a delegate in some cases. In one case, the
administrator of an estate delegated all the responsibilities of estate administration to
a solicitor who misappropriated a substantial [Link] court found the administrator
was personally liable for the lost funds.2

To the extent that the executor delegates administrative duties, there may be a
reduction in executor compensation. Record keeping, preparing an inventory of
assets, opening bank accounts, preparing reports for beneficiaries, determining
liabilities of the deceased, and arranging for payment of debts of the deceased and the
estate are administrative duties that would normally be carried out by the executor.
A reduction will not apply to all costs incurred. For example, the following would
generally not reduce executor compensation:

• real estate commission on sale of real estate,

• broker’s commission on investment sales and purchases, and

• lawyer’s and accountant’s fees to the extent the advice is beyond

the requirements of the executor’s role, such as specialised advice,
resolving beneficiary disputes, or added costs of formal passing of
accounts.

The importance of obtaining professional advice cannot be overemphasised.

Executors may wish to save the cost of professional advisors, but they run a very high
risk that costly mistakes may be made. In addition to personal liability, the executor
may be risking his or her own inheritance if he or she is a beneficiary.

The executor will be personally liable for the value of any distribution made to a
beneficiary without having first obtained a tax clearance certificate under the Income
Tax Act.

2 Wagner [Link] Cleef (1991), 5 O.R. (3d) 477 (Div. Ct.).

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10.2.4 CHAPTER 10 — ADMINISTRATION OF TRUSTS AND ESTATES

An executor may also be personally responsible for any loss or failure to minimise
liability if tax advice is not obtained. There are multiple tax planning opportunities
associated with the tax consequences of death, the tax returns available in the year
of death, and post-mortem tax planning. In addition, dealing with non-residents or
distributions to non-residents can create tax obligations. If the deceased owned U.S.
real property or securities of a U.S. issuer with a value in excess of $60,000US, a U.S.
Estate Tax Return is required and U.S. estate tax may be payable.

10.2.4 Conflicts of Interest

As a fiduciary, an executor must avoid placing him- or herself in a position of conflict

of interest. For example, an executor may not purchase property from the estate or
sell property to the estate, even for fair market value, without court approval unless
specific authority is provided in the Will. Any such transaction can be set aside by
the court.

There is a direct conflict of interest if an executor makes a claim against the estate, as
might be the case where the executor/spouse makes a claim in respect of property
under family law or a dependant relief claim. In such a case, the executor must cease
to act, and if there are no co-executors, an administrator ad litem must be appointed.3

10.2.5 Maintaining an Even Hand

The duty of impartiality or the even-handed rule is covered in the Law of Trusts
course in the STEP Diploma Program. The rule most often arises with respect to the
exercise of any discretion during the administration of a trust that may favour one
class of beneficiary over another, such as a life tenant versus a remainderman, or
other successive interest or residual beneficiary. The executor must not favour one
over the other.

For example, in the case of a trust for the surviving spouse with a gift over to children
of a previous marriage, the executor cannot structure the investment strategy to
maximise current income payable to the spouse to the detriment of the children,
nor can the executor go to the other extreme, focusing only on capital growth to
the detriment of the spouse. Similarly an executor cannot use a general power to
encroach on capital to exhaust the trust funds as this is contrary to the interests of
the residual beneficiaries, although the wording of the Will may permit this, as the
rule applies unless the Will provides for the contrary.

3 See [Link], Protect the Executor from a Subsequent Challenge and Liability.

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ROLE OF EXECUTOR 10.2.8

10.2.6 Standard of Care

Generally an executor is held to a high standard of care but will not be liable for
honest mistakes. An executor who is an individual who is not a professional will be
held to an ordinary standard of care. A lawyer or accountant who acts as executor
as part of his or her practice or a trust company will be held to a higher standard of
care. These different standards of care for non-professionals apply whether or not
they take compensation.

10.2.7 The “Prudent Investor” Rule and Investments

Provincial law sets out the requirements for investments by trustees. All provinces
have a form of the “prudent investor rule,” which sets out the principles that must be
followed by trustees in making investments rather than a pre-approved list of specific
investments that are permitted.

One common principle, for example, is diversification, known popularly as not

“putting all your eggs in one basket.” Often Wills permit executors to retain assets
in their current form. This might mean, for example, that an executor need not sell a
large position in a particular stock just to satisfy the requirement to diversify or sell a
closely held small business corporation.

The Will may also permit delegation of investment-making powers, and provincial
legislation may permit delegation of investment powers as well. The legislation of
most jurisdictions specifically states that investing in a mutual fund is not considered
an improper delegation of decision making over investments, even if the fund is
managed by an external money manager (however, the executor must still decide
whether investing in any particular mutual fund would be considered a prudent
investment).

At common law, the duty of an executor was to preserve capital. When in doubt, the
executor should act conservatively in making investments and should avoid placing
funds in high-risk or speculative investments even if the deceased did so. Where the
assets are already in high-risk type investments, the executor should consider moving
them to a more conservative position.

10.2.8 Managing a Business

Where the deceased was carrying on a business, the executor must act to preserve
the interest of the estate in the business. If the deceased was a sole proprietor, the

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10.2.9 CHAPTER 10 — ADMINISTRATION OF TRUSTS AND ESTATES

executor may have to wind up the business if it cannot be sold or a family member
does not want to continue the business. Where the deceased was a partner in a
business or a shareholder of a corporation carrying on business, the executor may
need to obtain professional advice to determine what is in the best interests of
the beneficiaries. If immediate sale of the interest in the business is not possible or
practical, it may be appropriate to arrange for continuation of the business until a
sale can be made. The executor would not be expected to carry on the business
personally.

The executor should make inquiries to determine if the deceased made any
succession plans. Potential purchasers for a business usually include family members,
employees, other partners or shareholders in the business, competitors, or suppliers.

10.2.9 Problems with Closely Held Corporations

The deceased may have operated a business through a private corporation or held
investments through a personal holding [Link] may significantly complicate
the administration of the estate and place the executor in difficult positions of conflict
of interest. The executor may act as shareholder of the corporation, but this may not
necessarily permit the executor to control the corporation unless he or she is elected
as an officer and/or director of the corporation.

The general advice is that the executor should seek to be appointed as a director
and officer of the corporation so that the corporation may be managed in the best
interests of the beneficiaries. This duty is more compelling where the corporation
will be held in an ongoing trust or the administration of the estate may be protracted.
This places the executor in a position of conflict because as executor the obligation
is to the beneficiaries; whereas as a director or officer, there is a primary obligation
to act in the best interest of the [Link] legal obligations of a director trump
those of the executor with respect to corporate decision making.

Where there is an ongoing trust with an income beneficiary, there is always a question
as to whether dividends should be declared and, if so, the quantum of such dividends.
The estate, as shareholder, will be the recipient of dividends. The Will generally sets
out the rights to income received by the trust or estate. However, the declaration
of dividends by a corporation is always discretionary.4 The executor may have to
contend with other shareholders and directors regarding the payment of dividends,

4 Although certain fixed income shares may specify the amount of dividends, the declaration and payment of
dividends is still at the discretion of the directors under corporate law.

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ROLE OF EXECUTOR 10.2.10

and will have to determine what is appropriate and in the best interests of all classes
of beneficiaries.

10.2.10 Interpreting the Will and Obtaining Advice and Direction of the Court

It is the responsibility of the executor to review the Will and administer and distribute
the estate in accordance with its contents. The assistance of a solicitor is essential to
fully understand and interpret the Will for this purpose.

Provincial rules generally permit an executor to apply to the court for advice and
direction of the court with respect to any questions that arise in respect of the
administration of the estate. For example, section 60 of the Trustee Act of Ontario
provides:

A trustee, guardian or personal representative may, without the institution

of an action, apply to the Superior Court of Justice for the opinion, advice
or direction of the court on any question respecting the management
or administration of trust property or the assets of a ward or a testator or
intestate.

The facts must not be in dispute for any such application and evidence will be
submitted by way of an affidavit — a statement by a person with knowledge and
understanding of the facts that is sworn before a commissioner of oaths.

Generally the courts will not permit these applications to be used to substitute the
decision of the court for one that should be made by the executors. So, for example,
the court will not intervene to break a deadlock between co-executors who cannot
agree. Nor will the court entertain an application to ask how the executors should
exercise their discretion or to approve a decision to exercise a discretion that is
clearly authorised under the Will, since such approval is not necessary.

Questions of interpretation might include:

• when a class of beneficiaries closes,

• whether a particular person is a member of a class of beneficiaries, or

• whether the executors have the authority under the terms of the Will
to carry out a specific act.

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10.2.11 CHAPTER 10 — ADMINISTRATION OF TRUSTS AND ESTATES

The questions to be put to the court must not be academic or hypothetical in nature,
or questions that, depending on future events, may not occur. Where the event
will occur in the future, such as the termination of a life interest, the court may be
prepared to make a declaratory judgment since the future event is inevitable and the
application would only need to be made again at a later date.

The role of the executor in making such an application should be neutral. The
executor cannot be an advocate for a particular beneficiary or a particular outcome.
The executor’s responsibility is to determine the appropriate interpretation of the
Will in order to discharge the obligations of an executor.

10.2.11 Agent for Executor

Many executors want to accept the appointment in order to honour the wishes
of the deceased, who is usually a close relative or friend. However, the “honour”
comes with a heavy responsibility, a lot of hard work, time-consuming red tape, and
potential personal liability. In addition, beneficiaries, anxious to receive what is their
due, possibly oblivious (or wilfully blind) to the role of the executor in settling an
estate, may exert pressure at every turn, badgering the executor, who needs time
to carry out the duties required, or second-guessing the executor with respect to
every decision. Where there is family conflict, the executor’s role can be extremely
unpleasant. Persons who have acted as executors have reported negative feedback
to describe their experience, the top three being “time-consuming,” “stressful,” and
“difficult.”

One choice an executor may make to relieve some of the work and anxiety associated
with estate administration is to hire an agent for executor, usually a trust company.
Often there is a clause in the Will specifically authorising an agent for executor,
although the executor generally may hire an executor whether specifically authorised
in the Will or not. However, a specific clause may avoid criticism by beneficiaries or
persuade co-executors that this is appropriate. Hiring an agent for executor has a
number of advantages.

• The agent can carry out only those administrative duties assigned by
the executor, whether limited or comprehensive.

• The fee arrangement is flexible so that only those services provided

are included in the fee.

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ROLE OF THE SOLICITOR 10.3

• The executor is relieved of much of the “legwork” involved but still

must make all decisions.

• The executor and beneficiaries can be confident (assuming a trust

company or other professional such as an estate solicitor is hired)
that the administration is being carried out by professionals who have
expertise in estate administration.

The fees for agent for executor are generally deducted from any compensation that the
executor may claim. The cost of hiring an agent for executor is sometimes seen as an
unjustified expense or a drain on the assets of the estate. However, the compensation
that may be claimed by an executor is not any less than may be charged by an agent
for executor for the same work even if the executor is a family member. In addition, if
the estate is complex or the estate is large, the executor may find that the expense is
well worth the service and peace of mind provided. It is not unusual for an executor
to commence his or her duties with enthusiasm, only to welcome assistance once the
extent of the commitment required to carry out all the tasks is fully appreciated.

10.3 ROLE OF THE SOLICITOR

The executor should retain a solicitor to provide advice pertaining to the executor’s
duties, the interpretation of the Will, and any legal matter that arises during the
administration of the estate. In the usual case, the solicitor normally carries out the
following functions:

• prepares the application for the grant of probate,

• prepares notarial copies of documents, such as Letters Probate, as

required,

• advertises for creditors, and

• performs any legal work required to transfer the real estate of the
deceased.

Where the executor does not wish to carry out all his or her duties personally —
either due to availability, lack of expertise, inconvenience, or for any other reason —
the solicitor may be requested to carry out all the administrative duties on behalf of
the trustee. In addition to the above, these might include:

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10.4 CHAPTER 10 — ADMINISTRATION OF TRUSTS AND ESTATES

• preparing the inventory of assets,

• securing the property and arranging for insurance as required,

• realisation of assets,

• preparation of income tax returns,

• application for the tax clearance certificate,

• distribution of property to beneficiaries and obtaining releases,

• preparation of accounts, or

• any other administrative duty.5

As discussed above, the executor must still make all decisions and must oversee
the work done by the solicitor. In many cases the solicitor will have engaged an
estates clerk who has specific training in estate administration and who, under the
supervision of the solicitor, prepares all the required forms and paperwork involved
in the administration of the estate and may keep the trust accounts required to
maintain proper financial records.6

The fees charged by the solicitor to perform administrative duties of the executor
will be deducted from the executor’s compensation. The solicitor should keep a
separate record of the time and charges related to executor’s duties for this purpose,
even where the solicitor is the executor.

10.4 THE EXECUTOR’S YEAR

Generally an executor cannot be forced to make any distribution or any payment of

income during the first year of administration of the [Link] period during which
payment cannot be legally enforced is called the “executor’s year.” The basis for the
rule is that until the assets and liabilities are determined, the executor will not be
in a position to determine what funds, if any, are available. Normally beneficiaries
who are entitled to income can compel payment only after the executor’s year has
expired. In addition, to some extent the Canada Revenue Agency (CRA) recognises
the executor’s year and in most circumstances will permit any income earned by the

5 See Chapter 11 for a detailed list of steps required to settle an estate.

6 See Chapter 13, Estate and Trust Accounts.

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TRUST ADMINISTRATION COMPARED WITH ESTATE ADMINISTRATION 10.6

estate in the first year to be taxed in the estate return even if income is payable to the
beneficiary under the terms of the Will. In any event, the executor can always make
an election to have income that is paid or payable to a beneficiary taxed in the estate
return under general tax rules relating to trusts.

10.5 INSOLVENT ESTATES

The administration of an insolvent estate is particularly difficult. The executor must

exercise care in all his or her actions as he or she may be called to account to creditors
as well as beneficiaries.“Insolvent” generally means the inability to pay one’s debts as
they fall due. An estate will be insolvent when all the debts, liabilities, and expenses
exceed the realisable value of estate assets.

Where an estate is clearly insolvent at the outset, the executor should seek advice
immediately and may want to consider whether or not to renounce the appointment.
If no one agrees to act as executor or comes forward to be appointed by the court, a
creditor may do so.

The law of insolvency and its consequences for estate administration are beyond
these [Link] executor of an insolvent estate should seek legal advice and refrain
from paying any debts or liabilities until such advice is obtained. Under provincial
law a debtor may not prefer one creditor over another. In addition, some creditors
may have a legal right to payment in priority over others. It may be possible for the
executor to declare bankruptcy on behalf of the estate if an agreement cannot be
reached with creditors.

10.6 TRUST ADMINISTRATION COMPARED WITH ESTATE ADMINISTRATION

The administration of an estate has some unique [Link] is considerable work

in settling the affairs of a deceased person that is not normally required in the case
of a trust. Usually the assets transferred to settle a trust are very specific, such as
cash or specific property like portfolio investments, shares of private corporations,
or real estate. The trustees of a trust usually are not required to take an inventory of
all the property of an individual, value assets, determine liabilities, pay creditors, or
prepare a terminal tax return for the deceased. An executor or liquidator also has the
responsibility of disposition of remains (if not already assumed by family members)
and arranging the funeral.

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10.6 CHAPTER 10 — ADMINISTRATION OF TRUSTS AND ESTATES

However, most of the other requirements and duties of an executor are identical to
those of any trustee of a [Link] include, but are not limited to, the following:

• the fiduciary duties and obligations of trustees,

• the standard of care,

• the requirement to account to and communicate with beneficiaries,

• the requirement to maintain an even hand,

• any requirements regarding investment and management of trust

property,

• the requirement to prepare and file tax returns,

• the exercise of discretion as permitted under the trust document,

• the distribution of income and/or capital in accordance with the

terms of the trust,

• the final distribution of trust property,

• preparing and presenting accounts and passing them before the court
if required, and

• the risk of personal liability where distributions are made without a

tax clearance certificate.

Where there is an ongoing trust created in the Will (i.e., a testamentary trust), the
role of the executor in administering the “estate” may shift from the role of estate
administration to administering the testamentary trust created in the Will. This shift
normally takes place once all the estate matters have been [Link] would include
realising all assets of the deceased and paying all liabilities, filing the terminal tax
return of the deceased, and making any other distributions required under the Will.

Once the property or funds that are to be settled into the testamentary trust are
ascertained, a separate bank account from that of the estate may be opened for the
specific trust. Although this action is not necessary in all cases, it will certainly be
required if there are multiple testamentary trusts or the trustees are not the same
persons as the executors. Similarly, since a distribution to an ongoing testamentary

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ADMINISTERING TRUSTS CREATED IN A WILL 10.7

trust from an estate is a distribution, a clearance certificate is appropriate to protect

the personal representative.

Trustees should be aware that the 21-year deemed disposition rule will apply to
ongoing trusts. For testamentary trusts, the first disposition will take place 21 years
after the death of the deceased. For inter vivos trusts, the first disposition will take
place 21 years after the creation of the trust. The rule is modified for alter ego, joint
partner, and common-law partner trusts where the first disposition takes place on
the last death of the settlor or the settlor and his or her spouse and every 21 years
thereafter. Similarly the first disposition for a qualifying spousal trust takes place on
the death of the spouse and every 21 years thereafter.

10.7 ADMINISTERING TRUSTS CREATED IN A WILL

Ongoing testamentary trusts are generally created in the Will. Testamentary trusts
may also be created by a trust declaration or executory trust outside a Will. This may
be done, for example, for life insurance proceeds. Common examples of testamentary
trusts include a trust for the benefit of minor children, surviving spouse, or for
an adult child and his or her family. A testamentary trust may be created for many
reasons, including income tax deferral, tax savings, to postpone distribution until
a beneficiary is more mature, to provide financial security for a special needs or
disadvantaged beneficiary, or to preserve capital for other beneficiaries. The reasons
for using testamentary trusts are as unique as individuals.

The period of administration of a testamentary trust begins only after the estate has
been administered and the assets or fund that is directed in the Will to be paid to the
trust has been distributed to the trust by the executor or administrator. This may be
confusing where the testamentary trust comprises the residue of the estate because
there may appear to be a seamless transition from the administration, gathering assets
and paying liabilities, and the commencement of the residual trust.

For tax purposes, the CRA considers that the estate, even without or before any
testamentary trust is established, is a trust for tax purposes, even though for trust-
law purposes this is not necessarily the case. An estate is not initially a trust legally
since — until the executor has gathered assets and determined liabilities and settled
all claims, identified the beneficiaries, and determined the specific interest of each
beneficiary — there is no division of legal and beneficial ownership because the
beneficiary’s interests cannot be ascertained until at least these steps are completed.

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10.8 CHAPTER 10 — ADMINISTRATION OF TRUSTS AND ESTATES

This is consistent with the concept of the executor’s year (see 10.4, The Executor’s
Year).

The timing of the commencement of the administration of testamentary trusts is

important for several reasons.

• Accounts may be passed before transfer to the testamentary [Link]

protects the executor and trustees of the trust.

• A clearance certificate should be obtained since the funding of the

testamentary trust is a distribution by the estate.

• The rights of beneficiaries to distribution under the trusts may not

commence until the trusts are funded by the estate.

• The trust may have trustees who are not the same persons as the
executors.

The administration of a testamentary trust is essentially the same as the administration

of an inter vivos trust and will be governed by the trust document (in this case, the
Will), and the Trustee Act of the province in addition to any relevant estate legislation.

10.8 T3 TRUST INCOME TAX AND INFORMATION RETURN

The T3 Trust Income Tax and Information Return is filed by trustees for inter vivos
and testamentary trusts. It is generally referred to as a trust return or T3 return and
reports income for the calendar year ending December 31.

The T3 return is also used to report income earned by an estate after the date of
death. It is filed by the executor annually until the administration and distribution of
the estate assets has been completed. Although terminology varies, when a T3 return
is being filed for an estate, it is often referred to as an “estate return.”This distinguishes
the return from a T3 return for an ongoing testamentary trust or an inter vivos trust.
However, it is important to not confuse an estate return (i.e., a T3 return for an estate)
with the terminal return (T1 return) for the deceased in the year of death.

For purposes of this course, the terminology “T3 return” or “trust return” is used to
refer to tax returns for testamentary and inter vivos trusts. The terminology “estate
return” is used to refer to a T3 return that is filed by an executor for the period

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T3 TRUST INCOME TAX AND INFORMATION RETURN 10.8

following the date of death. Estate returns are filed annually up to and including the
year of the final distribution to the estate beneficiaries.

Students should review the current T3 form on the CRA website [Link]
[Link]/E/pbg/tf/t3ret/[Link]. Note the following:

• The range of information that must be reported about the estate or

trust (T3 form, pages 1–2 ).

• Specific details to be noted include:

◦ The trust has a trust account number beginning with the letter
T. This is the trust’s taxpayer identification number. It is like a
Social Insurance Number (SIN) for an individual taxpayer.

◦ The type of trust must be identified. For purposes of this

course, the types of trusts that might be indicated are spouse
or common-law partner trusts, alter ego trusts, and joint spousal
or common-law partner trusts, as well as personal trusts, which
are all other testamentary or inter vivos trusts for persons or
purposes created by an individual, including estates.

◦ The residence of the trust or estate for tax purposes must be

indicated.

• Total income includes investment income and certain pension income

(see T3 form, page 2).

• Eligible deductions that can be claimed where applicable are

identified on page 3 of the T3 [Link] include:

◦ carrying charges and interest expense,

◦ investment counselling fees,

◦ capital losses, and

◦ certain other losses.7

7 The rules governing the types of income losses that may apply are beyond the scope of this course.

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10.8 CHAPTER 10 — ADMINISTRATION OF TRUSTS AND ESTATES

• The trust’s taxable income may be reduced by the amount of income

distributed to beneficiaries in the taxation year (T3 form, page 3).

• There are fewer deductions available to reduce tax payable, and a T3

return doesn’t provide for non-refundable tax credits such as those
available on the T1 return.

• Additional forms will need to be completed in order to furnish the

calculations of the final amounts to be reprinted on the T3 [Link]
T3 form is also used to determine the provincial or territorial tax due
(except for Quebec).

10-20
 CHAPTER 11
THE STEPS IN ESTATE ADMINISTRATION

LEARNING OBJECTIVES

11.1 INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-9

11.2 PRELIMINARY STEPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-10

11.2.1 Locate the Will, Determine Executor, and Review
Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-10
[Link] When There Is No Will . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-10
11.2.2 Organ Donation, Funeral Arrangements, and
Disposition of Remains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-11
[Link] Donation of Body or Organs. . . . . . . . . . . . . . . . . . . . . . .11-11
[Link] Executor Has the Last Word re: Funeral
Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-11
[Link] Payment of Funeral Expenses. . . . . . . . . . . . . . . . . . . . . .11-12
[Link] Bereavement Airfare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-12
[Link] The Obituary Announcement . . . . . . . . . . . . . . . . . . . . .11-12
[Link] Veterans’ Allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-13
11.2.3 Obtain Multiple Original Copies of the Proof-of-
Death Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-13
11.2.4 Retain a Solicitor to Advise the Executor and Carry
Out the Legal Work Required . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-13
11.2.5 Arrange for the Initial Meeting with Beneficiaries . . . . . . . . .11-14
11.2.6 Ensure the Family’s Immediate Financial Needs Can
Be Met . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-14
11.2.7 Review Any Marriage Contracts, Family Law Issues, or
Dependant Relief Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-14
11.2.8 Probate the Will If Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-14
[Link] Documents Required When Applying for Probate . . . 11-15
[Link] First Nations Members . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-16
11.2.9 Pay Probate Fees or Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-17

11-1
11.3 BENEFICIARY RELATIONSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-17
11.3.1 Communicate Directly with Beneficiaries and Set
Expectations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-17
[Link] Avoiding Conflict Over Executor’s Fees . . . . . . . . . . . . .11-18
11.3.2 Provide Regular Updates to Beneficiaries . . . . . . . . . . . . . . . . .11-19
11.3.3 Provide a Copy of the Estate Summary Document to
Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-19
11.3.4 Communicate with the Residual Beneficiaries
Regarding the Distribution Process. . . . . . . . . . . . . . . . . . . . . . .11-20
11.4 INITIAL STEPS IN DEALING WITH ASSETS . . . . . . . . . . . . . . . . . . . . . . .11-20

11.5 IDENTIFYING AND VALUING ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-21

11.5.1 Reasons to Value Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-21
11.5.2 Different Values for Different Purposes . . . . . . . . . . . . . . . . . . .11-22
11.5.3 Valuation Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-22
11.5.4 Accrued Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-23
11.5.5 Cost Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-24
11.5.6 Valuation Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-24
11.5.7 Collecting Asset Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-24
[Link] Sources of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-24
[Link] Requesting Information from Third Parties . . . . . . . .11-26
[Link] Safety Deposit Boxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-28
[Link] Privacy and Joint Accounts . . . . . . . . . . . . . . . . . . . . . . . .11-28
11.5.8 Location of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-29
11.5.9 Safeguarding Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-29
[Link] Safe Storage, Security, and Insurance . . . . . . . . . . . . . .11-29
[Link] Preventing Unauthorised Access to Accounts
and Collecting Income . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-30
11.6 ASSET CATEGORIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-31
11.6.1 Wages, Pensions, Death Benefits, and Annuities . . . . . . . . . .11-34
[Link] Canadian Government Pensions . . . . . . . . . . . . . . . . . .11-35
[Link] CPP/QPP and Other Federal Pensions in the
Month of Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-35

11-2
 [Link] CPP/QPP Spouse and Dependent Child Benefits. . . .11-36
[Link] Other Pensions and Periodic Payments . . . . . . . . . . . .11-36
[Link] Wages and Other Employee Entitlements . . . . . . . . . .11-36
[Link] Death Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-36
[Link] Veterans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-37
[Link] Annuities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-37
11.6.2 Other Income Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-39
11.6.3 Cash on Hand and on Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . .11-39
11.6.4 Fixed Income Securities: GICs, Savings Bonds,
Treasury Bills, Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-39
[Link] Guaranteed Investment Certificates (GICs) . . . . . . . . .11-39
[Link] Government Savings Bonds . . . . . . . . . . . . . . . . . . . . . . .11-41
[Link] Treasury Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-43
[Link] Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-44
11.6.5 Shares in Public Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-46
[Link] Ex-Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-47
11.6.6 Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-49
11.6.7 Loans Due to the Deceased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-51
[Link] Promissory Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-51
[Link] Agreements for Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-51
[Link] Recording Loans Due to the Deceased on the
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-52
11.6.8 Income from a Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-52
11.6.9 Registered Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-53
[Link] Registered Retirement Savings Plans (RRSP) . . . . . . .11-55
[Link] Registered Retirement Income Funds (RRIFs) . . . . . . .11-56
[Link] Tax-Free Savings Accounts (TFSAs) . . . . . . . . . . . . . . . .11-57
[Link] Registered Education Savings Plans (RESPs) . . . . . . .11-59
[Link] Registered Disability Savings Plans (RDSPs) . . . . . . . .11-59
11.6.10 Life Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-60
[Link] Other Life Insurance Benefits . . . . . . . . . . . . . . . . . . . . . .11-61
11.6.11 Collections and Other Valuables . . . . . . . . . . . . . . . . . . . . . . . . .11-61
11.6.12 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-61

11-3
 11.6.13 Deducting Liabilities for Purposes of Probate Fees
and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-62
11.6.14 Vehicles, Boats, and Other Vehicles for Transportation . . . .11-62
11.6.15 Personal Effects and Household Furnishings . . . . . . . . . . . . . .11-63
[Link] Listing Personal Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-63
[Link] A Caution When Listing Jewellery . . . . . . . . . . . . . . . . .11-64
[Link] Prepaid Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-64
11.6.16 Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-64
11.6.17 Missing Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-65
[Link] Unclaimed Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-65
[Link] Heir Locators and Unclaimed Property. . . . . . . . . . . . .11-66
[Link] Assets Identified in a Will . . . . . . . . . . . . . . . . . . . . . . . . . .11-66
11.7 ASSETS PASSING OUTSIDE THE ESTATE (WILL SUBSTITUTES) . . . 11-66
11.7.1 Assets Owned Jointly with Right of Survivorship . . . . . . . . . .11-67
[Link] Tenants-in-Common . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-67
[Link] Joint with Right of Survivorship . . . . . . . . . . . . . . . . . . .11-67
11.7.2 Designated Beneficiaries of Life Insurance and
Registered Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-69
[Link] Estate Is Default Beneficiary . . . . . . . . . . . . . . . . . . . . . . .11-69
[Link] Transfer of Proceeds to Beneficiaries . . . . . . . . . . . . . . .11-70
[Link] Trusts for Insurance or Plan Proceeds . . . . . . . . . . . . . .11-70
11.7.3 Registered Plan Designations . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-71
11.7.4 Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-71
11.8 TRANSFERRING ASSETS TO THE PERSONAL REPRESENTATIVE . . . .11-71
11.8.1 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-72
11.8.2 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-72
11.9 DISPOSING OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-72
11.9.1 Disposing of Investment Assets . . . . . . . . . . . . . . . . . . . . . . . . . .11-72
11.9.2 Disposing of Real Property and Other Assets . . . . . . . . . . . . .11-73
11.10 IDENTIFYING ESTATE LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-74
11.10.1 Liabilities, Estate Expenses, and Claims Against the
Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-74

11-4
 [Link] Executor’s Duty to Pay Just Debts . . . . . . . . . . . . . . . . . .11-75
[Link] Estate Liabilities versus Testamentary Expenses . . . .11-75
[Link] Other Claims Against the Deceased . . . . . . . . . . . . . . .11-76
11.10.2 Types of Liabilities and Establishing Amount Due . . . . . . . . .11-76
[Link] General Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . .11-76
[Link] Sources of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-77
[Link] Household Bills and Other Regular Payments . . . . . .11-78
[Link] Medical, Pharmacy, Nursing, or Home Care Bills . . .11-79
[Link] Credit: Loans, Mortgages, Lines of Credit, and
Margin Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-79
[Link] Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-80
[Link] Business Debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-81
[Link] Contracts for Services and Other Claims
Against the Deceased . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-81
11.11 ADVERTISING FOR CREDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-81
11.11.1 General Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-82
11.11.2 Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-83
11.12 SETTLING AND DISPUTING DEBT AND CLAIMS . . . . . . . . . . . . . . . . .11-84
11.12.1 Verification of Specific Debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-84
[Link] The Burden of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . .11-85
[Link] Joint or Shared Loans and Credit . . . . . . . . . . . . . . . . . .11-85
11.12.2 Timing of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-86
11.12.3 Authority to Settle Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-86
11.12.4 Defences and Other Considerations . . . . . . . . . . . . . . . . . . . . . .11-86
[Link] Limitation Period Has Expired . . . . . . . . . . . . . . . . . . . . .11-86
[Link] Lack of Corroboration . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-87
[Link] Quantum Meruit Claims . . . . . . . . . . . . . . . . . . . . . . . . . .11-87
[Link] Claims by Near Relatives . . . . . . . . . . . . . . . . . . . . . . . . . .11-88
[Link] Legacies to Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-88
11.12.5 Disputing a Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-89

11-5
11.13 INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-89
11.13.1 Obtain a Copy of the Last T1 Tax Return Filed by
Deceased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-89
11.13.2 Final Tax Returns for the Deceased . . . . . . . . . . . . . . . . . . . . . . .11-89
11.13.3 T1 Terminal Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-90
[Link] Deductions and Non-Refundable Tax Credits
on the Terminal Return . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-90
[Link] Exceptions to Deemed Disposition Rules on
Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-90
[Link] Testamentary Spousal Trusts and the ACB of
Trust Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-91
[Link] Introduction to Taxation of RRSPs and RRIFs
on Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-92
[Link] Due Dates for Terminal Returns. . . . . . . . . . . . . . . . . . . .11-94
11.13.4 Optional Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-94
[Link] Rights and Things Return. . . . . . . . . . . . . . . . . . . . . . . . . .11-95
[Link] Returns for Income from a Testamentary Trust . . . . .11-97
[Link] Returns for a Partner or Proprietor . . . . . . . . . . . . . . . . .11-98
11.13.5 Prior Years’ Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-98
11.13.6 Foreign Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-98
[Link] U.S. Estate Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-99
11.14 T3 TRUST RETURNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-99
11.14.1 Income Included on a T3 Return . . . . . . . . . . . . . . . . . . . . . . . 11-100
11.14.2 Deductions from Income Reported on a T3 Return . . . . . . 11-100
[Link] Exception for Estate T3 Return . . . . . . . . . . . . . . . . . . . 11-101
11.14.3 Calculation and Payment of Trust Taxes . . . . . . . . . . . . . . . . . 11-101
[Link] Due Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-101
[Link] Final Trust Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-102
[Link] T3 Slips and Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . 11-102
11.15 DISTRIBUTIONS TO NON-RESIDENTS (NR TAX) . . . . . . . . . . . . . . . . 11-102
11.15.1 Taxation of Beneficiaries in Home Jurisdiction . . . . . . . . . . 11-103
11.16 ASSESSMENT NOTICES AND OBJECTIONS . . . . . . . . . . . . . . . . . . . . 11-103

11-6
11.17 PENALTIES AND INTEREST CHARGES. . . . . . . . . . . . . . . . . . . . . . . . . . 11-103

11.18 TAX CLEARANCE CERTIFICATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-104

11.19 A WORD ON SPOUSAL TRUSTS, ALTER EGO TRUSTS,

AND JOINT PARTNER TRUSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-106

11.20 DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-106

11.20.1 Begin Distributing Assets to Beneficiaries . . . . . . . . . . . . . . 11-106
11.20.2 Distribute Specific Bequests . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-106
11.20.3 Advise Beneficiaries to Consult with a Financial Advisor. . . 11-106
11.20.4 Arrange for Final Distribution and Obtain Final
Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-107
11.20.5 Advise the Bank to Close the Estate Account. . . . . . . . . . . . 11-107
11.20.6 Prepare a Reckoning of Executor’s Expenses and Any
Executor Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-107
11.20.7 Prepare a Final Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-107
11.20.8 Obtain Approval of Estate Accounts and Releases
from Adult Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-108
11.21 GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-108

11-7
 Chapter 11
The Steps in Estate Administration1

Learning Objectives

Knowledge Objectives
• Know the steps required to complete the administration of an estate

Skills Objectives
• Describe the steps to be taken in administering an estate
• Explain how estate assets are realised and managed
• Identify how estate assets are to be distributed
• Explain the importance of tax clearance and releases

11.1 INTRODUCTION

This chapter presents the many tasks involved in estate administration, and
duplication is necessary for the purpose of completeness. Some of the content of this
chapter overlaps the content of other chapters. For instance, the content in 11.13,
Income Taxes, is more fully covered in the Taxation of Trusts and Estates course in the
STEP Diploma [Link] may be included in this chapter in less detail. Students
are responsible for the additional detailed content in the other chapters in respect of
any particular topic and should not necessarily rely on the more general content here
as being complete. References to the appropriate chapter are made in some cases.

1 This material was prepared in part by STEP Canada using, with permission, Royal Bank of Canada proprietary
information found in the “Settling an estate – An executor’s kit” [05466 (09/2009)] brochure. Royal Bank of
Canada assumes no responsibility for the accuracy of the material or liability arising out of the use of it. The
content has been expanded to include additional information and modified to meet the knowledge and skill
objectives of this [Link] Glossary is also from the RBC brochure.

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11.2 CHAPTER 11 — THE STEPS IN ESTATE ADMINISTRATION

The term “executor” is used throughout this chapter and is being used to include
any person with the authority to administer an estate, including an administrator,
liquidator, or other personal representative of the deceased.

Details of administration of estates in Quebec are shown separately in italics. See

Chapter 7 for more information regarding Wills, trusts, and estates in Quebec.

11.2 PRELIMINARY STEPS

11.2.1 Locate the Will, Determine Executor, and Review Instructions2

The Will may have been kept among personal papers at home, in a safety deposit box,
with family members, with a lawyer/notary, or elsewhere. There may be instructions
in the Will with regard to funeral arrangements and organ donation, so locating the
Will quickly is of the utmost importance.

[Link] When There Is No Will3

If the individual died intestate, a court may have to appoint an administrator

to settle the estate. The court may appoint:

• an individual as administrator of the estate according to the

order of priority in the provincial legislation or

• a corporate executor for the estate (e.g., a trust company).

Contrary to the common belief that the deceased’s spouse will inherit
everything, in most provinces or territories the spouse will not receive
all the assets. If no family members can be located, the estate assets may
ultimately go to the provincial or territorial government.

In Quebec, when someone dies without a Will (intestate), the office of

liquidator becomes the responsibility of the heirs. The heirs, by majority
vote, may designate the liquidator. If the heirs cannot agree or if it is
impossible to appoint or replace the liquidator, a liquidator may be
appointed by the court or named by Ministerial Order.

2 See 8.5.2, Locating the Will, for a discussion on this topic.

3 See Chapter 5.

11-10
PRELIMINARY STEPS [Link]

11.2.2 Organ Donation, Funeral Arrangements, and Disposition of Remains

[Link] Donation of Body or Organs

The deceased may have left instructions regarding organ donation in the
Will, on the form contained in the provincial driver’s licence, or with the
provincial health insurance provider or provincial agency (such as the
Trillium Gift of Life Network in Ontario).The donation of human remains is
the subject of provincial legislation.

Provincial law generally permits an individual to consent to organ donation

and that consent survives death. However, the wishes of family members
may override this consent to organ donation in most provinces, with the
exception of British Columbia. In British Columbia, there is an Organ
Donor Registry. In Ontario, the Trillium Gift of Life Network performs a
similar function.

Provincial legislation also sets out the order of priority for consent by
family members for organ donation.4 In general, the order is spouse, adult
children, parents, siblings, followed by next of kin. Consent of family
members is not valid for organ donation if it is known that the deceased
had expressed objections during his or her lifetime.

[Link] Executor Has the Last Word re: Funeral Arrangements

One of the first duties of the executor is to assist with the funeral
arrangements. In many cases the funeral and burial or cremation has
already taken place before the executor commences his or her duties. This
is certainly the case where a person has died intestate, in which case the
next of kin typically takes charge of funeral arrangements.

In Quebec, unless the deceased has specifically requested it, the

liquidator does not have this responsibility. Rather, it is up to the heirs
and successors to act and the expenses are charged to the succession.

The executor has the authority to make the funeral arrangements and
decide how to dispose of the [Link] authority supersedes the wishes
of any beneficiary, but generally should not be contrary to the wishes

4 See CCH Canadian Estate Administration Guide at ¶2011.

11-11
[Link] CHAPTER 11 — THE STEPS IN ESTATE ADMINISTRATION

expressed by the deceased.5 The executor has a duty to inform close family
members of the burial arrangements and cannot keep the place of burial
secret.

Many people pre-arrange their funerals with a funeral home or pre-plan

their funerals by leaving detailed instructions in their Will or with a family
member or friend. If the deceased has died without pre-arranged funeral
plans or if his or her wishes were not communicated to anyone, the
executor may, but is not obligated to, request family members’ input on
decisions about the funeral arrangements.

[Link] Payment of Funeral Expenses

The cost of the funeral and disposition of the body is a proper expense of
the estate. However, the cost must be reasonable in the circumstances and
in keeping with the station in life of the deceased.

If family members insist on expensive arrangements, the executor may

refuse or require an agreement in writing that the additional cost will be
paid by the family. Where the estate is or may be insolvent, more modest
arrangements may be appropriate. If the estate declares bankruptcy, the
funeral expenses will be a first charge on the assets of the estate.

Reasonable costs of a marker or gravestone are also a proper expense of

the estate.

[Link] Bereavement Airfare

Some airlines offer discounted rates for travel to attend the funeral of
a close family member. Cost of travel to a funeral is not a proper estate
expense.

[Link] The Obituary Announcement

An obituary notice may be placed in a local newspaper, and paid for by the
estate.

5 However, the wishes of the deceased may not be forced upon the executor. See Saleh v. Reichert (1993), 50
E.T.R. 143, where it was held that the administrator could follow the wishes of the deceased or family.

11-12
PRELIMINARY STEPS 11.2.4

[Link] Veterans’ Allowance

Veterans of Canada’s armed forces and their dependants may be eligible for
burial, pension, and other benefits if they meet the eligibility requirements.
Veterans without sufficient funds to cover their funeral expenses may be
eligible for help from the Last Post Fund. The local Veterans Affairs Canada
office can be contacted for further information.

11.2.3 Obtain Multiple Original Copies of the Proof-of-Death Certificate

The executor will need several original, notarised, or certified true copies of the
proof of death, as he or she will be called upon by the deceased’s banks, insurance
companies, investment firms, and other institutions to provide these while
administering the estate. Obtaining multiple copies at the beginning should help
avoid delays or inconvenience.

Proof of death can usually be any of the following:

• death certificate issued by the province or funeral director,

• burial certificate,

• copy of coroner’s report, or

• Act of Death or Certificate of Death (Quebec).

The death certificate issued by the funeral director is sufficient for most purposes and
is available immediately. However, the official death certificate issued by the province
is sometimes required (e.g., this may be required when making insurance claims) and
may take some time to obtain.

11.2.4 Retain a Solicitor to Advise the Executor and Carry Out the Legal Work
Required

The executor has many responsibilities, and legal advice can assist the executor to
understand his or her obligations to the beneficiaries, creditors, dependants, tax
authorities, and others and ensure that all the required tasks are addressed. A lawyer
usually prepares the application for the grant of probate and carries out any other
legal requirements, such as conveyance of real property and passing of accounts if
required.

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11.2.5 CHAPTER 11 — THE STEPS IN ESTATE ADMINISTRATION

11.2.5 Arrange for the Initial Meeting with Beneficiaries

Details on this process are discussed at 11.3.1, Communicate Directly with

Beneficiaries and Set Expectations.

11.2.6 Ensure the Family’s Immediate Financial Needs Can Be Met

If family members have urgent financial needs, the executor may be able to look
to sources of funds that are payable directly to family members. These may include
life insurance policies, employee pension plans, registered plans with designated
beneficiaries, joint bank accounts or other joint property with a right of survivorship,6
Canada Pension Plan (CPP) survivor benefits, or employer death benefits. Distributions
from the estate for this purpose before the estate is fully administered and/or a Tax
Clearance Certificate is obtained may expose the executor to personal liability either
to creditors or the Canada Revenue Agency (CRA).

11.2.7 Review Any Marriage Contracts, Family Law Issues, or Dependant Relief
Issues

The effects of marriage — such as the family patrimony, compensatory allowance,

survival of the obligation to provide support, and matrimonial regime legislation —
may require that part of the value of the estate be paid to the surviving spouse or
descendant. If the deceased resided outside Quebec but was ever resident in Quebec,
the existence of any Quebec marriage contract should be considered.7

In Quebec and Newfoundland and Labrador, it may also mean that the surviving
spouse owes money to the estate.

11.2.8 Probate the Will If Required8

A probated Will is a Will that is acknowledged by the courts to be the deceased’s Last
Will and Testament.

It confirms the executor and acknowledges his or her authority to carry out the
terms of the Will. Most financial institutions require probate before they will release
a deceased person’s assets because it assures the institution is handing over the
deceased’s assets to the person who is lawfully entitled to receive them.

6 See, however, 9.3.7, Property Held Jointly with Right of Survivorship, regarding jointly held property.
7 See 7.2, Situations Where Quebec Issues May Arise.
8 See Chapter 8, Obtaining the Grant of Probate.

11-14
PRELIMINARY STEPS [Link]

Without probate, the institution cannot be assured that the Will it has been given is,
in fact, the deceased’s last Will. However, if probate has been obtained, even if the
Will is challenged or ruled invalid or if a later Will is discovered (thereby revoking
the Will), the financial institution cannot be held liable for releasing assets to the
executor named in the probated Will.

When the value of the deceased’s assets is relatively small, the financial institution
may require the executor to sign a Bond of Indemnity in lieu of obtaining probate.

However, executors often find that administering the estate is easier when they
obtain probate since it is unlikely that anyone will question their authority to gather
and deal with the deceased’s assets.

[Link] Documents Required When Applying for Probate

The following documents will be required in the application for probate:

• original Will (and any codicils),

• Affidavit of Witness to the Will/codicil (in most provinces), and

• depending on the province, the court may also require the

executor to list the value of the estate assets on the probate
application form supplied (not applicable in Quebec).

In Quebec, probate can be obtained by depositing a motion for probate

before the Superior Court where the deceased resided. If he or she did
not reside in Quebec, the motion for probate is obtained before the
court of the district in which the testator died or the district where he or
she owned property. The Will may also be probated by a notary on the
application of any interested person. Probate is not required for notarial
Wills.

Once the court receives the required documentation from the executor, it
will issue one of the documents in Figure 11.1, depending on the province.

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[Link] CHAPTER 11 — THE STEPS IN ESTATE ADMINISTRATION

Figure 11.1: Document Issued upon Granting of Probate

Province Term for Grant Term for Executor

British Columbia, Letters Probate Executor
Saskatchewan, and
Atlantic Canada
Alberta Grant of Probate Personal representative
Manitoba, Northwest Grant of Probate Executor
Territories
Ontario Certificate of Estate trustee with a Will
Appointment of Estate
Trustee with a Will
Quebec Probate Will Liquidator

These documents confirm that the Will is the deceased’s Last Will and
Testament and that it conforms to the law. Depending on the province, it
also confirms the authority of the named executors in the Will.

The court will issue Letters of Administration or Letters of Administration

with Will Annexed instead of Letters of Probate or Grant of Probate,
depending on the province, in the following cases:

• a person dies intestate (without a Will),

• the deceased had a Will but did not appoint an executor, or

• all the executors named in the Will are deceased, unable to act,
or decline to act.

In Ontario, Letters of Administration are known as a Certificate of

Appointment of Estate Trustee without a Will.

[Link] First Nations Members

If the deceased was a First Nations member who ordinarily resided on a

reserve, estate documentation as detailed in the table in Figure 11.1 will
not be required. A document known as a Ministerial Order will be issued
by the Ministry of Indian and Northern Affairs, naming the executor under
the provisions of the Indian Act.

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BENEFICIARY RELATIONSHIP 11.3.1

11.2.9 Pay Probate Fees or Taxes9

In all provinces except Quebec, when an executor applies to the court for probate, a
tax must be paid to the provincial government.

The tax is based on the value of the estate assets. Certain assets do not form part of
a deceased’s estate at death. These generally include jointly owned assets held with
right of survivorship and life insurance policies, RRSPs, RRIFs, and similar investments
that have a beneficiary other than the deceased’s estate designated on the plan.

11.3 BENEFICIARY RELATIONSHIP

11.3.1 Communicate Directly with Beneficiaries and Set Expectations

Settling an estate can often stir up family tensions or create conflict between
beneficiaries who are under emotional stress.

As executor, it’s important for the executor to communicate with beneficiaries early
and often. This will help beneficiaries understand the process, update them on the
status of the administration progress, and answer questions before they turn into
problems.

After obtaining a copy of the Will and the funeral has taken place, the executor
should arrange a meeting as quickly as possible with the [Link] duties and
obligations of the executor should be discussed, as well as beneficiary expectations
and the steps required to settle the estate.

The beneficiaries should understand that the executor’s duties include:

• obtaining the Grant of Probate (or provincial equivalent), if necessary,

in order to deal with the deceased’s assets,

• paying the estate’s debts and taxes,

• producing full accounts to the beneficiaries showing how the estate

assets have been handled and obtaining the beneficiaries’ written
approval of the accounts,

9 See Chapter 8.

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[Link] CHAPTER 11 — THE STEPS IN ESTATE ADMINISTRATION

• distributing the personal property and the remainder of the estate to

the beneficiaries according to the Will,

• filing the estate’s final income tax return (the “terminal” return), and

• always being ready to account to the beneficiaries for the handling of

the estate’s assets.

Beneficiaries typically want to know:

• when they will receive their inheritance,

• that the executor has done his or her job properly — if the executor
misses something, it could have an impact on the beneficiaries,

• that the debts and taxes of the estate have been paid,

• that reasonable funeral expenses have been paid,

• that the estate accounts and investments are earning reasonable

interest,

• that the executor has distributed the personal property to the

designated people,

• that the remainder of the estate is being distributed according to the

terms of the Will, and

• what fees the executor will receive for his or her work in administering
the estate.

[Link] Avoiding Conflict Over Executor’s Fees10

The executor is entitled to compensation for administering the estate. The

executor’s fee is payable out of the estate, and details should be included
in the estate accounts.

In Quebec, the liquidator is entitled to remuneration if he or she is not

an heir. If an heir, he or she may be remunerated if the Will so provides
or the heirs or the court agrees.

10 See 13.4, Passing Accounts, and 13.5, Executor Compensation.

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BENEFICIARY RELATIONSHIP 11.3.3

To avoid conflict or misunderstanding over executor’s fees:

• keep detailed accounts,

• keep a detailed log of the time spent on each aspect of estate

administration to illustrate the number of hours involved, and

• explain how the fee is calculated. Often, the fee is 3% to 5% of

the value of the estate, depending on the province. Provincial
laws provide that the executor’s fee must be fair and reasonable
in proportion to the size of the estate and the work done by the
executor.

11.3.2 Provide Regular Updates to Beneficiaries

Beneficiaries dislike long periods of silence while executors are administering the
estate, and may interpret lack of communication with lack of [Link] is also a
risk that beneficiaries may have concerns that build up and do not get raised until the
executor presents the estate accounts.

To maintain the best possible relationship with the beneficiaries, the wise executor
will be proactive and keep beneficiaries informed as the administration progresses.
By being in regular contact with the beneficiaries, they have a better understanding
of the work the executor is doing. They also have the opportunity to voice concerns
as they arise.

Regular communication tends to foster trust in the executor, ensuring the beneficiaries
that he or she is acting in their best interests. Confidence in the beneficiary may
avoid the need to pass accounts and prevent the stress and legal costs of obtaining
court approval.

Written reports can be sent if regular meetings with beneficiaries aren’t possible or
practical.

11.3.3 Provide a Copy of the Estate Summary Document to Beneficiaries

Depending on the province, beneficiaries who receive specific bequests (e.g., an

item of personal property) are not entitled to a copy of the estate summary. Only
those who will receive the balance of the estate (i.e., residual beneficiaries) need the
full document.

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11.3.4 CHAPTER 11 — THE STEPS IN ESTATE ADMINISTRATION

11.3.4 Communicate with the Residual Beneficiaries Regarding the

Distribution Process

Ongoing updates to the beneficiaries about the estate settlement are key as the
executor will need the residual beneficiaries to provide written approval of the
estate’s accounts confirming that they are satisfied with how the estate has been
administered. It is recommended that signed releases be obtained to confirm that the
beneficiaries accept the amounts shown in the accounts in full satisfaction of their
entitlement under the Will and waive their right to sue the executor in the future.

If a beneficiary refuses to approve the estate accounts, the executor can apply to
the court to have the accounts reviewed/approved. When approved, the executor
can distribute the remainder of the estate without the signature of the outstanding
beneficiary. However, it is usually wise to avoid an application to court if at all possible
as this process causes delays and incurs legal costs.

11.4 INITIAL STEPS IN DEALING WITH ASSETS

An executor’s first concern is to identify any other assets that require immediate
attention to protect them from loss, theft, or destruction. Examples include:11

• Changing locks to the apartment or home if there is any question as

to who may have access to the premises;

• Disposing of or selling perishable goods;

• Arranging to continue or terminate regular services;

• Advising management companies and landlords of any expected

delays in the estate’s ability to make monthly payments; and

• Taking steps to protect the deceased’s business interests.

If the deceased had any pets or a farming operation with livestock or crops,
arrangements should be made immediately for their care.

Although an executor named in a Will should be careful to not intermeddle if the

executor may wish to renounce the appointment, activities that are intended to

11 Dealing with farm properties and livestock requires specialised knowledge and expertise. Dealing with
estates that involve farms is beyond the scope of this course/program.

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IDENTIFYING AND VALUING ASSETS 11.5.1

protect estate assets but do not assume control will be unlikely to attract liability
as an executor de son tort. Inquiries to determine the nature and approximate
value of assets are also permitted. When carrying out these activities, one way to
communicate that the executor is not assuming control is to clearly indicate that
although named as an executor, the protective steps are only an interim measure until
the executor accepts the appointment and/or that information is being gathered to
determine whether or not the executor should accept the appointment. If there is
no Will, anyone making inquiries in order to determine if he or she should apply to
administer the estate should also make the purpose of the inquiries or instructions
clear.

See Chapter 6, Claims Against Estates by Family Members, for additional steps to be
considered when gathering information on liabilities and debts.

11.5 IDENTIFYING AND VALUING ASSETS

11.5.1 Reasons to Value Assets

As noted earlier, an asset inventory is a key requirement for any estate administration.
The inventory identifies the asset and establishes a date-of-death value. Valuations
serve many [Link] are required in order to:

• calculate probate fees/taxes where applicable,

• determine the amount of insurance that may be required (subject to

the caution below),

• establish a deemed disposition value for the deceased’s final tax return
(the asset values also become the new cost base for the estate),12

• assist with the calculation required if there is a division of family

assets,

• establish or inform the list price for assets that must be sold (see 11.9,
Disposing of Assets), and

• calculate executor fees (see Chapter 13, Estate and Trust Accounts).

12 Deemed dispositions may not apply when the will establishes a testamentary spousal trust that meets the
requirements of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.).

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11.5.2 CHAPTER 11 — THE STEPS IN ESTATE ADMINISTRATION

Although the details required on the asset inventory for purposes of applying for a
grant will vary depending on the jurisdiction, the general structure of the inventory is
the same — the assets are listed by asset classes and all relevant details are included
to clearly identify the asset, its location, and how the value was determined.

11.5.2 Different Values for Different Purposes

When obtaining appraisals that require a professional opinion of value, it is important

to clarify the purpose of the valuation. When valuing an asset for probate or income
tax purposes, the value is the amount that could be obtained in a sale on an open
market. This is often called the “disposition value” or “fair market value” (FMV). When
valuing assets for insurance purposes, the executor requires the replacement value,
that is, what it would cost to rebuild or replace this asset if is destroyed, stolen, or
lost. Typical examples where values may be very different include a home, jewellery,
vehicles, and other personal and household effects.

11.5.3 Valuation Methods

Different methods are used to value different types of assets. Sometimes there is
more than one way to approach the valuation, and a decision will be required as to
which is the most appropriate in the circumstances. Factors to be considered will
include the cost, the purpose of the valuation, and the risk of the valuation being
challenged. A number of practices have also evolved to guide executors on what is
appropriate and, in some cases, professional valuation rules must be followed, and
further guidance on what constitutes FMV will be found in case law.

Examples of the range of valuation methods for different assets include:

• Publicly Traded Securities (stocks, bonds): Use closing prices for

the date of death or last trading.

• Mutual Funds: Use closing price for date of death or last trading day
where available; contact fund manager or representative.

• GICs, Canada Savings Bonds, and Other Fixed Interest Vehicles:

Use the face value.

• Registered Plans: Ask for the valuation from the registered plan
trustee, who will apply rules similar to those used for an estate.

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IDENTIFYING AND VALUING ASSETS 11.5.4

• Real Estate Interests: Retain an appraiser with the appropriate

qualifications for the type of property. In some jurisdictions and for
some purposes, a property assessment notice or a real estate agent’s
opinion of value may be acceptable.

• Businesses: Retain qualified business valuators. Different approaches

to the valuation will be used depending on the nature of the business.

• Personal and Household Goods, Collections, Valuables:

Specialists should be used where appropriate; auctioneers can also
assist; Black Book values for vehicles.

These methods are discussed in the sections that follow when reviewing the
information and steps required to deal with different asset classes.

NOTE: The date-of-death values will become the new cost base (or acquisition cost)
for the assets held by the estate. If the assets are sold, the capital gains or losses on the
sale are calculated using the new cost [Link], when the assets are recorded
on a corporate trustee’s accounting system, or on a brokerage firm or investment
manager’s account, these values should be used as the adjusted cost base (ACB) (see
11.5.5, Cost Information).

If the assets are being transferred to a spouse or a spousal trust, the deceased’s original
ACB is retained unless an election to increase the cost is made on the deceased’s final
tax return.

11.5.4 Accrued Income

In addition to determining the value of an asset at the date of death, if the asset
produces income such as interest, rents, or dividends, it will be necessary to calculate
any accrued income also due to the deceased. If the income is interest or rental
income, the accrued income is calculated on a pro rata basis from the date of the
last interest or rent payment. See 11.6, Asset Categories, for the details on how to
calculate accrued income for each type of asset, where applicable. If the investment
is shares in a company, it is necessary to determine whether the estate is entitled to
any ex-dividends (see [Link], Ex-Dividends).

The amount of accrued income is an asset of the estate reported on the inventory. It
will be reported as income on the deceased’s final tax return. Accrued income is not
included in the asset’s new ACB value (see 11.5.3, Valuation Methods, under Note).

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11.5.5 Cost Information

When gathering information about asset values, it is also important to gather details
about the purchase cost(s) and date of acquisition. Purchase cost is usually the
original amount paid. It is referred to as the cost base or adjusted cost base (ACB).
The ACB is required by the tax return preparer in order to assist with preparation of
the final return(s).The information is usually captured in a separate summary.

NOTE: The term “adjusted cost base” is a tax term. “Adjusted” is often included
when referring to an asset’s cost base because the original price paid may have
been adjusted over the years. For example, there may be a “return of capital” to
shareholders, or mutual fund unit holders, and value of the amount “returned” will be
deducted from the cost base, resulting in a new or “adjusted” cost base. Or a taxpayer
may own depreciable property such as a rental building. Special tax rules apply to
depreciable property.

“Cost base” and “adjusted cost base” may be used interchangeably in these materials.

If a Will creates a testamentary spousal trust, the deceased’s ACB will usually become
the cost to the spouse or spouse trust for tax purposes and there may be no tax on
death. For tax planning purposes, elections may be made to increase the cost base.
However, the FMV is the value reported on the estate summary for all other purposes.

11.5.6 Valuation Dates

Generally, the date-of-death value for an asset is the value of the asset at the end of
the day of the date of death. When dealing with investments that trade on the open
market, the value is the closing price on the date of death, or if the date of death is
not a business day, the closing price on the last business day.

11.5.7 Collecting Asset Information

[Link] Sources of Information

There are numerous sources of information that the executor may need
to explore. Checklists, templates, or form letters assist in this process. The
primary sources of information for assets, liabilities, and beneficiaries are
reviewed below.

Letters may be sent to:

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IDENTIFYING AND VALUING ASSETS [Link]

• Third Parties Holding Assets: These include banks and

investment firms holding cash, mutual funds, investments,
registered plans, and life insurance. Account statements also
provide information and should be reviewed. Note that the
deceased may also have outstanding liabilities to these firms
and the letter will ask about these as well.

• Government Agencies: These include Canada Pension Plan,

Old Age Security, Veterans Affairs Canada, and Quebec Pension
Plan.

• Canada Revenue Agency (CRA): The CRA can provide past

returns and assessment details.

• Sources of Periodic Payments: These include employers for

outstanding wages and benefits, pensions, and annuities.

Documents to be reviewed for information include:

• Personal Papers of the Deceased: Papers may be found in

the home and/or a safety deposit box. These papers may reveal
assets, liabilities, beneficiary information, and a number of other
relevant pieces of information, including loans to family, friends,
or business [Link] documentation and records available
for these arrangements will depend on the relationships and
amounts involved.

• Contracts and Agreements for Services: These documents

may establish legal obligations, including separation or divorce
agreements or court orders.

• Tax Returns: Past tax returns provide clues to assets that paid
employment or investment income. Inquiries may be required
to determine why income sources have stopped and/or to
locate them.

It may be necessary to redirect the deceased’s mail to ensure nothing is

overlooked. Online accounts for billing notices, statements, subscriptions,
and other accounts should also be monitored.

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[Link] CHAPTER 11 — THE STEPS IN ESTATE ADMINISTRATION

Interviews may be required with a number of people, including:

• Family Members: Close family members may have information

to assist the executor to identify or locate assets, liabilities,
business activities, creditors, and beneficiaries.

• Professional Advisors and Bankers: Lawyers, accountants,

investment advisors, financial planners, and bank managers may
have relevant information about assets, taxes, business dealings,
or legal matters.

[Link] Requesting Information from Third Parties

When requesting information, it will be necessary to establish the

executor’s authority. This will include a certified (or notarised) true copy
of both the Will and the proof of death (often a death certificate).

If a lawyer or corporate trustee is writing on behalf of the executor,

permission to release information to the lawyer or corporate trustee will
be required. When writing the CRA on behalf of the executor, form T1013
Authorizing a Representative will be required.

If an asset is jointly owned, the institution may have additional steps or

requirements to be satisfied.

Letters must be customised to the type of asset, holder, or institution to

ensure all necessary information is [Link] letters address these
matters and should include requests or instructions for the following, as
applicable:

• The Registered Name on the Account. All names that have

been used by the deceased should be captured. This includes
the deceased’s full legal name, a shortened version, and all
nicknames. When applying for the grant, it is usually necessary
to ensure that all the names used on accounts or registered
titles are included in the application so that they are disclosed
on the grant. Failure to include the name that is recorded on the
account could result in the grant not being accepted because it
does not identify the deceased owner by the name on the third
party’s records.

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IDENTIFYING AND VALUING ASSETS [Link]

• Balances: All balances, including accrued income and other

amounts due to the deceased, are required. Past statements
should be requested if not already available.

• Transmission/Transfer Requirements: The holder of the

asset may require his or her own documents or supplemental
information, in addition to the grant, before the asset(s) or
account balances will be transferred to the executor.

• Acquisition Costs and/or ACB: Purchase costs and/or the

current ACB is required to prepare the tax return.

• Interim Instructions: Interim instructions pending receipt of

the grant should be provided as appropriate, including whether
or not to accept future deposits, permit automatic withdrawals,
and sale of investments if an account was managed by a
discretionary investment manager. Dividend reinvestment plans
should also be stopped.

• Statements and Tax Slips: A request should be made that all

future statements and tax slips be redirected to the executor.
If this cannot be done immediately, the executor will need to
collect statements and slips that were issued prior to the grant
being issued. If mail is redirected, this may not be an issue.

Other letters may include:

• Canada Revenue Agency (CRA): A request to the CRA may be

made for copies of past returns if not available in the deceased’s
files or from an accountant, and/or a status of account showing
details of prior years’ assessments and amounts due to or from
the deceased.

• Mail Redirection: A request for mail redirection is advisable

unless the executor continues to live in the home. This ensures
that no information is missed and does not end up in the wrong
hands. It also ensures that mail does not accumulate and signal
an extended vacancy.

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[Link] CHAPTER 11 — THE STEPS IN ESTATE ADMINISTRATION

Generally, an executor cannot collect bank balances or titles to assets

cannot be transferred to the executor until a grant of probate has been
obtained and provided to the third party who controls ownership or
registration of title. This means that when the assets are received, the
estate accounting will need to reflect any transactions that occurred in the
deceased’s accounts after the date of death. (See Chapter 13, Estate and
Trust Accounts.)

[Link] Safety Deposit Boxes

When the deceased owned a safety deposit box, it will be necessary to

bring the keys to the bank and arrange to list the contents in the presence
of a bank employee.13 A copy of the listing may be left in the box. The
contents of the box can be removed after the grant is obtained.

If there is a joint owner of the box, the joint owner may need to be present
or provide written consent for the listing to proceed in the absence of the
joint owner.

If the safety deposit box keys cannot be found, it will be necessary to drill
the box. A grant will likely be required before this can occur.

[Link] Privacy and Joint Accounts

Executors may find that a third party is reluctant to share information

when the deceased owned an account with another person on the grounds
that there may be disclosure of personal information about the other party.
However, the executor is entitled to all information up to and including
the date of death even where the asset goes to the survivor by right of
survivorship.

Collecting information about jointly owned accounts and assets is

important for a number of reasons.

• There may be tax reporting obligations for income earned until

the date of death or there may be deemed dispositions of the
deceased’s interest to be reported.

13 British Columbia only: Section 183 of The Wills, Estates and Succession Act (S.B.C. 2009, c. 13) sets out the
rules for accessing a safety deposit box.

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IDENTIFYING AND VALUING ASSETS [Link]

• Increasingly it is important for the executor to make inquiries to

determine the reason for making the account joint and whether
or not it passes to the survivor(s) according to the law or
account agreement or if the survivor(s) are holding the account
or asset on a resulting trust for the estate. If the account or asset
is held on a resulting trust, it must be collected and reported
when applying for the grant.

See 11.7.1, Assets Owned Jointly with Right of Survivorship, for further
review of the issues related to jointly owned assets.

11.5.8 Location of Assets

When listing assets, the location’s jurisdiction must be indicated. When applying
for a grant, the general requirement is to report all personal property wherever
located if the grant will be used to collect the property. All real property interests
in the jurisdiction must also be reported. Any property (personal or real property)
that requires a grant from another jurisdiction may also need to be disclosed when
applying for the grant. However, the property should be clearly indicated as being
outside the jurisdiction. For purposes of the estate summary, these assets are often
listed on a separate page. This ensures that they are excluded when calculating
probate fees and taxes, and are easily identified when applying for a grant in the
other jurisdiction.

11.5.9 Safeguarding Assets

As noted, the executor is responsible for safeguarding assets. There are a number of
ways to do this and some have been noted above. This section reviews the more
common practices and general considerations. Unique safeguarding needs for certain
assets or asset categories are addressed in 11.6, Asset Categories.

[Link] Safe Storage, Security, and Insurance

Decisions about storage and security requirements are guided by the

nature of the asset. Cost and other practical issues must also be taken into
consideration. Actions required may include:

• moving valuables to a vault with double custody or another

secure place,

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[Link] CHAPTER 11 — THE STEPS IN ESTATE ADMINISTRATION

• arranging storage for art collections or other valuables that

require special facilities and/or climate control,

• arranging for storage of household goods pending probate and

sale or distribution if the premises are not secure or must be
vacated,

• arranging for insurance on valuables, collections, and jewellery,

• arranging for insurance on homes, including vacancy permits if

the home is not occupied,

• ensuring that homes and other properties are appropriately

prepared for the different seasons and satisfy insurance
requirements, including periodic inspections,

• changing locks where others may have keys, and

• arranging for security services for homes or other premises.

[Link] Preventing Unauthorised Access to Accounts and Collecting

Income

Third parties responsible for bank and investment accounts must be

notified of the death. Each financial institution will have its own policies
and procedures that it will follow. For example, accounts will likely be
frozen and requirements for releasing the assets will be communicated on
request. However, the executor should also:

• give specific instructions regarding future deposits and

withdrawals, including whether or not transactions are to be
permitted,

• give instructions that no further trades should occur on an

investment account, and that any dividend reinvestment plans
should be terminated so that dividends are received as cash and
no further share purchases occur,

• give instructions redirecting investment income to the deceased

if delivered by mail so that cheques do not get lost, and

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ASSET CATEGORIES 11.6

• collect bank balances and transfer investments to an estate

account as soon as possible (usually upon receipt of the
grant). This may involve a physical transfer or re-registration of
accounts or certificates into the executor’s name.

If the deceased was receiving income or loan payments from individuals

or other entities that are not large financial institutions, or assets are being
held by a third party, the holder or payer should be instructed to redirect
income payments and/or to not deal with the assets without further
instruction.

The executor will need to open an estate account to handle cash receipts
and disbursements. An investment account may also be required. The
executor will want to minimise the number of accounts maintained
to avoid mistakes and additional time when income tax returns and
beneficiary accountings must be prepared.

If there is a corporate trustee, an account will be opened on the company’s

trust accounting system. The account will hold all cash balances and
investments and record any non-financial assets. When customised trust
accounting systems are used, all transactions are recorded in one place.
Special codes are used that allow the executor to generate customised
statements required in order to prepare income tax returns and to account
to beneficiaries.

11.6 ASSET CATEGORIES

There are a number of classes or categories of assets. The two broad categories are
personal property (sometimes called movables) and real property (immovables).
Real property includes any interest in land, such as ownership of land, a house, or
a condominium (strata in British Columbia). It also includes a mortgage held by the
deceased as security for a loan to a third party. Personal property is everything else,
including items and structures that can be removed from the land. For example, a
mobile home is personal property because it is not affixed to the land it sits on.
However, a house or other building is affixed and is included in the valuation of the
real property interest.

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11.6 CHAPTER 11 — THE STEPS IN ESTATE ADMINISTRATION

Assets can also be categorised by other features and characteristics. For example,
investments are a broad category of assets but within that class are a number of
different [Link] include:

• cash (e.g., bank accounts),

• fixed income securities (e.g., bonds, GICs,Treasury Bills),

• equity investments (e.g., stocks or shares — investments in companies),

• mutual funds, and

• real estate.

Assets can also be held within different vehicles. For example:

• Registered plans may hold a wide range of different investments.14

• Private companies may be created to hold a portfolio of investments,

or shares of an operating company. They are referred to as holding
companies.

The rules for pricing these assets or investment holding vehicles differ. Each asset type
generates different types of income for the investor as well (e.g., interest, dividends,
mutual fund distributions).

For purposes of preparing the inventory, it helps to group assets based on the details
that must be recorded.

The next sections of this chapter review the most common categories of assets.

14 “Qualified investments” for purposes of registered plans are defined in the Income Tax Act, R.S.C. 1985, c. 1
(5th Supp.).

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ASSET CATEGORIES 11.6

Figure 11.2: Supplemental Content on Asset Categories

Important Note for Students

In 11.6, Asset Categories, many features of the more common investment

vehicles are reviewed. However, it is beyond the scope of this course to fully
explain the nature and character of each type of investment. In addition, the
course does not review the different kinds of investment advisors available
in the marketplace or the principles that must be applied to establish an
investment policy statement to guide how funds should be invested for an
individual, estate, or trust.

It is the student’s responsibility to become familiar with the more

common investment vehicles discussed in this course and how these
investments are purchased and sold or redeemed. Students should also
understand the nature and basic rules that apply to registered plans
(RRSPs, RRIFs, RDSPs, RESPs, and TFSAs) and annuities. Students are
expected to be familiar with the general steps required to determine
an investor’s risk tolerance and investment objectives, which in turn
will inform the development of an investment policy statement to
guide the choice of investments.

For an easy-to-understand resource to supplement the content in this chapter,

see The Investor Education Fund website at [Link]. The
site is funded by the Ontario Securities Commission and offers clear, concise
basic information about the assets discussed in this chapter, ranging from
bank accounts to different types of bonds, GICs, stocks, and mutual funds. It
also covers real estate, registered plans, annuities, and insurance. See the page
Managing Your Money — Investments for a list of the different investment
[Link] is a link for each investment vehicle to definitions, explanations,
and examples. A review of the information about the investments on this list
will provide students with the minimum knowledge required for this course.

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11.6.1 CHAPTER 11 — THE STEPS IN ESTATE ADMINISTRATION

The Planning section of [Link] (found below the list of

investments) provides information about the different types of investment
advisors (Getting Advice), the process for making investments (Investing
Basics), and the Canadian income tax system (Understanding Tax). Students
who are not familiar with these topics are encouraged to review the material
in order to prepare for chapters that follow and future courses.

The British Columbia Securities Commission’s website (InvestRight website:

About Investments) also has good information and offers additional
information on some topics. The site includes summaries of the different types
of investments and how they work.

The Canadian Securities Course, offered by the Canadian Securities Institute,

provides a comprehensive course for anyone entering the investment industry.
Historically, it has also been mandatory education for staff in trust companies
who administer estates and trusts. More information about the course is
available on the website.

Clients may also hold more complex assets such as flow-through shares, hedge
funds, income trusts, principal protected notes, and options. There are a variety
of websites that offer consumer education on these types of investments,
including the sites [Link] these are not required knowledge for this course,
students are encouraged to visit these sites to learn more about these and other
investment vehicles and ways for investors to participate in the market.

11.6.1 Wages, Pensions, Death Benefits, and Annuities

Prior to retirement a person may receive wages or other sources of regular income,
including government disability benefits. Upon retirement, employment income may
be replaced by new sources of income, such as pension income and other periodic
payments.

Pension sources include the Canada Pension Plan (CPP), or the Quebec Pension Plan
(QPP) for those who worked in Quebec. Other pension sources include government
pensions from other countries, employer pensions, and the federal Old Age Security
(OAS) and Guaranteed Income Supplement (GIS). If the deceased was a surviving
spouse or common-law partner, he or she may also be receiving survivor benefits,

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including the CPP survivor benefit. Pensioners may also have purchased an annuity to
ensure a steady source of income

Most pensions and annuity payments are deposited automatically in the pensioner’s
bank account. Therefore, it is important to notify the payer of the pension or annuity
of the death as soon as possible so that payments are terminated. Payments received
into an account after the date of death must be returned as soon as the executor has
legal authority over the account.

[Link] Canadian Government Pensions

Canadians who contributed to the CPP or QPP can apply to receive monthly
pension benefits at age 65. Applications for a reduced pension may be made
beginning at age 60. Applications can also be deferred until age 70. The
pension amount payable depends on the deceased’s lifetime contributions
and when the payments begin. If the deceased could not work due to a
disability, he or she may have been receiving a CPP disability benefit.

Canadian citizens and legal residents who meet certain requirements are also
entitled to receive OAS payments. The amount of an OAS payment depends
on the number of years the individual lived in Canada after age 18. For
Canadians born before April 1, 1958, an application for OAS can be made to
ensure payments begin upon reaching age 65. For those born after April 1,
1958, the age will increase to 67 over a six-year period, beginning in April
2023. If a recipient’s net world income for a taxation year exceeds a specified
threshold, a recovery tax is due and some or all of the OAS must be repaid.

Canadians whose income is below a certain threshold may also apply for
GIS payments.

[Link] CPP/QPP and Other Federal Pensions in the Month of Death

All federal and QPP pension payments are paid for the month. If a person
dies before the cheque is issued or an automatic deposit occurs, the estate
will keep the payment and report it on the estate inventory. For example,
if the deceased died on the fifth of the month, and an automatic deposit
is made on the twentieth, the amount of the cheque is recorded on the
inventory and is part of the assets at the date of death.

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[Link] CPP/QPP Spouse and Dependent Child Benefits

When inquiring about the CPP or QPP, where applicable, the executor
should determine whether a surviving spouse or any dependent children
may now be eligible for a survivor benefit or the child benefit and may
wish to assist the survivor or dependent child with the application by
providing proof of death and the necessary forms.

[Link] Other Pensions and Periodic Payments

The deceased may also be receiving a monthly employer pension or

annuity payment. Payments must be dated on or before the date of death.
Any payments received after the date of death by automatic deposit, or
cheques dated after the date of death, must be returned.

If the deceased received a government pension from another country,

inquiries will be required to determine whether or not the deceased’s
estate is entitled to the payment.

[Link] Wages and Other Employee Entitlements

If the deceased was employed at the time of death, the employer’s human
resources department will be able to confirm whether the deceased was
entitled to any benefits, including final salary, bonuses, or vacation pay.

[Link] Death Benefits

CPP/QPP pension recipients are entitled to a death benefit. The amount

of the payment will depend on the number of years and the amount of
the deceased’s contributions. The maximum payment is $2,500. The
average as at July 2014 was $2,294.07.15 If there are no estate assets to
administer or the executor does not apply, the person responsible for the
funeral expenses may apply for the death benefit. The surviving spouse or
common-law partner is the next in line, followed by the next of kin.

The estates of recipients of CPP/QPP survivor benefits do not receive a

death benefit.

15 For a detailed review of the federal pensions, including the death benefit, and how to make applications, visit the
Service Canada website at [Link] For information
about the QPP, visit the Quebec website at [Link]

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Employer pension plans must also be reviewed for possible entitlements

for the deceased’s spouse and dependants. The deceased’s estate may also
be eligible for one of the following benefits:

• a lump sum based on the contributions made to a pension plan

while the deceased was employed, plus interest,

• a lump sum based on an actuarial calculation, or

• a deferred pension benefit.

The employer’s human resources department should be able to confirm

any pension benefits.

[Link] Veterans

Veterans of Canada’s armed forces and their dependants may be eligible for
burial, pension, and other benefits if they meet the eligibility requirements.
Veterans without sufficient funds to cover their funeral expenses may be
eligible for help from the Last Post Fund. The local Veterans Affairs Canada
office can be contacted for further information.

[Link] Annuities

Annuities are periodic payments that continue for the annuitant’s life and
are issued by life insurance companies. Annuities may be purchased with
the funds in an RRSP instead of converting the RRSP to a RRIF. Annuities
can also be purchased to address financial commitments to third party
creditors, including a former spouse, or to secure a future income stream
to an individual.

The cost of an annuity depends on the terms of the annuity contract,

interest rates at the time of purchase, the life expectancy of the annuitant,
who will receive the payments, and the monthly payment.

Annuity payments end upon the death of the annuitant unless there is
a guarantee period or it continues for the benefit of a surviving spouse.
Payments received after the date of death must be returned unless there was
time remaining in the guarantee period. When a guarantee period has not
expired, the payments continue until the end of the [Link] executor may

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be able to elect to take a commuted lump sum amount in order to proceed

with distribution of the estate. A decision to take a lump sum will need to
be carefully considered. Each decision will depend on the circumstances
and needs of the estate, including the relationship of the beneficiaries to the
deceased, and whether or not there is a testamentary trust.

Example of an Annuity with a Guarantee Period

Ryan purchased an annuity that will pay him $1,000/month for life
beginning next month. He is 65. The annuity cost $1,00,000.16 If Ryan
dies in an accident after two years (having received $24,000), the
estate receives nothing further.

However, if the purchase price included a guarantee period of five

years, Ryan’s estate would receive payments for another three years,
for a total of $36,000 (three years @$12,000/year). Although the full
$100,000 used to purchase the annuity was not recovered, Ryan
and his estate received a combined total of $60,000. If the $100,000
purchase price included a 15-year guarantee, then the estate would
be entitled to receive $12,000/year for 13 more years, for a total of
$156,000.

In the circumstances, Ryan secured an income for himself of $1,000/

month for life. If Ryan had lived to age 90, he would have received
$12,000/year for 25 years, for a total of $300,000. The guarantee
period allowed him to minimise the risk to his estate.

Guarantee periods are usually offered for 5, 10, or 15 years. While a

guarantee period will add to the cost of the annuity, it can protect
the estate from the risk of an early, unexpected death.

If Ryan’s estate is entitled to payments under a guarantee period,

the executor will want to consider the implications for the estate. A
commuted lump sum payment may be a practical solution to allow
the estate distribution to be completed. Decisions will be guided by
the amount that might be received, the beneficiaries, and the terms
of any testamentary trusts.

16 The numbers in this example are used for illustration purposes only. They are not based on actual quotes or
prices.

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11.6.2 Other Income Sources

Other income sources may include rents from residential or commercial properties;
investment income from assets such as GICs, government savings bonds, bonds,
shares in public companies, mutual funds, loans; RRIF payments; and income from
trusts. These sources of income are addressed under the following applicable asset
descriptions.

11.6.3 Cash on Hand and on Deposit

For purposes of the inventory,“cash on hand and on deposit” includes:

• physical money found on the deceased and/or in the home and

• cash balances on deposit at a financial institution.

The balance of a chequing account will be the balance at date of death. If the account
is a savings account, the amount due to the estate will be the balance at date of death
plus accrued interest earned between the last payment and the date of death. The
financial institution will provide the accrued interest balance, which is based on daily
or other periodic balances over the period in question.

Once cash is collected, the executor should ensure that, where possible, it is held in
an interest-bearing account. Larger amounts might be invested in short-term GICs if
the cash is not required immediately.

11.6.4 Fixed Income Securities: GICs, Savings Bonds, Treasury Bills, Bonds

There are a variety of investment vehicles that offer investors a fixed return on the
principal or capital [Link] are reviewed below.

[Link] Guaranteed Investment Certificates (GICs)

GICs are issued by financial institutions for fixed terms from 30 days to five
or more years. The interest rate is an annual rate and may be paid annually
or more frequently (e.g., semi-annually, quarterly, or monthly). If a GIC is a
compound-interest GIC, the interest is added to the principal.

The principal amount invested in a GIC is returned to the investor on

maturity.

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Examples:

Interest payment options on $10,000 invested in a three-year GIC

paying 2% per annum. Assume the GIC is purchased on June 1.

Annual payment:

• $200 will be paid each June 1.

• On the third anniversary, the $10,000 will be returned
to the investor.

Semi-annual payment:

• $100 will be paid on December 1 and June 1 each year

for three years.
• On the third anniversary, the $10,000 will be returned
to the investor.

Compounded-interest GIC:

• At the end of year one, $200 is added to the principal of

$10,000.
• At the end of year two, 2% of $10,200 ($204) is added
to the principal.
• At the end of year three, 2% of $10,404 ($208) is added
to the principal. The GIC has matured, so $10,612 is
paid to the investor.

If the investor died on July 15 in year three, the deceased’s estate will
be entitled to the principal and the interest accrued since the last
payment on June 1 at the end of year two.

The description of a GIC on the inventory should include:

• the issuer name,

• the principal,
• the maturity date,
• the interest rate, and
• the frequency of payment.

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The accrued interest is calculated based on the number of days. To

calculate the accrued interest, follow these steps:

1. Count the number of days since the last payment, beginning

with the first day after the payment and including the date
of death.

2. Multiply the principal by the interest rate and the number

of days and divide by 365.

Example:

• Jordan owned a $10,000 GIC 2% semi-annual pay, due

June 1, 2016.
• Jordan died on March 5, 2015.
• The last payment was December 1, 2014.
• The number of days since the last payment is 94 days,
calculated as follows:
◦ December (30 days) + January (31 days) +
February (28 days) + March (5 days)
• The accrued interest = $51.51, which is calculated as
follows:
◦ 10,000 x 2% x 94 days/365 days (the number of
days in the year)

There is usually a penalty for cashing a GIC early. Or, early redemption may
not be permitted. The one exception to these rules is on death. However,
if it is possible to continue to hold the GIC to maturity, the executor may
choose to do so if the funds are not required for the administration and a
better rate is not available.

In addition, while a GIC is normally not transferrable, it may be possible to

transfer it to a beneficiary. It will depend on the terms of the GIC contract.

[Link] Government Savings Bonds

Canada Savings Bonds (CSBs) and Canada Premium Bonds (CPBs) are
issued by the government of Canada.17 Some provinces also issue savings

17 For more information on CSBs and CPBs, see the website, which also includes information on the interest
rate and maturity dates for each issue: [Link]

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bonds. Each year a new series of bonds is issued with a stated maturity
date and interest rate.

Similar to a GIC, a principal amount is invested. The interest can be paid

each year (Regular bonds) or compounded (Compound bonds). Unlike
GICs, the interest on savings bonds is only paid annually unless it is
compounded, in which case it is earned but not received until the bond
matures.

Savings bonds, however, can be cashed at any time. Because the bonds can
be cashed, the interest rates are reset from time to time, so it is important to
check the tables on the CSB website to determine the current rate payable
when calculating accrued interest.

Canada Savings Bonds are purchased through payroll plans. Canada

Premium Bonds may be purchased directly or through a bank or an
investment account. The sales period is early October to December 1.

Savings bonds are redeemable at any time, subject to the following rules
with respect to interest:

Canada Savings Bonds: Interest is paid up to the end of the last

month.

Example:

In 2013, Ellie purchased a $10,000 CSB paying 2% each November 1.

• An annual interest payment of $200 is paid on

November 1, 2014.
• Ellie redeems the CSB on January 15, 2015.
• Ellie will receive $10,000 plus $33.33 interest for November
and December 2014 ($200 x 2 months/12 months). No
interest is paid for January.
• If Ellie died on January 15, the same rules are used
to calculate the accrued interest for purposes of the
inventory even though the bond hasn’t been redeemed.18

18 An alternative approach is to accrue the interest on a daily basis if the bond is not cashed in the month
of death. Since the interest for the month of January will be received, some practitioners will allocate the
amount received pro-rated to the date of death. Practices vary between firms and corporate trustees.

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Canada Premium Bonds: Interest is paid up to the last anniversary

date.

Example:

In 2013, Dylan purchased a $10,000 CPB paying 2% each November 1.

• An annual interest payment of $200 is paid November 1,

2014.
• Dylan redeems the CPB on January 15, 2015.
• Dylan will receive $10,000. No interest is paid for the
months of November and December 2014.
• However, if Dylan died on January 15, 2015, the
“hardship” rules allow for payment of interest up to
the last month before death (e.g., for the months of
November and December) and the accrued interest to
be reported will be $33.33.19

Savings bonds are described on the inventory in the same way as a GIC.
However, the interest rate applied for the current year should be included
along with the principal due and accrued interest.

The requirements for transfer or redemption of CSBs and CPBs on death

are found on the CSB website. There is one set of rules for Quebec, where
notarial Wills are most common. There is a second set of rules for all
jurisdictions outside Quebec and probate may not be required in certain
circumstances. For example, under the rules as of November 2014, if the
value of the bonds is less than $75,000 and the sole beneficiary under
the Will or an intestacy is the spouse, a notarial certified copy of the Will,
proof of death, and a completed transfer form (2351) ETRF is required. The
limit is $50,000 where the children or the spouse and children are the sole
beneficiaries. The threshold is reduced to $20,000 where there are other
relatives, a common-law spouse, or a same-sex partner.

[Link] Treasury Bills

Treasury Bills (or T-Bills) are short-term money market instruments issued
by the Government of Canada for up to 365 days. They are purchased

19 See the website for other hardship exceptions.

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through a broker. Unlike a bond or GIC, they are purchased at a discount.

There is no interest payment. Rather, on maturity, the investor receives the
face value of the [Link] difference between the purchase price and face
value is the interest earned. T-Bills can be sold before maturity.

The purchase price of a T-Bill depends on current interest rates.

Example:

• Sarah purchases a $100,000 T-Bill for $97,000 that

comes due in 91 days.
• On maturity, Sarah will receive the original $97,000
plus $3,000, which is treated as interest.
• If Sarah sells the T-Bill or dies before the maturity date,
the price will depend on current interest rates. The
calculation of the price requires a special formula and
can be obtained from the broker.

When a T-Bill is reported on the inventory, the price at the date of death
is recorded along with the accrued interest. The broker can provide this
information. In addition, the face value of the T-Bill and maturity date
should be recorded.

[Link] Bonds

Bonds are issued by all levels of governments and corporations. In effect

the bond issuer borrows from the investor. Bonds can be purchased on
the open market through a broker. The price will fluctuate after the initial
release depending on current interest rates. Bonds can be purchased at par,
at a discount, or at a premium. An example of each is set out below.

Example:

Ava purchased a $100,000 Government of Ontario bond, 5% semi-

annual pay, due October 1, 2016.

Purchase at par:

If Ava purchased the bond at par, Ava paid $100,000 and the price
paid is shown as $100. She will receive 5% interest ($5,000) annually.

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However, because it is a semi-annual pay, $2,500 will be paid on

April 1 and $2,500 will be paid on October 1.

Purchase at discount:

If Ava purchased the bond at a discount, she paid less than $100,000.
The price is determined by current interest rates. If the current rate of
return for bonds maturing in October 2016 is 6%, Ava will only pay
$83,333. The price is shown as $83.33. The annual interest payment
of $5,000 is the equivalent of a 6% return on Ava’s investment of
$83,333.20

Purchase at premium:

If Ava purchased the bond at a premium, she paid more than

$100,000. Again, the price is determined by current interest rates.
If the current rate of return in the market is 4%, Ava would pay
$125,000. Ava’s return of $5,000 is now 4% on her investment of
$125,000.21

If Ava dies before the bond matures, the price of the bond on the
date of death is used to determine the date-of-death value. Accrued
interest will be calculated from the last payment date. If Ava dies on
April 10, 2015, the accrued interest is calculated in the same way
that GIC accrued interest is calculated:

• The last payment was on April 1.

• The number of days for purpose of calculating accrued
interest is nine days (exclude the payment date of
April 1 and include the date of death April 10).
• The accrued interest is $123.20 ($100,000 x 5% x 9/365
days).

The information required on the inventory includes:

• name of issuer;

20 Note that when the bond matures, Ava will have a capital gain of $16,666.67, the difference between the
purchase price and the principal due on maturity.
21 When this bond matures, Ava will have a capital loss of $25,000, the difference from what she paid and what
she received on maturity.

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• description of bond, including the face value, series information,

and/or other descriptors or features;

• interest rate as stated in the bond description;

• payment frequency (usually semi-annual);

• maturity or due date;

• price of the bond on the date of death;

• accrued income details:

◦ number of days since last payment beginning with the

first day after the payment and including the date of death,
and

◦ accrued interest amount.

11.6.5 Shares in Public Companies

Shares or stocks represent an investment in the ownership of a company itself, that

is, shareholders own an interest in the company. Shareholders earn income from the
investment in the company when the company pays dividends. There are different
classes of shares and each class has its own set of rights. Some have voting rights.
Some are entitled to specified dividends.

Companies issue different classes of [Link] two main types of shares are:

1. Common Shares: Common shareholders share in the profits of

the company if and when there are profits to be shared and the
directors decide to declare a dividend. On the wind-up of a company,
the common shareholders share the net proceeds after all debts and
preferred shareholders are paid. The value of the shares depends on
the current net value of the company. Common shareholders have
voting rights and elect directors to run the company. The directors
appoint the officers (president, secretary, and treasurer) to manage
the day-to-day operations.

2. Preferred Shares: Generally, preferred shareholders do not have

voting [Link] receive fixed [Link] dividend rate may also

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float. If a company cannot pay the dividend in a given year, the dividend
due may be cumulated and carried forward for payment in future.
The price of preferred shares is more stable than common shares
because of the dividend entitlement, and preferred shareholders have
a priority over common shareholders on a bankruptcy or liquidation.
Preferred shares often come with other rights, such as a right to
convert to common shares or to ask the company to redeem the
shares at certain times.

This course is only concerned with shares traded on the public stock exchanges —
public companies.

For purposes of valuing public shares, an executor can obtain the price from a variety
of sources, including the newspaper and online sources. The investment firms where
the deceased held the account may also look up the prices for the executor.

For the purpose of the estate inventory, the description of a stock holding should
include:

• the name of the company,

• the type of share and any description attached to it (e.g., features such
as being redeemable or convertible), including the stated dividend
rate for preferred shares,

• the market price at the close of business on the date of death or the
last business day before the date of death,

• the number of shares, and

• the value of any ex-dividends.

[Link] Ex-Dividends

In addition to determining the market value of the shares, it is important to

determine whether or not there are any ex-dividends due to the deceased.
Ex-dividends are another type of accrued income that must be included on
the inventory.

There are four important dates after a dividend is declared:

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1. Declaration Date: the date the dividend is announced.

2. Ex-Dividend Date: (see below).

3. Record Date: the date the shareholders of record entitled to

the dividend are determined.

4. Pay Date: the date the dividend is paid.

These dates are important because dividends are not paid on the same
day they are declared and shares might be sold or purchased before the
payment date. Accordingly, it is important to know who is entitled to the
dividend — the seller or the purchaser.

In order to prepare the dividend payments to shareholders, there must be

a cut-off date to know who should receive the dividend. This is the record
date. The record date can be up to a month or more before the payment
date. If the purchaser will receive the dividend, in theory the price will be
higher than if the seller will receive the dividend.

When public company shares are sold, the new shareholder of record will
be recorded on the company register within three days after the trade date.
It is often referred to as T+3 (trade date plus three business days).

The “ex-dividend” date is used to determine whether the purchaser

receives the dividend. A purchaser who buys the shares on or after the
ex-dividend date will not receive the dividend. It is paid to the seller. If
shares are purchased before the ex-dividend date, the purchaser receives
the dividend.

In the case of an estate, the “seller” is the deceased and the trade date or
date of sale is the date of death. Dividends due to the deceased at the
date of death become part of the capital of the deceased’s estate and
are recorded as accrued income. If the deceased was not entitled to the
dividend, it becomes income to the estate (the “purchaser”) in the first tax
year following the date of death. Some examples are provided below to
illustrate these rules.

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Example:

A dividend of $1.50/share is declared for all shareholders of ABC Ltd.

who are shareholders of record on March 5, 2015. The dividend pay
date is March 30, 2015. The ex-dividend date is March 3, 2015.

Declaration Date Ex-Dividend Date Record Date Payment Date

February 4, 2015 Tuesday, Thursday, Monday,
March 3, 2015 March 5, 2015 March 30, 2014

Scenario #1:

• Ethan owns 100 common shares of ABC Ltd. He dies on

March 4, a date that is after the ex-dividend date.
• The shares are worth $25 each at the close of business
on March 4.
• The inventory will show 100 common shares in ABC
Ltd. at $25 each, for a total value of $2,500.
• Because Ethan died after the ex-dividend date, the
inventory will also show Ethan’s entitlement to the
$150 dividend payable on March 30, 2015 (100 shares
x $1.50/share). The amount is shown separately and
will be reported as income on Ethan’s final tax return.

Scenario #2:

• Abby dies on March 2, 2015, a date that is before the ex-

dividend date.
• The share price is $26/share.
• The inventory will record the 100 shares valued at
$2,600. The dividend is not included because it is paid
to the “purchaser” (the estate).
• The executor will report the $150 dividend on the first
T3 tax return for the estate, which begins the day after
the date of death.

11.6.6 Mutual Funds

Essentially, a mutual fund is made up of a pool of funds contributed by a number

of investors. The money invested is used to purchase a portfolio of investments in

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accordance with the investment policy for the fund. Each investor is allocated his or
her pro rata share according to his or her contribution. The investor’s interest is said
to be unitised and each investor holds a number of units. Most mutual funds in Canada
are created as trusts. Mutual funds can also be created using a company structure.
The units of a mutual fund company are referred to as shares and distributions are
referred to as dividends.

Mutual funds allow investors with smaller amounts to invest to obtain better
diversification and to gain access to investments that might not otherwise be available
or affordable. The investments in a mutual fund are managed by a professional
investment manager, and each mutual fund is described by its investment objectives
and the type of investments purchased. The different types of funds include short-
term money market investments, longer-term fixed-income funds invested primarily
in bonds, equity-focused funds comprised of stocks from a specific country or region,
or a mixed-asset class portfolio focused on achieving a balance between income and
capital growth returns.

When the mutual fund is a trust, the units are purchased from the mutual fund dealer
or authorised representatives. If an investor wishes to sell the units, they must be
redeemed. Units are not traded on the stock [Link] unit value is based on the
net asset value of the fund at the end of the trading day.

There are two types of income distributions from a mutual fund. The first is the
more frequent (monthly, quarterly) distributions of income that is comprised of the
interest and dividends earned for the period. The second is an annual distribution
of net capital gains realised in the year. If the mutual fund is a company, the latter is
referred to as a capital gain dividend.

For purposes of the inventory, the executor will record:

• the name of the mutual fund,

• the number of units or shares held,

• the price at the end of the day on the date of death, which is often
available on public listings or can be obtained from the dealer,

• the market value,

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• any accrued income based on a prorated allocation of the first income

distribution payment received after the date of death, and

• distributions of net capital gains are not included in accrued income.

They should be reported by the taxpayer who owns the units on the
date the payment is received.

Unlike shares, there is no transfer of ownership, so there are no ex-dividend type

rules.

11.6.7 Loans Due to the Deceased

The deceased may have lent money to family, friends, or business associates. The
loans may take many forms. The more common types of loans that may be identified
are reviewed below.

[Link] Promissory Notes

A promissory note documents a loan. The borrower acknowledges a loan

and promises to repay the loan on the terms set out in the note. The note
sets out the interest rate and sets the terms as to how and when the loan
will be repaid. It may also document the security that has been put in place.

Some promissory notes are payable on demand. In these situations there

is no regular payment schedule. Other loans may require monthly interest
payments or establish a repayment schedule that includes principal and
interest.

Any security for the loan will be in the form of a mortgage registered in
the land registry or land title office, or a charge registered against personal
property in the applicable provincial registry for personal property
security.

[Link] Agreements for Sale

If a deceased sold a property or asset to a third party and agreed that the
purchaser could pay the purchase price over time, the arrangement should
be documented in an agreement for sale. The agreement will set out the
terms for payment of the purchase price, including interest and a payment

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schedule. It will also set out when title or transfer of ownership will occur
and any security arrangements that are put in place.

[Link] Recording Loans Due to the Deceased on the Inventory

The executor will need to review all documentation to determine the

terms of any loan arrangements between the deceased and a borrower or
purchase under an agreement for sale. If the security involves a mortgage
or other charge on land, then it should be recorded on the inventory as an
interest in real property.

The executor must determine the balance of principal due and the status of
interest payments to ensure everything has been collected. If no payments
have been made recently, it is important to quickly investigate whether
or not limitation periods may be running and a claim must be made to
protect the loan.

The borrower should be advised to redirect payments to the executor and

should be asked to confirm the amount of the debt outstanding.

When listing the loan, the details to be included are:

• the name of the borrower,

• the amount due, including both principal and any unpaid interest,

• the interest rate,

• the accrued interest, and

• the nature and details of any security put in place.

11.6.8 Income from a Trust

If the deceased was a life tenant or revenue beneficiary of a trust entitled to the
trust’s net income each year, there may be an amount due to the estate. The trustee
should be asked to prepare an accrued income statement for the beneficiary’s estate
detailing the income earned and paid in the trust’s current tax year, and identifying
all accrued income to the date of death. The accrued amounts are calculated using
the same valuation rules for accrued income for a deceased person’s estate. (See

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11.5.4, Accrued Income, and the relevant sections for income from different types of
assets below.) The trustee should be asked to send the accrued income amount upon
receipt of the grant and all relevant tax information slips when available.

Example:

Grace is the life tenant of a testamentary trust. She receives the net
income each year. The trust holds 10 stocks that pay interest semi-
annually. It also has shares in 10 different companies. The trustee
pays Grace the accumulated interest and dividends on hand at the
end of each calendar quarter. Grace died on April 15. The trustee
would send Grace’s executor a statement indicating the amount paid
on March 31, the amount of interest and dividends received between
April 1 and April 15, and the accrued income at April 15 (e.g., accrued
interest and the amount of any ex-dividends at April 15). Once
the executor has the grant, the trustee would send the executor the
amounts on hand at April 15, plus the total of the accrued income.
All income received after Grace’s death (less the accrued income) is
paid to the next life tenant, or to the capital beneficiaries if the trust
is distributed.

11.6.9 Registered Plans

Registered plans are established under the Canadian Income Tax Act. They are vehicles
to allow Canadians to save money for different purposes and to defer income tax on
income and gains earned. The full details of each type of plan is beyond the scope of
the course. Students are referred to the GetSmartAboutMoney website or the Canada
Revenue Agency website for more details.

There are five types of registered plans, each with different rules:

1. Registered Retirement Savings Plans (RRSPs)

2. Registered Retirement Income Funds (RRIFs)

3. Registered Education Savings Plans (RESPs)

4. Registered Disability Savings Plans (RDSPs)

5. Tax-Free Savings Accounts (TFSAs)

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With the exception of Quebec, all provincial and territorial jurisdictions have
legislation that permits owners of RRSPs, RRIFs, and TFSAs to make beneficiary
designations of the RRSP, RRIF, or TFSA. As a result, the plan assets pass outside of the
estate and generally will not be subject to the claims of [Link] legislation also
permits designations in a Will. See Figure 11.3, Jurisdictional Legislation Governing
Beneficiary Designations in Registered Plans, at the end of this chapter for the
legislation in your jurisdiction. Students are encouraged to review the legislation to
become familiar with any special restrictions that may apply to registered plans.

Quebec: Designations are only permitted for plans that are issued by life insurance
companies.

Registered plans hold a variety of investments, including cash, GICs, bonds, shares,
and mutual funds.

When a plan owner dies, information about the registered plan can be obtained
from the trustee for the plan, or through the financial institution where the plan was
established. Key pieces of information to watch for include:

• The Value of the Plan at the Date of Death. This is calculated

by the trustee of the plan and follows similar rules for determining
market values and accrued income.

• Designated Beneficiary(ies): Plan beneficiaries may be identified in

the plan application form or in a Will. Where the designation is in the
Will, the plan should already be in existence, that is, it cannot refer to
future plans. If there are designations in the plan documentation and
in a Will, and the names are not the same, guidance will be required
to determine which one prevails. The dates of the documents, and
details of any revocations, will be required. Note that if a Will has
been revoked, and later revived, it is unlikely that any beneficiary
designations will be revived.

• Trustee to Receive the Funds: The deceased may have arranged

for the beneficiary to be a person who will hold the plan proceeds
on trust. The terms of the trust may be in the Will or a separate trust
document.

In the sections that follow, the unique features of each of these plans are discussed.

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[Link] Registered Retirement Savings Plans (RRSP)

RRSPs allow Canadians to set aside money for retirement. Contribution

limits are set by the federal government and are based on the taxpayer’s
employment [Link] a contribution is made, there is a corresponding
deduction on the taxpayer’s income tax return. While the money and
investments purchased remain in the plan, there is no tax on the income
earned or capital gains [Link] the plan holder withdraws funds, the
investments in the plan are usually sold and cash is paid to the plan holder.
The amount received must be reported on the plan holder’s income tax
return for the year it is received. If there are withdrawals, or a contribution
is not made in a given year, the contribution room is not lost and funds can
be contributed at a later date.

Contributions to an RRSP can continue until December 31 of the year the

contributor turns 71. However, the RRSP can be converted to a RRIF or an
annuity at any time before then. The CRA calls the taxpayer an annuitant.

If funds are withdrawn from an RRSP, the amount withdrawn is included

in the taxpayer’s income in the taxation year of the withdrawal. On death,
the tax rules impose a deemed disposition and the entire value of the plan,
including accrued income, is deemed to have been withdrawn. Unless
there is a designated beneficiary, the FMV of the plan on the date of death
must be reported on the inventory. Details to be included on the summary
include the:

• name of the institution where the plan is held,

• type of registered plan (e.g., RRSP, RRIF, TFSA, RDSP, RESP),

• plan number, and

• valuation.

If there is a designated beneficiary, the information about the plan is

included on the page listing assets passing outside of the estate.

NOTE: Whether or not there is a designated beneficiary, the full amount

of an RRSP is also included on the deceased’s final tax return. Elections to

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defer the tax may be possible in certain situations where the proceeds of
the plan are transferred to:

• the deceased’s spouse or common-law partner,

• a child or grandchild who is financially dependent on the

annuitant, or

• an RDSP.

[Link] Registered Retirement Income Funds (RRIFs)

A RRIF can be opened any time up until the end of the year when the
taxpayer turns 71. RRIFs are funded from RRSPs and other registered
pension plans.

New documentation is required to open a RRIF. There are no tax

consequences triggered when registered funds are transferred to a RRIF.

The new documentation allows the taxpayer (the annuitant) to identify his
or her spouse as successor annuitant. The annuitant can also designate one
or more others to be beneficiaries of the RRIF.

Each year the annuitant must withdraw a minimum amount from the RRIF.
The amount received is reported as taxable income. The amounts paid out
increase each year.

If there are funds remaining on the annuitant’s death, and there is a

successor annuitant, there will be no tax consequences. The successor
continues to receive the payments.

If there is no successor annuitant, the fund is dealt with in the same way
as an RRSP and the entire amount is included on the inventory if there is
no other designated beneficiary. If there is a designated beneficiary, the
plan proceeds pass outside of the estate and the plan is reported on the
inventory page for assets passing outside of the estate. In either situation,
the full value of the RRIF is reported as income on the final tax return.

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NOTE: As with an RRSP, options for tax-free transfers of RRIF proceeds to

beneficiaries who are financially dependent children or grandchildren may
be available.

[Link] Tax-Free Savings Accounts (TFSAs)

Canadians may transfer specified amounts of cash each year to a TFSA. The
amount is set by the federal government. It is not tied to income and there is
no deduction from income in the year of the contribution. If a contribution
is not made in a given year, the taxpayer will have “contribution room” in
future years. A taxpayer who opens the TFSA is called a “holder.”

Example: Luke contributed the maximum amounts to his TFSA

from 2009–2012 ($20,000). However, he did not contribute in 2013
or 2014 ($5,500 per year). In 2015, Luke can contribute $9,000 for
the years he did not contribute as well as the limit set for 2015.

The money in a TFSA can be invested in a wide range of investments subject

to the qualified investment rules. The interest, dividends, and capital gains
accumulate in the TFSA tax-free. The holder is not taxed on the amounts
withdrawn. If original contributions are withdrawn, the contribution room
remains open for future contributions at a later date. However, accumulated
income amounts cannot be re-contributed.

A TFSA holder can also designate a spouse or common-law partner (a

“survivor”) to be a successor holder. In this situation, the TFSA can
continue and the survivor’s contribution room for his or her own TFSA is
not affected.

If the spouse or common-law partner was not designated as a successor

holder, there is an opportunity to make an exempt contribution to a TFSA
without regard to the survivor’s contribution limits. The contribution must
be made no later than December 31 of the year following the date of death.

Although a TFSA plan ceases to exist unless a spouse or common-law

partner is a successor holder, the proceeds will pass outside of the estate
when a beneficiary designation is made in the plan documentation or a
Will.

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Example:

The TFSA contribution maximum for the years 2009 to 2012 was
$5,000 ($20,000).

In 2013, the TFSA limit was increased to $5,500. As at the end of

December 2014, the total TFSA contribution room is $31,000.

Liam’s contributions are as follows:

• $5,000 in 2010, $4,000 in 2012, and $3,000 in 2013,

for a total of $12,000.
• Liam’s has $19,000 of unused contribution room.
• In 2014, Liam contributes to his TFSA and uses up his
remaining contribution room.
• Income earned in the TFSA over the years adds up to
$1,000.
• Liam dies in 2015. He named his wife, Jade, as a
successor holder. Although Jade already has her own
TFSA with $25,000 in contributions, Jade becomes the
owner of Liam’s TFSA and the entire TFSA, including the
accumulated income, will remain in a TFSA for Jade.
She may withdraw funds from the account without tax
consequences.

If Liam had designated his only son, Noah, as the beneficiary, then
Noah will receive the proceeds of the TFSA tax-free. If Noah has his
own TFSA and only has $10,000 contribution room available, Noah
may contribute $10,000 to his own TFSA.

If the designated beneficiary of a TFSA is a qualified donee (e.g., a charity or

other entity authorised to issue a tax receipt), a tax receipt for the value of
the TFSA will be issued to the estate if all other requirements are satisfied.

For purposes of the inventory, if the TFSA passes outside of the estate, the
details will be recorded on the page listing assets passing outside of the
[Link] details of the TFSA are otherwise reported as with any registered
plan.

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[Link] Registered Education Savings Plans (RESPs)

RESPs offer a way for parents, grandparents, or other relatives to save

for the future education of children and grandchildren. The person who
establishes the plan is called a subscriber. The person(s) who will benefit
from the plan is referred to as the beneficiary(ies).

There are a number of rules, including contribution limits, how the funds
can be used, and how long the plan can remain in place. Plans can be
established for one child or a [Link] federal government also contributes
to RESPs up to certain limits. As a result, the rules on withdrawals are strict
and timing can be important.

From an estate perspective, the important point to note is that RESPs do

not provide for designating a beneficiary on the death of the subscriber or
the beneficiary. And the beneficiary for purposes of definitions relating to
RESPs is not entitled to the RESP proceeds if the subscriber dies.

Most plans provide for the appointment of a successor subscriber in the

event that the RESP is still in place when the subscriber dies. If there is no
successor, or the RESP is not otherwise dealt with in the Will, the RESP will
be treated as if the assets belong to the estate. Therefore, it is important
to determine whether or not the fund belongs to the estate, and if it does
belong to the estate, whether any funds must be repaid to the government.
The details of these rules are beyond the scope of this course.

[Link] Registered Disability Savings Plans (RDSPs)

RDSPs are long-term savings plans for Canadians with a disability. Eligibility
is determined based on eligibility for the Disability Tax Credit under the
Income Tax Act.

The person with the disability is the beneficiary of the plan. Contributions
may be made by the beneficiary or by others. The contributor is referred
to as the “plan holder” and is the one responsible for managing the
investments in the fund. The investments in the RDSP grow tax-free.

The beneficiary is the only person who can withdraw the funds. There can
only be one plan and the lifetime contribution limit is $200,000. There are

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no annual limits and there is no deduction from the plan holder’s income
in the year of the contribution. Contributions can be made until the
beneficiary turns [Link] the beneficiary turns 60, regular payments must
start to be paid or the entire RDSP must be used to purchase an annuity.

The federal government may contribute a Canada Disability Savings Grant

(CDSG) based on the beneficiary’s “family net income.” The amounts are
subject to a number of rules. Some are also eligible for a Canada Disability
Savings Bond (CDSB). CDSG and CDSB grants end the year after the
beneficiary turns 49.

If the beneficiary no longer qualifies for the disability tax credit, the plan
must be closed by December 31 of the following year. If the beneficiary
dies, the RDSP must be closed by December 31 of the following year. CDSG
and CDSB contributions made within the last 10 years must be repaid to
the government and the beneficiary’s estate receives the remaining funds.
There is no provision for designating other beneficiaries.

For purposes of a plan holder who is not a beneficiary, the RDSP does not
form part of the plan holder’s estate and does not need to be reported on
the estate summary. If the beneficiary dies, the RDSP proceeds will belong
to the beneficiary’s estate.

11.6.10 Life Insurance Proceeds

If the deceased named the estate as the beneficiary of a life insurance policy, there
will be an amount due to the estate that will be paid when the executor provides a
copy of the grant and any other required information. The inventory should indicate
the name of the insurer, the policy number, and the proceeds due to the estate.

If the policy proceeds are payable to one or more named beneficiaries, or are payable
to a trustee and will pass outside of the estate, the policy should be listed on the
estate summary page for assets passing outside of the estate.

If a life insurance policy is missing, assistance may be obtained from the OmbudService
for Life and Health Insurance.

Generally, life insurance proceeds that pass outside of the estate are exempt from
claims by creditors.

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[Link] Other Life Insurance Benefits

The deceased may also have had life insurance under a group insurance
plan through his or her employer or other organizations he or she
belonged to, such as alumni and professional associations. If the deceased
was involved in a car, plane, or train accident, or while on vacation, he or
she may also have life insurance coverage under an automobile club or by
a credit card issuer. The executor will need to review personal papers and
make the appropriate inquiries.

11.6.11 Collections and Other Valuables

Collections and other valuable items such as artwork will require an appraisal by a
qualified appraiser for the assets being valued. The cost of the appraisal will be an
expense of the [Link] inventory listing will note the description provided by the
appraiser, the value, and the appraiser’s name and contact information.

11.6.12 Real Estate

Real estate should be valued by a qualified appraiser for the type of property. The
Appraisal Institute of Canada has two designations:22

1. Canadian Residential Appraiser (CRA): A person holding a CRA

designation is qualified to offer valuation and consulting services and
expertise for individual, undeveloped residential dwelling sites and
dwellings containing not more than four self-contained family housing
units.

2. Accredited Appraiser Canadian Institute (AACI): A person

holding the AACI designation is qualified to offer valuation and
consulting services and expertise for all types of real property.

In certain circumstances an alternative approach to obtaining a valuation of a

residential property may be appropriate. For example, in some jurisdictions a recent
municipal assessment is considered representative of the FMV.

It may also be sufficient to obtain an opinion of value from a real estate agent,
especially if the property is the deceased’s principal residence and the spouse will be

22 See website for more information and to find an appraiser for the type of property owned by the deceased.
[Link]

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11.6.13 CHAPTER 11 — THE STEPS IN ESTATE ADMINISTRATION

the beneficiary or it will be held in a spousal trust. However, one will need to be sure
the valuation is based on the market value at the date of death and not a proposed
listing price, and is well supported, should there be any dispute as to the value at a
later date if the valuation is required for other purposes.

When a property is a multi-unit residential property and includes rental income, or

could be a revenue-generating property, other valuation considerations may need to
be taken into account. An AACI is recommended.

11.6.13 Deducting Liabilities for Purposes of Probate Fees and Taxes

If the deceased has an outstanding loan that has been secured by a mortgage against
property owned by the deceased, it is the practice in all jurisdictions to deduct the
outstanding mortgage value from the value of the property for purposes of calculating
probate fees or taxes. However, the debt does not reduce the value of the estate
for purposes of executor compensation. Some executors and lawyers will show the
liability on the estate summary page where the real estate is listed; others will show
it on the liability page.

In some jurisdictions, liabilities secured against personal property may also be

eligible for deduction when calculating probate [Link] estate solicitor will provide
guidance on this.

Alberta: The fixed probate fees are based on the net value of the estate
after deducting all debts and liabilities.

Northwest Territories and Nunavut: The fixed probate fees are based
on the value of the estate. When calculating the value, the liabilities and
debts against property in the territory are deducted.

11.6.14 Vehicles, Boats, and Other Vehicles for Transportation

Cars, motorcycles, motorboats, bicycles, and watercraft can have a range of values
depending on the age, model, and condition. A variety of sources may need to be
considered to determine the fair market value.

One source for valuing a car is the Canadian Black Book. The information is now
online and can be searched by province and postal code.23

23 See website at [Link]

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Other vehicles and modes of transportation may require inquiries of retailers of the
particular asset to determine the FMV.

The inventory should identify the vehicle make and model, year, serial identification
number, the date-of-death value, and the source of the valuation.

11.6.15 Personal Effects and Household Furnishings

Personal effects and household furnishing are a broad category. Household furnishings
generally include anything associated with the enjoyment of the home. Personal
effects are items that are personal to the deceased, including clothing and jewellery.
The distinction will only be relevant if the Will deals with each category differently.

If the value of these items is nominal, a valuation will not be required and the
inventory will note “of nominal value.” However, there may be furniture, jewellery,
and other equipment such as electronics or tools that do have sufficient value to be
marketable. An auctioneer can be hired to provide a disposition value for these items.
Unless there are specific items worth identifying in the inventory, the appraiser’s
name and contact details, date of appraisal, and a total value for a group of assets may
be [Link] estate records will have the detailed listing.

[Link] Listing Personal Effects

Often, especially for a corporate trustee, it will be necessary to visit the

deceased’s home or place of residence to not only review personal papers
but also to remove any valuables for safekeeping and list the household
furnishings and personal effects. If an auctioneer cannot attend at the same
time to make a listing and prepare a valuation, it is prudent to visit with a
second person and to make a listing on site. Photos of items in the location
where they are found can be helpful in this step.

The listing can become an important record if family members ask

questions about items that were not located. When such questions arise,
the executor is at risk of allegations of theft. It is for this reason that a
second person is always present.

Where there is personal property with significant value, it may also be

necessary to determine the original cost for purposes of the deceased’s
final income tax return.

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[Link] A Caution When Listing Jewellery

When listing jewellery or any other item that may have value, it is important
to only describe the item. While markings can, and should, be noted, it is
prudent to not use words that could suggest the item is more valuable
than it is. For example, a ring should be described as “a gold-coloured ring
with a dark blue stone and two small clear stones.” Do not say “a gold ring
with a sapphire and two diamonds.” Or, describe a necklace as “a sixteen-
inch string of white pearl-like stones,” rather than “a sixteen-inch string of
pearls.” It is for the appraiser to confirm the material and quality of the
item.

[Link] Prepaid Amounts

Prepaid amounts include items such as newspaper and magazine

subscriptions, club memberships, home insurance, and car insurance. It may
also include utilities. Some of these amounts will be eligible for a refund
for the unused [Link] amount due will depend on the contract terms.
Each contract should be explored to determine the estate’s entitlement
and/or possible liabilities that may be outstanding (e.g., for a cellphone
contract, or gas or electric heating bills).

11.6.16 Other Assets

There are numerous other assets and unique investment vehicles that may need to
be identified and listed. Points on loyalty programs should also be investigated. While
they may not have a FMV to be reported, it may be possible to transfer the points to
certain family members.

Generally, the guidelines discussed above can be [Link] key elements are:

• What is the value at the date of death and how is a valuation obtained
for the specific asset?

• What type of income does the asset pay and is there any accrued
income?

• What unique features of the asset may require special attention?

• What is required to transfer ownership to the estate or others?

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11.6.17 Missing Assets

An executor may have reason to believe that assets are [Link] could arise if:

• A Will leaves a specific gift to someone. It will be necessary to attempt to

determine what happened to the gift (see Chapter 3,The Law of Wills).

• A tax return reveals that in the past year income was earned from an
investment or asset and there is no information to suggest that the
asset was sold or transferred as a [Link] slips will provide information
on where more information might be found.

• Jointly held accounts, revealed in personal papers or a tax return,

no longer exist at the date of death. It will be prudent to determine
why the account no longer exists, particularly if the deceased was
incapable in the year prior to death.

• A family member or beneficiary tells the executor about an asset or

personal item that they believed existed.

[Link] Unclaimed Property

In addition to the sources noted above, the Bank of Canada holds unclaimed
balances where there has been no activity at a federally regulated bank
or trust company for 10 years. It includes deposit accounts, bank drafts,
certified cheques, deposit receipts, money orders, GICs, term deposits,
credit card balances, and traveller’s cheques. The names can be searched
online.24 Balances of less than $1,000 are held for 30 years. Balances over
$1,000 are held for 100 years. At the end of the relevant period, the funds
are transferred to the Bank of Canada.

British Columbia,Alberta, and Quebec also have unclaimed property offices

that hold property that is for other financial institutions and assets. The
Office of the Superintendent of Bankruptcy Canada also holds unclaimed
property.

24 See the website here [Link] Searches are by name and

jurisdiction.

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[Link] Heir Locators and Unclaimed Property

Executors should be alert to heir locators who may have matched

unclaimed property to a deceased person. The contracts that an executor
will be asked to sign include significant fees. Executors should therefore
conduct their own thorough searches.

[Link] Assets Identified in a Will

If the Will includes a legacy of a specific asset that cannot be located,

further inquiries into when it was sold may be required if the deceased
was incapable and was represented by a substitute decision maker. In some
provinces if the substitute sells a specific gift in the Will, the beneficiary
may be entitled to receive an amount equal to the proceeds. The rule does
not apply if the money was needed to care for the adult.25

11.7 ASSETS PASSING OUTSIDE THE ESTATE (WILL SUBSTITUTES)

Chapter 3,The Law of Wills, identified a number of ways to transfer assets outside of a
Will. In these circumstances the testator is generally assumed to have:

• received competent legal advice,

• understood the legal and tax implications of any transfers or actions

taken,

• ensured that the action was completed in accordance with all relevant
laws, and

• satisfied any other requirements that may apply.

However, it is increasingly becoming more important for an executor to scrutinise

transfers and designations diligently to ensure that the assets subject to these transfers
and designations do not belong to the estate. Where the arrangement is legitimate, it
is incumbent on the executor to assist the new owner to finalise the transfer. If there
are questions, further inquiries may be required or steps taken to recover the asset(s).

25 This rule can be found in the British Columbia Wills, Estates and Succession Act, S.B.C. 2009, c. 13, s. 48,
and applies to guardians, attorneys, and representatives. Section 19(3)(d) of the Power of Attorney Act also
addresses this situation. The rule is also found in Ontario’s Substitution Decisions Act,1992, S.O. 1992, c. 30,
ss. 35.1 and 36, and applies to both property guardians and attorneys.

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11.7.1 Assets Owned Jointly with Right of Survivorship

Jointly owned assets were discussed in Chapter 3, The Law of Wills. When assets are
registered in the name of more than one person, it is important to determine the
legal nature of the ownership.

In common-law jurisdictions, there are two forms of ownership. Each is treated very
differently for purposes of an estate administration.

[Link] Tenants-in-Common

Each owner has a specified share of the title. It may be equal (e.g., 50/50)
or one owner may have a greater ownership (e.g., 60/40). The income
and gains or losses are shared in accordance with the share of ownership.
Importantly for an executor, the deceased’s share is included in the estate.
It does not pass outside.

The steps required to transfer the deceased’s title or ownership will

depend on the circumstances. If the joint owner is the sole beneficiary of
the estate, the deceased’s share can be transferred to the beneficiary.

If the beneficiary is a stranger, or funds are needed to pay liabilities, the

circumstances will guide the next steps. For example:

• the asset may have to be sold and the proceeds divided,

• the other owner may purchase it from the estate,

• it may be possible for the deceased’s title to be transferred to

the beneficiary, or

• where the asset is an investment account, it may be possible to

divide the holdings in accordance with the ownership.

[Link] Joint with Right of Survivorship

As noted in Chapter 3,The Law of Wills, if an asset or account is held in the

name of more than one person as joint tenants with right of survivorship,
when one owner dies, the survivor(s) becomes the legal and beneficial
owner and the asset or account is not included in the estate.

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Quebec only: Quebec does not recognise joint ownership with right of
survivorship. Therefore, any asset or account in Quebec will be dealt with
in the same way as an asset or account owned as tenants-in-common.

Historically, joint ownership with right of survivorship required the “four

unities” (see Chapter 3,The Law of Wills). For a number of reasons, testators
today may decide to add a child or other close relative or friend to a bank
account or investment account. Sometimes property title is changed to add
a second owner as a joint tenant with right of survivorship. These actions
may or may not be taken with the necessary legal and/or tax advice.
Sometimes they are deliberately taken as part of a well-thought-out estate
plan. It is the executor’s responsibility to determine why an asset is owned
joint with right of survivorship and, if there are questions, to investigate
further.

Generally one of three scenarios will apply. (See Chapter 3, The Law of
Wills, for a discussion of the presumptions that apply.)

• If the testator added a spouse or a minor child to the title

or account, there is a presumption of advancement (or an
intention of a gift of the remainder if the testator dies first) and
the spouse or minor child will take beneficial ownership unless
the presumption is rebutted by an interested party. The asset or
account will be listed on the estate summary page for assets
passing outside of the estate.

• If there was no intention to “gift” the right of survivorship, the

survivor will not take beneficial ownership. Rather, the survivor
holds the asset or account for the estate. The value must be
included in the inventory for probate fee/tax purposes.

• If the testator added an adult child, there is no presumption of

advancement (or gift) and the burden falls on the adult child to
prove that the deceased intended the child to take the legal and
beneficial ownership on the testator’s death. The law continues
to evolve around this issue. Accordingly, legal advice should be
obtained whenever there is a concern.26

26 For example, see the recent Ontario Court of Appeal case Sawdon Estate v. Sawdon, 2014 ONCA 101
(CanLII).

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ASSETS PASSING OUTSIDE THE ESTATE (WILL SUBSTITUTES) [Link]

Joint accounts can be a very contentious and difficult aspect of an estate

administration. The executor’s responsibility is to make inquiries, consider
the information and evidence, and, where necessary assert the estate’s
rights to the assets. When a joint asset or account is determined to belong
to the deceased, it must be included in the inventory and is subject to
probate fees/taxes.

Where an asset is determined to be held in a true joint tenancy with right

of survivorship, the estate summary will usually indicate this to ensure full
disclosure and to ensure all necessary tax reporting is addressed.

11.7.2 Designated Beneficiaries of Life Insurance and Registered Plans

See Chapter 3,The Law of Wills, for a discussion of beneficiary designations generally.
See also 11.6.9, Registered Plans, and 11.6.10, Life Insurance Proceeds.

Generally, when there is a designated beneficiary of a life insurance policy or

registered plan, the assets pass outside of the estate. The assets are not subject to
creditor claims or probate fees, and are not included in the estate that is subject to
claims by dependants. Creditor protection status for registered plans is more limited
in some jurisdictions.

The executor should review the designation in the plan or in a Will to ensure that it
meets all the necessary requirements and is clearly identified. If there is any concern
that a designation in the policy or Will is not valid, or has been revoked, the insurer
or plan trustee should be notified immediately to ensure the proceeds are not
transferred to the beneficiary named until the issues are resolved.

Some of the more common scenarios are noted below.

[Link] Estate Is Default Beneficiary

Where the first named beneficiary is not alive to take the insurance or
registered plan, the documentation must be reviewed for alternate
beneficiaries. If the original designation was to two or more people and
one has pre-deceased, legal advice may be required to determine whether
or not the survivor takes the entire proceeds.

If no beneficiary is designated, or the designated beneficiary dies first and

no alternate beneficiary is named, the proceeds will fall into the estate to

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be administered under the Will or on an intestacy. The proceeds will be

subject to probate fees/taxes and lose creditor protection.

[Link] Transfer of Proceeds to Beneficiaries

Once copies of the life insurance policies are obtained, the executor will
often assist the beneficiary by contacting the company to initiate payment.
Proof of death will be required. If there is a named beneficiary, the proceeds
from the policy will usually be available in about 30 days and paid directly
to the named beneficiary.

When a registered plan must be transferred to a beneficiary, the executor

may need to provide additional information to help facilitate the transfer.

[Link] Trusts for Insurance or Plan Proceeds

A testator may have named a trustee to receive insurance proceeds. This

may occur in one of two ways.27

1. A trust is established within the terms of the Will to receive the

proceeds of insurance. Although the terms of the trust are in
the Will, the proceeds do not form part of the estate and are not
included for purposes of calculating probate fees/taxes.

2. A trust document is prepared that creates a trust that comes

into existence when death occurs and the life insurance is paid
to the trustee.

If the designation is in the Will and the insurance proceeds are to be held
in trust, care must be exercised not only to separate the value in the estate
inventory but also to keep the insurance proceeds outside the estate
account.

Similar considerations will apply where the proceeds of a registered plan

are to be held in trust.

27 For further reading on insurance trusts, see Waters, beginning at p. 568 and the articles referenced in the
footnotes. See also G. Chow, I. Pryor, J. Poyser, and L. Frostiak, Taxation of Trusts and Estates: A Practitioner’s
Guide 2015 (Toronto:Thomson Canada Ltd., 2015).

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TRANSFERRING ASSETS TO THE PERSONAL REPRESENTATIVE 11.8

11.7.3 Registered Plan Designations

Registered plans have been reviewed in depth (see 11.6.9, Registered Plans). The
proceeds of a registered plan may also be transferred to a trustee. It should be
noted that registered plans do not have the same level of creditor protection as life
insurance proceeds.28

Note that a plan designation in a Will may still be valid even if a Will has been revoked.
Each situation must be reviewed.

11.7.4 Gifts

An executor should consider inquiring into any gifts made by the deceased in the
year before the date of death for two reasons.

1. Tax Implications: If the gift was a property, investment(s), or other

valuable, there may be a deemed disposition that must be reported on
the final tax return.

2. Gifts in Suspicious Circumstances: The prudent executor will

make inquiries into transfers in the year(s) preceding death when
there are “red flags.” These may include:

• large transfers during the period leading up to the death or

• large (or multiple) transfers or unexplained changes of

ownership during the period when the deceased was declared
or believed to be incapable.

It may be necessary to challenge the transfer. Legal advice will be required.

11.8 TRANSFERRING ASSETS TO THE PERSONAL REPRESENTATIVE

Once a grant is obtained, the executor must take steps to transfer the assets into the
name of [Link] requirements will depend on the nature of the asset.

28 It is beyond the scope of this course to review the creditor protection rules of life insurance and registered
plan designations.

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11.8.1 CHAPTER 11 — THE STEPS IN ESTATE ADMINISTRATION

11.8.1 Investments

When investments are held with an investment company in a book-based

system, the usual requirement to take instructions will be a copy of the
grant.

If the deceased holds a physical certificate, it will be necessary to also

complete and send a declaration of transmission to the transfer agent
in order to transfer ownership to the executor. If the certificate is to be
transferred to a beneficiary, a Security Transfer Form is also required. These
requirements will be set out in the response to the initial inquiry letters.

11.8.2 Real Property

Real property may be transferred into the name of the executor once the grant is
[Link] estate solicitor will assist with this process.

11.9 DISPOSING OF ASSETS

The general rule is that an executor must call in (collect) all assets, convert them to
cash, pay expenses and debts, and distribute. However,Wills often provide exceptions
to this rule and/or give the executor discretion as to timing.

In addition to liabilities and estate expenses, specific cash legacies must also be paid.
Therefore, the first priority is to ensure that, if necessary, liquid assets (those that are
easily sold) are sold or collected in order to fund these payments.

A second consideration is the need to sell any assets that are “wasting” or at risk to
avoid any further loss to the estate. These assets may include high-risk volatile shares
or any other investment that is at risk in the current market. The executor’s duty is
similar to that of a trustee and it is not appropriate to speculate on when a “better”
time may occur.

11.9.1 Disposing of Investment Assets

Prior to selling investments that are not needed for expenses or that are not at risk,
the executor should consider whether or not to offer the investments to the residuary
beneficiaries in kind.

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DISPOSING OF ASSETS 11.9.2

When there are investments to be redeemed such as GICs and mutual funds, the
executor will give instructions to the broker or dealer where the investment is
held. If investments are to be sold, instructions will be given to a broker, advisor, or
investment manager where the assets are held. If the executor is a corporate trustee,
this will usually be handled in-house by investment specialists.

11.9.2 Disposing of Real Property and Other Assets

When the executor must sell other assets, including property, collections, and other
valuables, there are a number of steps and considerations, some of which have been
discussed earlier in this [Link] general duties of the executor are to:

• Determine Sale Price: Is an updated appraisal required to determine

the current market value and to help inform the decision on the list
price?

• Ensure Proposed Sales Commissions Are Appropriate: Are the

sale commissions fair and consistent with industry practice?

• Identify the Best Market for Offering the Asset for Sale: The
executor must seek to ensure an open market is used in order to
obtain the best price. For example, best practice when selling real
estate is to use Multiple Listing Service (MLS). Other assets may need
to be taken to a special collector’s auction or marketed through a
specialist who has access to the potential buyers. Household goods
and other items from the home might be sold through an auction
house.

A specialist in selling the particular asset should be retained to provide advice and
assist with the listing and sale in order to ensure that the asset is made available to
a broad market to obtain the maximum value. Generally, private sales would not be
prudent as they do not truly test the market value. Failure to allow the asset for sale
on the open market opens the executor up to criticism by the beneficiaries and a
challenge to the final price. If it can be shown that the true market price was higher,
the executor could be held liable for the difference.

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11.10 CHAPTER 11 — THE STEPS IN ESTATE ADMINISTRATION

Figure 11.3: Jurisdictional Legislation Governing Beneficiary Designations in Registered

Plans

Jurisdiction Legislation*
British Columbia Wills, Estates and Succession Act, S.B.C. 2009, c. 13, Part 5
Alberta Wills and Succession Act, S.A. 2000, c. W-12.2, Part 4
Saskatchewan The Queen’s Bench Act, 1998, S.S. 1998, c. Q-1.01, ss. 72-75 as amended
Manitoba The Beneficiary Designation Act (Retirement, Savings, and Other Plans),
C.C.S.M., c. B30
Ontario Succession Law Reform Act, R.S.O. 1990, c. S.26, ss. 51, and 52
Quebec Civil Code of Québec, S.Q. 1991, c. 64, arts. 2445-2452 (for plans issued
by insurance companies only)
New Brunswick Retirement Plan Beneficiary Act, S.N.B. 1982, c. R-10.21, s. 2
Newfoundland and Pension Plans Designation of Beneficiaries Act, R.S.N.L. 1990, c. P-5
Labrador
Nova Scotia Beneficiaries Designation Act, R.S.N.S. 1989, c. 36
Prince Edward Island Designation of Beneficiaries Under Benefit Plans Act, R.S.P.E.I. 1988,
c. D-9
Yukon Retirement Plan Beneficiaries Act, R.S.Y. 2002, c. 197, as amended SY
2012, c. 15
Northwest Territories Retirement Plan Beneficiaries Act, R.S.N.W.T. 1988, c. R-6
Nunavut Beneficiaries Designation Act, R.S.N.W.T. 1988, c. R-6, as duplicated for
Nunavut by section 29 of the Nunavut Act, S.C. 1993, c. 28
* The relevant section numbers are provided when the applicable legislation is found in a larger statute.

11.10 IDENTIFYING ESTATE LIABILITIES

11.10.1 Liabilities, Estate Expenses, and Claims Against the Estate

During an administration there are three general categories of liabilities, expenses, or

claims that may [Link] are:

• debts or liabilities due at the date of death, including claims by others

in respect of contracts or other liability to third parties,

• legitimate expenses incurred in the administration of the estate, and

• claims that may be made against the deceased’s estate by a spouse or

dependant.

These next sections review the types of debts and expenses that may need to be
[Link] also include a short discussion on spousal and dependant claims. See

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IDENTIFYING ESTATE LIABILITIES [Link]

Chapter 13, Estate and Trust Accounts, for further information on estate expenses.
Spousal and dependant rights are dealt with in more detail in Chapter 6, Claims
Against Estates by Family Members.

[Link] Executor’s Duty to Pay Just Debts

The executor must pay all just debts and settle any legitimate claims prior
to the final distribution of the estate assets. “Just debts” are also referred to
as “valid” or “proper” debts. Case law provides guidance on what is a proper
debt. However, every situation is fact-specific. Ultimately the executor has a
duty to not waste the estate. Therefore, the executor must be satisfied that:

• when a debt or specific amount is claimed, all relevant details have

been reviewed and considered, and that the calculation of the amount
due is correct,

• there are no reasons to dispute the claim, and

• when the claim is more general (e.g., for damages for breach of
contract or liability for an event that occurred prior to the deceased’s
death), that the amount settled upon, if not taken to trial, is fair and
reasonable.

[Link] Estate Liabilities versus Testamentary Expenses

For purposes of an estate administration, there is a distinction between

estate liabilities (outstanding debts and liabilities), which are a charge
against the assets owned at the date of death, and the testamentary expenses,
which are the costs of administration incurred in the administration of the
estate. Estate liabilities include outstanding bills and liabilities at the date
of death. It includes outstanding income tax liabilities up to and including
any taxes that are due on the final date of death tax returns. These are
typically listed on the estate summary and they are paid from the capital
(see Chapter 13, Estate and Trust Accounts).

Testamentary expenses are incurred by the executor in order to administer

the estate. They are recorded in the accounts provided to the beneficiaries.
Although some expenses, such as property taxes or utility fees, are fixed by
third parties, many are not. Suppliers may have different ways of calculating
the cost of goods or services. Accordingly, expenses must be reasonable.

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If an estate expense is successfully challenged, the executor can be held

personally responsible for part or all of the expense if it was not necessary
or is determined to be excessive in the circumstances.

Estate expenses include a wide range of expenditures. Some of the more

common expenses are funeral expenses, appraisal fees, professional
service fees, property insurance premiums, security or inspection
services to protect assets, probate fees/taxes, property taxes, utility bills,
and condominium fees. Executor fees are also an expense but must be
specifically approved (see Chapter 13, Estate and Trust Accounts). When
there is an ongoing testamentary trust, decisions will be required as to
whether an expense should be charged against the income earned or the
capital. See Chapter 13, Estate and Trust Accounts, for more information on
allocating expenses between income and capital interests.

[Link] Other Claims Against the Deceased

Other claims that might be made against the deceased include amounts
due on a contract, a legal claim for a tort (wrongdoing or negligence), or a
claim for services provided.

The deceased may also have a legal obligation to a former spouse to make
monthly support [Link] the deceased has any ongoing or regular
financial obligations, it will be important to read the terms of the order or
agreement. If the order or agreement does not provide for how payments
will be satisfied in the case of death, the obligation may continue and it
will be necessary for the executor to seek legal advice to determine how
to best fund the obligation.

11.10.2 Types of Liabilities and Establishing Amount Due

At the time of death the deceased may have a number of different liabilities that need
to be addressed. Each one requires its own inquiries, and different approaches may
be required to establish the amount due.

[Link] General Considerations

Corporate trustees and law firms will have a series of templates or form
letters for use when writing the more common creditors. As with letters

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IDENTIFYING ESTATE LIABILITIES [Link]

that inquire about assets, letters to potential creditors will provide evidence
of the executor’s authority (e.g., a copy of the Will and death certificate or
the grant) and request the details relevant for the type of debt. The letter
should also request that all future correspondence and any statements
issued by the creditor be redirected. This ensures that the executor can
monitor bills, ensure that bills are paid when funds are available, and/
or deal with unauthorised transactions. Examples of situations that may
require attention include:

• Monthly or bi-monthly utility bills may need to be paid or

arrangements made pending the executor gaining access to the
estate funds.

• Credit card statements may need to be monitored until

cancellation of the card is confirmed to ensure that no
unauthorised payments go through the account.

Where an outstanding debt carries interest, the executor will want to

arrange payment as soon as the debt has been verified, funds are available,
and it is confirmed that there are sufficient assets to pay all creditors.

[Link] Sources of Information

In addition to template letters, corporate trustees and law firms will have
checklists that identify the typical liabilities and ongoing expenses that
must be dealt with. A wide range of information sources will need to be
used to identify these liabilities. Bank records, statements, personal papers,
income tax assessments, mail, and people in the deceased’s life are all good
sources of information. Here are some examples:

• Bank Records and Credit Card Statements: A review of

these documents, including the automatic withdrawals and
pre-authorised payments, may identify a number of regular
expenses incurred by the deceased that need to be addressed.
They may include utilities, television, Internet services, phone,
security systems, and credit [Link] records may also reveal
periodic payments.

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• Mail: The deceased’s mail may also indicate the existence of

a contract or a regular service that needs to be cancelled and
outstanding bills that require payment. Often it may be necessary
to redirect the mail to ensure that it reaches the executor and
to avoid it piling up outside the home if it is vacant. Redirected
mail will also assist to identify memberships, subscriptions,
and other relationships, financial or otherwise, that need to be
attended to.

• Personal Papers: These may reveal insurance policies and/or

other contracts that the deceased has entered. Some may have
automatic payments for premiums or other fees due. Others
may only invoice annually. Where the payments have been
made in advance, there may be a refund due and cancellation
should occur as soon as possible to maximise the [Link]
services are invoiced in arrears, they need to be cancelled as
soon as possible to avoid increasing the outstanding balance
due. Personal papers may also include information about loan
arrangements with third parties.

• Income Tax Assessment Notices: These may reveal

outstanding balances due.

• Family, Business Associates, Building Managers, and the

Deceased’s Lawyer and/or Accountant: These people may
be able to identify other liabilities or expenses that need to be
addressed.

• Online Accounts and Services: Increasingly, executors

need to be informed about how to identify online services
and accounts that may need to be terminated. However, prior
to termination, it will be necessary to also ensure that all
information and digital assets are preserved.

[Link] Household Bills and Other Regular Payments

Household bills need to be identified. Typical bills and regular payments

include phone, television, Internet, security systems, utilities, condominium

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IDENTIFYING ESTATE LIABILITIES [Link]

fees, rents, insurance, property taxes, and subscriptions. Many are monthly
but others may be bi-monthly or less frequent.

Once these bills and payments are identified, the executor should:

• Consider immediate cancellation and/or diarise for future

cancellation. For example, if a home is vacant, telephone and
television is no longer required, but condominium fees or
monthly rental payments must continue and it will likely be
prudent to maintain security system arrangements. Magazine
and other subscriptions can be terminated immediately to avoid
new charges and/or collect refunds if the subscription was paid
in advance.

• Confirm the amount due and determine if interest is accruing

on unpaid balances.

• Ensure that the outstanding balance is a proper estate liability.

For example, if the deceased’s adult child lived with the
deceased and the bill relates to a phone or Internet service used
exclusively by the adult child, the expense is not a proper estate
expense. Similarly, if the deceased shared a credit card with
another family member, expenditures by the other person will
not be a proper estate expense.

[Link] Medical, Pharmacy, Nursing, or Home Care Bills

If the deceased was suffering from an illness or had medical needs prior
to death, there may be outstanding bills with a local pharmacy, ambulance
services, or health-care related services. If applicable, inquiries should
also be made at the residential facility where the deceased lived for any
outstanding accounts.

[Link] Credit: Loans, Mortgages, Lines of Credit, and Margin Accounts

There are many ways to obtain credit today. For purposes of this course,
the most common are:

• credit cards issued by financial institutions and retailers,

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• lines of credit with a financial institution,

• unsecured loans from financial institutions, retailers, and

individuals for specific purposes,

• “margin” accounts, where an investor borrows against

investments in an account to make additional investments, and

• conventional mortgages to secure loans to purchase property,

obtain lines of credit, or fund borrowing for special purposes.

Each of these credit or loan arrangements is subject to the terms and

conditions of an agreement between the borrower and the lender. The
agreement will document the:

• amount of the loan (principal) and schedule of repayment if

applicable,

• interest rate, including method of calculation and payment

frequency,

• due date for the balance owing or principal,

• renewal options if any, and

• security for the loan if any (e.g., a mortgage or other lien or

charge against personal property).

The deceased may have also purchased insurance to fund repayment of

any debt outstanding on death.

The lender will provide details as to the outstanding balance at the date of
death, interest rates that apply pending full payment, and the requirements
to pay out or transfer the debt.

[Link] Guarantees

A deceased may have also guaranteed a loan. Often this will involve a loan
to a child or family member, or a loan to a [Link] executor will need
to obtain a copy of the loan and guarantee documentation. Once the terms
are known, including whether there was any security provided, a decision

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ADVERTISING FOR CREDITORS 11.11

will be required as to whether or not full payment in satisfaction of the

balance due should or can be made. It may be necessary to explore options
for the executor to ensure the debt is paid by the primary debtor or is
secured through other means. Negotiations with the lender and/or the
primary borrower may be required.

[Link] Business Debts

If the deceased operated an unincorporated business, there may be

additional business-related debts to be settled.

[Link] Contracts for Services and Other Claims Against the Deceased

Contracts for personal services cannot be enforced against an estate.29

Personal services include anything that the deceased might be contracted
to do personally, or that required participation by the deceased and cannot
be done by another person. An example is found in the case cited for this
rule where the deceased was contracted to write a book.30

Individuals may also advance claims against the deceased’s estate for
goods or services provided to the deceased. Any claim that is not based
on a formal agreement in writing that can be verified must be scrutinised
carefully. The executor will need to ensure that sufficient evidence is
provided to validate the claim itself and the amount due. Legal advice may
be required. See 11.12.4, Defences and Other Considerations.

11.11 ADVERTISING FOR CREDITORS

An executor will be liable to creditors if proper debts are not paid. In addition to
the sources of information noted above, executors will often advertise for creditors.
This allows the executor to ensure that potential claimants have an opportunity to
learn about the death of the testator and bring forward any claims that have not
already been [Link] helps to bring closure to the question of potential
liabilities. In many jurisdictions advertising will also protect the executor from liability
if a claimant comes forward after the estate is distributed. Where legislation does not
offer this protection, advertising minimises the risk of future liability to the executor.

29 Widdifield at para. 3.5.9.

30 Marshall v. Broadhurst (1831), 1 Tyrwhitt 349.

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11.11.1 General Rules

Where Canadian jurisdictions provide statutory protection to executors who

advertise for creditors or post a notice to creditors, there is a wide range of rules
that may apply. Some jurisdictions require an executor to advertise or post a notice.31
Others do not require a notice or advertising, but legislation provides protection
from liability if the executor decides to do so. In these situations, requirements may
be set out in the legislation.32 Some require only one notice. Others require multiple
notices. The notice may need to be posted in the provincial Gazette or local papers.
Some prescribe the information that must be in the notice. Where the rules are not
set out in the legislation, practices have developed to guide executors on what is
appropriate for a given situation.33 See Figure 11.4 for a list of the relevant legislation
and overview of the nature of the rules.

Although there are jurisdictional differences, there are three general requirements for
an effective notice or advertisement.

1. The notice/advertisement should be in the jurisdiction where the

deceased lived and/or conducted any business. It may be necessary to
consider multiple jurisdictions.

2. The notice/advertisement must indicate that after the date set out in
the notice, the estate may be distributed. The date set must allow for
a minimum period of time within which claims can be made. If there
are multiple advertisements, the date selected must be counted from
the date of the last publication.

3. All jurisdictional rules, if any, must be complied with in order for the
notice/advertisement to be effective for purposes of ensuring that the
executor will be protected from future liability. This often includes
the information to be communicated, the date after which the estate
may be distributed, and how to make a claim.

31 These include Saskatchewan, Prince Edward Island, and Nova Scotia. In Quebec, CCQ, arts. 794 and 795, set
out a different process for ensuring notice.
32 For example, in these provinces, the requirements are set out in legislation if the executor decides to
advertise: British Columbia, Alberta, Manitoba, Newfoundland and Labrador,Yukon, Northwest Territories, and
Nunavut.
33 For example, in Ontario, s. 53(1) provides protection to the executor who advertises, but guidance is found in
the case law. For a review of the different requirements and approaches, see Widdifield at para. 3.2. Note that
New Brunswick does not appear to have any [Link], executors will decide what is appropriate
in the circumstances to minimise risk of personal liability.

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ADVERTISING FOR CREDITORS 11.11.2

The purpose of the time period set out in the notice is to allow the creditor time to
advance a claim. Distributions must not be made until this date has passed. However,
if a claim is advanced at a later date, or the executor learns of a new claim, and funds
remain in the estate, the claim must be dealt with. Where the executor has advertised
in accordance with the applicable rules, he or she will be protected from liability to
any creditors who come forward after the estate assets have been distributed. Most
legislation includes a provision that permits the creditor or other claimants to recover
assets of the estate of the deceased person from the person who received them.34

11.11.2 Considerations

Subject to specific requirements in order to ensure the executor can be protected

from liability, the executor must also consider the best methods to advertise and
the costs. For example, a local newspaper may not have broad enough circulation
for some estates. A national newspaper may be too expensive and unnecessary for
others.35 One may also have to consider the most appropriate jurisdictions depending
on where the deceased lived and may have carried out business. Every situation will
require some judgment where there is discretion.

Example #1: If the executor has been acting as an attorney under

an enduring power of attorney for a number of years, the executor
should have an in-depth knowledge of the deceased’s financial
situation and any potential liabilities. If the deceased had no
business dealings and a relatively simple lifestyle, costly advertising
may be inappropriate.

Example #2: If the deceased was a business person and had

numerous business dealings or worked in more than one jurisdiction,
a broader advertisement in a national paper may be appropriate.

34 The following text is found in most statutes:“This section does not prejudice the right of a creditor or other
claimant to recover assets of the estate of the deceased person from the person who received them.”
35 For example, see Re Egan Estate, [1994] O.J. No. 84, 1994 Carswell Ont 2730 (Ont. [Link].), as summarised
in Widdifield at para. [Link] advertisement in the Globe and Mail in this case was found to be unnecessary
and the cost was ordered to be refunded to the beneficiary.

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11.12 CHAPTER 11 — THE STEPS IN ESTATE ADMINISTRATION

Figure 11.4: Advertising for Creditors — Relevant Legislation by Jurisdiction

Jurisdiction Legislation Summary of Requirements

British Columbia Wills, Estates and Succession Act, If advertise, requirements are
S.B.C. 2009, c. 13, s. 154 prescribed
Alberta Trustee Act, R.S.A. 2000, c. T-8, s. 38 If advertise, requirements are
and Surrogate Rules, Alta. Reg. prescribed. Form NC34 may be
130/1995 used
Saskatchewan Administration of Estates Act, S.S. See requirements to advertise in
1998, c. A-4.1, ss. 32-33 newspaper
Manitoba Trustee Act, R.S.M. 1987, c. T160, If advertise, requirements are
s. 41 prescribed
Ontario Trustee Act, R.S.O. 1990, c. T.23, s. 53 See case law for guidelines
Quebec CCQ, arts. 794-795 See prescribed requirements
New Brunswick No legislation Executor discretion
Newfoundland and Trustee Act, R.S.N.L.1990, c. T-10, Court determines what is sufficient
Labrador s. 24
Nova Scotia Probate Act, N.S.S. 2000, c. 31, s. 63 Six months’ notice in Royal Gazette
Prince Edward Probate Act, R.S.P.E.I. 1988, c. P-21, Six months’ notice in Royal Gazette
Island ss. 17 and 47 after grant is issued. Registrar
posts notice
Yukon Trustee Act, R.S.Y. 2002, c. 223, s. 47 Court determines what is sufficient
Northwest Probate Rules ss. 39-40 Probate, Court can provide directions or
Territories Administration and Guardianship see prescribed requirements for
Rules of the Supreme Court of the voluntary advertising
Northwest Territories, SOR/79-515
NT
Nunavut Trustee Act, [Link]. 2013, c. 20, s. 47 Court determines what is sufficient

11.12 SETTLING AND DISPUTING DEBT AND CLAIMS

11.12.1 Verification of Specific Debts

As noted above, the executor must pay “just” debts. The law requires the claimant to
“corroborate” the claim by providing evidence to support the claim. The executor
must then review that evidence. For example:

• Credit Cards: Ensure that the last expenditures appear to be correct;

if there is a second cardholder, determine who is responsible for the
charges incurred.

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• Promissory Notes and Loans: Verify the principal already paid

and balance outstanding; determine the interest rate and how it is
calculated.

• Contract for Services: Verify the terms of the contract for services,
confirm that the services were provided.

[Link] The Burden of Payment

Generally speaking, the liabilities of the estate are paid from the residue.
If that is insufficient, then legacies may abate (see Chapter 3, The Law of
Wills). However, where a debt is secured by an asset (e.g., a mortgage or a
charge against personal property), it will be necessary to determine who
bears the burden of payment. If the Will is silent, the executor will look to
legislation or case law [Link] general rule under the common law is
that, subject to a contrary intention in the Will, the legatee is entitled to take
personalty free of any charge. But the beneficiary, who receives a devise
(gift of an interest in realty) that is encumbered by a debt, will become
responsible for the debt. Legislation has altered these rules in a number
of jurisdictions and legal advice will often be required to determine who
bears the burden of payment.36

[Link] Joint or Shared Loans and Credit

From time to time the deceased may have shared the debt with a spouse,
family member, or another person. For example, two or more people may
co-sign a loan agreement and the mortgage documentation to purchase a
home.A couple or two family members may also share credit cards. Liability
for the debt will need to be resolved between the estate and the other
borrower/debtor. Where security such as a mortgage has been granted,
negotiations may be required with the lender to release the deceased’s
estate from further liability. Each situation will need to be reviewed in the
circumstances and within the context of the estate distribution.

36 For two very different examples of amendments to the common-law rules, see s. 32 of the Ontario Succession
Law Reform Act and s. 47 of the British Columbia Wills, Estates and Succession Act.

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11.12.2 Timing of Payment

Once the executor has received the grant, confirmed that the assets exceed liabilities,
and collected any liquid assets, any debts that are accruing interest should be paid as
soon as possible and confirmation of payment (e.g., the creditor’s acknowledgement
of receipt) should be filed with the estate records.

Generally, the executor has the executor’s year to settle the estate. If debts are paid
later than the year, the delay must be justified. Where the debt did not carry interest,
interest may become payable after the executor year.

11.12.3 Authority to Settle Amounts

Where there is a claim against the estate, the Will usually grants the executor express
authority to settle and compromise claims. The legislation of many jurisdictions also
includes a power for the executor to settle claims. Although some matters may need
to proceed to trial, litigation can be costly and take some time to resolve. The power
to settle the claim allows the executor to come to a fair settlement and protects the
executor from liability. However, when settling, the executor must still be prudent
and may require some legal advice to ensure that the settlement is reasonable.

11.12.4 Defences and Other Considerations

When a debt or claim is presented, in addition to verifying the authenticity and

accuracy of a claim, the executor should also consider whether the debt or claim is
enforceable. There are a number of potential defences, particularly with claims that
are not regular bills. Each is reviewed briefly below.37

[Link] Limitation Period Has Expired

One of the first considerations is whether or not the claim is out of time.
Depending on the nature of the claim, and the jurisdiction, claims may
need to be brought within as little as two years or as many as 15 years.
The time from which the clock starts to run will depend on the nature
of the claim and the facts. The estate solicitor can provide advice on the
applicable limitation period and the requirements to properly dispute the
claim.

37 For a detailed discussion of the requirements to corroborate a claim and the various defences, see Widdifield
at para. 3.5.

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The important point for the executor is to not acknowledge a debt until
it is clear that the limitation period has not expired. A typical example is a
loan that is evidenced by a promissory note or promise to pay.A promissory
note indicates the amount of the loan, the interest rate, and the repayment
[Link] note may include a repayment schedule (e.g., monthly, quarterly,
annual payments), including interest, or it may be “on demand.” Every
payment to the lender is an acknowledgement of the debt. However, if
a promissory note is only payable on demand, or does not have a fixed
repayment schedule, it is possible that no payments have been made for
a number of years. Accordingly, when the deceased is the borrower, it is
important to determine whether or not the lender can enforce the claim. If
not, and the lender makes a claim, it may be necessary to dispute it.

NOTE: Where the deceased is the lender, the reverse is true. If the deceased
has made a loan that has not been acknowledged within the last two years,
the applicable limitation period must be determined and the executor
should ensure that a demand for payment is made before the limitation
period expires.

[Link] Lack of Corroboration

Where the details of a claim are not clearly documented in an agreement

and evidence of the exact amount due is not easily verified, the executor
must ensure that the claim is corroborated. Generally, some independent
evidence is required to support the plaintiff’s claim. This requirement has
been incorporated into the legislation of some provinces. Where it has not
been included, executors may look for guidance in the common law.38

[Link] Quantum Meruit Claims

It is not uncommon for an executor to receive a claim for personal

services provided to the deceased by another person where there is no
signed contract or agreement. When the services are services that one
would normally pay for, the law implies a promise to pay the value of those
services.39 This is often called a quantum meruit claim.

38 For an example of legislation, see s. 13 of Ontario’s Evidence Act, R.S.O. 1990, c. E.23. Other provinces with
legislation include Alberta, Yukon, and the Northwest Territories. In Quebec, see CCQ beginning at art. 2857.
For more information, see discussion of these rules and case law in Widdifield at para. 3.5.1.
39 Widdifield at para. 3.5.6(a).

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Example: A neighbour comes to the deceased’s home once a week to

do light housekeeping tasks that the deceased is no longer able to do.
Generally, one would expect to pay for cleaning services by a stranger
(non-family member).

The executor must ensure that the services were provided, that the
value being charged for the services is appropriate, and that there are
no circumstances that would suggest that the services were offered
gratuitously, without intention or expectation of payment (see [Link],
Claims by Near Relatives).

[Link] Claims by Near Relatives

When there is a relationship between the deceased and the claimant, there
may be a presumption under the law that the services were provided out
of love and affection or for mutual convenience. Each situation must be
examined on the facts, including the nature of the relationship (husband/
wife, parent/child, aunt or uncle/niece or nephew), the nature and duration
of the services, and whether the claimant lived with the deceased. Where
the law says that the presumption applies, the claimant will bear the
burden of proof to show that there was an intention or promise to pay.
Again, the estate solicitor can assist the executor to determine whether or
not to dispute the claim.

[Link] Legacies to Creditors

If the deceased leaves a legacy in the Will to a creditor but is silent on the
debt, it is necessary to determine whether or not the legacy was made in
order to satisfy the debt. The general law is that if the legacy is a sum of
money equal or greater than the debt, then the legacy is paid in satisfaction
of the debt. However, the courts have set out a number of exceptions40 and
at least two jurisdictions have abolished the rule.41

40 For a review of the case law and exceptions, see Widdifield at para. 3.5.7.
41 See s. 53 of the Wills, Estates and Succession Act in British Columbia; s. 110 of the Wills and Succession Act in
Alberta.

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11.12.5 Disputing a Claim

When an executor does not agree with a claim or has notice that there is a potential
claim, it will be necessary to take steps to address the claim so that the administration
can proceed. Guidance from the estate solicitor may be required.

Statutory Rules: A number of provinces have specific provisions in their legislation

that allow the executor to give written notice to the claimant. The notice states that
the claim is disputed or rejected and sets a deadline for bringing an action to
enforce the claim. These jurisdictions and the applicable legislation is set out in
Figure 11.5. Students are encouraged to review the applicable sections.42

Figure 11.5: Statutory Provisions for Disputing Claims Against an Estate

Jurisdiction Legislation
British Columbia Wills, Estates and Succession Act, S.B.C. 2009, c. 13, s. 146
Alberta Estate Administration Act, S.A. 2014, c. E-12.5, ss. 24-26
Saskatchewan Trustee Act, S.S. 2009, c. T-23.01, s. 75
Manitoba Trustee Act, R.S.M. 1987, c. T160, s. 53
Ontario Trustee Act, R.S.O. 1990, c. T.23, ss. 44 and 45
Nova Scotia Probate Act, N.S.S. 2000, c. 31, s. 63
Prince Edward Island Probate Act, R.S.P.E.I. 1988, c. P-21, s. 12

For claims by spouses and dependants, see Chapter 6, Claims Against Estates by
Family Members.

11.13 INCOME TAXES

11.13.1 Obtain a Copy of the Last T1 Tax Return Filed by Deceased

The executor will need a copy of the last T1 tax return filed by the deceased. Some
issues, such as carry forward items, may need to be considered before filing the final
or terminal return on behalf of the estate.

11.13.2 Final Tax Returns for the Deceased

The executor must file a final or terminal return for the year in which a taxpayer dies.
Three optional returns may also be filed to report specific types of income. Returns
for prior years must also be filed if applicable. Each return is discussed briefly below.

42 The details of each jurisdiction are not examinable.

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11.13.3 T1 Terminal Return

A T1 General Return is used to file the deceased’s terminal [Link] return reports
all income earned from January 1 up to and including the date of death, rather than
December [Link] amounts include:

• employment income, including vacation pay,

• business income from unincorporated businesses,

• pension income,

• income from personal trusts, and

• investment income.

In addition, the terminal return must report additional income items, including:

• the net taxable capital gain (or losses) arising from the deemed
dispositions of assets,

• accrued income due to the deceased, and

• the value of RRSPs and Registered Retirement Income Funds (RRIFs)

held by the deceased (subject to certain exceptions).

[Link] Deductions and Non-Refundable Tax Credits on the Terminal

Return

The usual deductions and non-refundable tax credits may be claimed on

the terminal return. Special rules may also apply. These include estates
where:

• the deceased has eligible medical expenses or

• assets are left to one or more charities.

[Link] Exceptions to Deemed Disposition Rules on Death

Although there is a deemed disposition of all property owned at the date

of death, there are a number of exceptions and/or special rules. These
include:

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• assets are left to a spouse or common-law partner,

• property was settled in a qualifying spousal or common-law

spouse trust,

• the deceased owned farm or fishing property,

• the deceased owned eligible shares of a small business

corporation, and

• the deceased died owning an RRSP or a RRIF.

[Link] Testamentary Spousal Trusts and the ACB of Trust Assets

If a deceased leaves assets to his or her spouse or common-law partner, or

the assets are left in a trust for a spouse or common-law partner that meets
the requirements to qualify as a spousal trust under the Income Tax Act
(ITA), there is a deemed disposition of the assets and the estate acquires
the assets at the deceased’s adjusted cost base (ACB). If the assets are
distributed to the spouse in Canada or to a testamentary spousal trust, the
ACB is retained. Unrealised capital gains are triggered when the surviving
spouse or the trust sells the asset, or when the surviving spouse dies.

The executor may elect to increase the ACB of any asset owned at the date
of death up to any amount between the deceased’s ACB and the fair market
value (FMV) on the date of death.

Examples:

Rollover of the ACB: Aiden died leaving real estate with an ACB of
$400,000 and a FMV of $500,000 to be held in a spousal trust for his
wife, Mia. The executor did not elect out of the rollover. Therefore, on
the terminal return there was no capital gain arising from Aiden’s
death and no tax was payable by the estate. Mia died four years
later. The spousal trust still held the original real estate and it had
increased in value to $800,000. On Mia’s death, the trust is deemed
to dispose (sell) the real estate for its FMV of $800,000, triggering a
capital gain of $400,000 in the trust. One-half of the capital gain is
taxable in the trust.

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Election to increase the ACB: If Aiden had died holding another

investment with a $50,000 loss, the executor might elect to recognise
a deemed disposition of the real estate for $450,000, triggering a
$50,000 capital gain. This allows the executor to offset the $50,000
capital gain on death with the loss. When Mia dies, the capital gain
will only be $350,000 ($800,000 – $450,000).

[Link] Introduction to Taxation of RRSPs and RRIFs on Death

When an annuitant (the owner of the registered plan) dies, the FMV of his
or her RRSPs or RRIFs is included as income on the terminal tax return.
This amount is called a “refund of premiums.” The beneficiary receives the
refund of premiums tax-free. The estate must pay the tax. If the estate does
not have the funds to pay the tax, the Canada Revenue Agency (CRA) will
seek to have the tax paid by the beneficiary.

There are two general exceptions to these rules that allow for a deferral of
this tax. If the exceptions apply, the estate does not pay the tax. Tax is paid
by the beneficiary when he or she receives the funds. The exceptions are:

1. A Spouse Is Designated as the Successor Annuitant

of a RRIF: In this situation, there is no refund of premiums.
The surviving spouse or common-law partner becomes the
annuitant and the owner of the RRIF. Tax is paid as funds are
paid from the RRIF to the survivor. On the survivor’s death,
there will be a deemed disposition and the refund of premiums
for the balance remaining in the RRIF will be reported on the
survivor’s terminal return.

2. A Qualified Beneficiary Is the Named Beneficiary of

an RRSP or RRIF, or Receives the Plan as Part of His or
Her Share of the Estate: In this situation the rules allow the
executor to make an election to claim a corresponding deduction
for the value of the refund of [Link] plan is transferred to
a plan for the beneficiary or, in the case of a minor beneficiary, an
annuity can sometimes be purchased. This deferral of tax is also
often referred to as a rollover. Rollovers are not mandatory and
careful planning may be required to maximise the benefit to the
beneficiary and minimise the tax payable by the estate.

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A qualified beneficiary includes the deceased annuitant’s:

• spouse or common-law partner (see earlier definition),

• child or grandchild (under 18) who was financially dependent

on the annuitant, or

• child or grandchild (18 or over) who was financially dependent

on the annuitant because of an impairment in physical or
mental functions.

The ITA sets out rules for determining whether a child or grandchild is
financially dependent. The CRA provides further information. The general
rules are:

• A rollover is available if the plan assets are transferred to the

plan of the surviving spouse or common-law partner within 60
days (or a longer period if agreed to by the CRA) after the year
of death.

◦ The executor makes an election to deduct the amount

of the refund of premiums from the income reported on
the terminal return so the estate does not pay tax on the
terminal return.

◦ The spouse is taxed at the time the funds are withdrawn

from the plan or on the death of the spouse.

• In some situations it may be mutually beneficial for the surviving

spouse to receive the refund of premiums tax-free and to allow
the income to be reported in the final return of the deceased. In
this case the executor would not make the election. This might
be done if the tax payable can be offset by deductions or credits
available in the terminal return.

• If the spouse or common-law partner spouse is not the named

beneficiary, but will take the plan proceeds as part of his or her
share of the estate, the spouse and executor may make a joint
election for the rollover treatment.

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• If the beneficiary of an RRSP or RRIF (whether designated or

taking under the Will) is an eligible, financially dependent child
or grandchild who is a minor, the plan proceeds can be used to
purchase an annuity that meets the conditions set out in the ITA.
The executor will make the election to deduct the amount of
refund of premiums from the taxable income in the terminal return.

• If the beneficiary of an RRSP or RRIF is a financially dependent

adult, the plan may be rolled into the beneficiary’s own RRSP or
a Registered Disability Savings Plan (RDSP).43 Again, the executor
will make the election to deduct the amount of the refund of
[Link] ITA defines “financially dependent.”

[Link] Due Dates for Terminal Returns

If the date of death occurred between January 1 and October 31, the
terminal tax return is due by April 30 of the following year, the same date
all T1 returns are due. If the date of death was between November 1 and
December 31, the tax return is due six months after the date of death.

Any taxes owing must be paid by the due date. If the taxes owing are not
paid by the due date, interest will be added to the final tax bill. If the return
is filed late, penalties will also be charged. (See 11.17, Penalties and Interest
Charges.) Extended filing deadlines may apply if the deceased was carrying
on a business as a partner or sole proprietor but the deadline for payment
of taxes is not extended.

11.13.4 Optional Returns

Certain income may be reported on optional T1 returns in the year of death. There
are specific rules for each return as to the income that can be reported and the
deductions and credits that can be claimed. With the exception of the Rights and
Things Return, the return due dates follow the same rules as the terminal return.

Each return is briefly described below.

43 For tax purposes, the CRA website summarises the treatment of an RDSP as follows:“If the beneficiary of an RDSP
dies, the RDSP must be closed no later than December 31 of the year following the year of the beneficiary’s death.
Any funds remaining in the RDSP, after any required repayment of government bonds and grants, will be paid to
the estate. If a disability assistance payment (DAP) had been made and the beneficiary is deceased, the taxable
portion of the DAP must be included in the income of the beneficiary’s estate in the year the payment is made.”

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INCOME TAXES [Link]

[Link] Rights and Things Return

The executor may elect to file a separate return for “rights or things” of the
deceased person as at the date of death. Rights or things are amounts that:

• have been earned prior to death,

• are unpaid at the time of death,

• are payable at the time of death, and

• would have been included in income of the deceased when

received.

The amounts qualifying as rights or things are relatively limited, and

include:44

• salary, commissions, and vacation pay owed before the death

and paid after death,

• retroactive salary adjustments owed and paid after death,

• Old Age Security (OAS), Canada Pension Plan/Quebec Pension

Plan (CPP/QPP) paid after the date of death for the month of
death,

• CPP and Employment Insurance (EI) arrears,

• universal child care benefit (UCCB),

• accounts receivable, supplies, and inventory,

• uncashed matured bond coupons,

• bond interest earned and payable but not received before death,

• dividends declared before the date of death, but not received

including ex-dividends,

44 Source: CRA Guide to Preparing Returns for Deceased Persons 2013 – Appendix [Link]
pub/tg/t4011/[Link].

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• crops, livestock, or

• work in progress.

While a limited number of deductions will be available on most Rights and

Things Returns, it is often possible to reduce, and sometimes eliminate, the
tax on this income. This is because:

• The personal amounts of the non-refundable tax credits can

be claimed in full to reduce the taxable income. These are the
amounts on lines 300-306 and 367 on page 1 of the Federal
Income Tax Schedule 1. Personal amounts include the basic
amount and, where applicable, the:

◦ age amount,

◦ spouse or common-law partner amount,

◦ amount for eligible dependant,

◦ amount for infirm dependant,

◦ amount for children (under 18), and/or

◦ caregiver amount.

• Other non-refundable tax credits may also be claimed, but the

credit can only be claimed once so it may be split with other
[Link] amounts include, where applicable:45

◦ pension income amount,46

◦ disability amount,

◦ medical expenses, and/or

◦ charitable donations.

45 See the Appendix to the CRA Guide to Preparing Returns for Deceased Persons in the Student Resource area
for a full list of which non-refundable tax credits may be claimed in full or must be split.
46 This amount can only be claimed on returns where the related income was reported.

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INCOME TAXES [Link]

• The graduated tax rates apply to the taxable income, instead of

the deceased’s effective tax rate on the main Terminal Return.

Example: If Lily was 80 years old at the time of death and had $5,000 of
income that can be reported on a Rights and Things Return, her executor
can claim the basic personal amount and age amount non-refundable
tax credits. This will likely eliminate all tax due on this income due to
Lily at her date of death. Each situation must be analyzed by the tax
preparer in order to minimise the overall tax payable by the estate.

The due date for filing a Rights or Things Return, and the deadline for
making an election to file a Rights or Things Return, is the later of one
year from the date of death or 90 days after the mailing of any Notice of
Assessment in respect of the tax payable for the year of death.

[Link] Returns for Income from a Testamentary Trust

If the deceased is a beneficiary of a graduated rate estate that does not

have a December 31 year end, and the deceased died after that year end
but before the end of the calendar year, the income earned and/or payable
can be reported on a separate return. This period is often referred to as
the “stub period.” The return due date is the same as the due date for the
terminal return.

These situations will only arise when a beneficiary of an estate dies before
the estate is fully distributed.

Example: A graduated rate estate has a June 30 year end. The

revenue beneficiary, Kyle, dies on December 1, 2014.

In this scenario, the estate will have issued a T3 slip to Kyle for income
earned from July 1, 2013, to June 30, 2014. Kyle’s executor must report
this income on the terminal return. If the income earned from July
1, 2014, to December 1, 2014, is also reported on the terminal return,
17 months of income will be reported. The optional return allows
the executor to report the five-month stub period income separately
and claim the personal amount credits, along with other credits as
applicable. Again, this will help to reduce or eliminate the tax due on
the stub period income.

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[Link] Returns for a Partner or Proprietor

If the deceased was a partner or sole proprietor of a business with a year

end that is not December 31, and the deceased died after the year end,
a stub period return may be filed to avoid taxing more than 12 months
of income in the terminal return. The due dates are the same as for the
terminal return. These returns are rarely required.

11.13.5 Prior Years’ Tax Returns

All outstanding tax returns from previous years that the deceased was required to
file during his or her lifetime must be filed. If the deceased died between January 1
and April 30 without having filed the previous year’s return, the tax return should
be filed no later than six months after the date of death. No interest or penalties
will be payable until six months after the date of death. However, if the deceased’s
death occurred after April 30, the prior year’s return is already late, and interest and
penalties will apply. Penalties may be relieved, at the Minister’s discretion, under the
taxpayer relief measures if the late filing was the result of the deceased’s illness or
other extenuating life events. Interest, however, will not be relieved.

Example: Liam died on April 1, 2015. He had not yet filed his return for
2014, which is due on April 30, 2015. Liam’s executor must file the 2014
return no later than October 1, 2015, to avoid late filing penalties and
interest. The terminal return, however, is not due until April 30, 2016.

11.13.6 Foreign Tax Returns

A tax return may have to be prepared and filed in another country in respect of
income and/or inheritance tax if the deceased:

• owned foreign real property,

• received certain foreign source income,

• was domiciled in another country at death,

• was a citizen of the U.S., or

• was domiciled in the U.S. or was a U.S. green card holder.

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T3 TRUST RETURNS 11.14

As in Canada, prior year tax returns will also need to be filed. Appropriate foreign tax
advice will be required to determine the returns due and the due dates.

[Link] U.S. Estate Tax Return

A U.S. Estate Tax Return may be required if the deceased was:

• a U.S. domiciliary (primarily a U.S. citizen or U.S. green card

holder), or

• owned U.S. property with a value exceeding $60,000US.

The U.S. Estate Tax Return must be filed even if there is no U.S. tax liability.
The exemptions and credits available under the Canada/U.S. tax agreement
that eliminate or reduce the liability apply only if a return is filed.

U.S. assets for the purpose of U.S. estate tax and the requirement to file a return
include, among other U.S. situs assets, securities issued by U.S. corporations,
and U.S. real estate or an interest in real estate located in the U.S.

U.S. Estate Tax returns are due nine months after the decedent’s death.A six-
month automatic extension may be obtained by timely filing an extension
request.

NOTE: Third parties responsible for releasing assets to a foreign executor

will usually require evidence that the U.S. estate tax liability has been paid.

11.14 T3 TRUST RETURNS

A T3 Trust Return is filed by an estate to report income earned by the estate after the
date of death. T3 returns are also filed for testamentary and inter vivos trusts. There
are a number of rules that apply to the taxation of estates, testamentary trusts, inter
vivos trusts, and their beneficiaries. The rules identify income to be included on the
T3 return and eligible deductions. They also provide for elections that can be made
by an executor, trustee, and/or beneficiary to prevent double taxation or minimise tax
for the estate, trust, and/or beneficiary. These are reviewed in the Taxation of Trusts
and Estates course.

This section deals with the taxation of trusts and the beneficiaries (including estates)
generally.

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11.14.1 Income Included on a T3 Return

All income earned by the estate or trust must be reported on the T3 return. Trust
income is often limited to investment income (including capital gains), but it may
include other types of income. The CPP/QPP Death Benefit is also reported on the
first estate T3 return.

11.14.2 Deductions from Income Reported on a T3 Return

A trust is a taxpayer. Therefore, all income earned is taxable. However, when income
is paid or payable to a beneficiary, it is generally treated as “flowing through” the trust
to the [Link] there is a “flow through” of income, all income earned by the
trust and then paid to a beneficiary is deducted from the trust’s income.47 The income
information is provided to the beneficiary on a T3 slip. The beneficiary reports the
income on his or her personal tax return and the income is taxed in his or her hands.

Example: In 2015, an inter vivos trust for Tyler earned $10,000

in interest income and $15,000 in dividends. Tyler is the revenue
(income) beneficiary and received the interest and dividend amounts
during the trust’s tax year as required by the terms of the trust.

When the trustee prepares the T3 return, the full amount of the
interest and dividends earned must be reported. However, the trustee
will claim a corresponding deduction for the income paid (allocated)
to Tyler.

The amount that has been paid or is payable to Tyler is deducted from
the trust’s taxable income and a T3 slip is issued to Tyler. The T3 slips
reports the income allocated to Tyler. Because Tyler is a Canadian
resident taxpayer, the T3 slip will designate the income as interest
income and dividend income. Tyler will report these amounts in the
applicable lines of his own T1 tax return and will obtain the benefit
of any of the special tax treatment that applies to the dividends.

If Tyler lives in the Unites States, his allocation would be listed on

a T3-NR form (not a T3 slip) as estate and trust income, with no
designation for the type of income. In addition, the 15% NR Tax

47 The elections that may be available to tax the income in the trust and not the beneficiary’s hands are covered
in the Taxation of Trusts and Estates course. Other elections may allow the trustee to allocate income to a
beneficiary that is not paid to a beneficiary. Neither of these rules is reviewed in this chapter.

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T3 TRUST RETURNS [Link]

withheld at the time the income was paid will be reflected on the tax
slip he receives. (See 11.15, Distributions to Non-Residents (NR Tax).)

If the trust sold assets in the year and taxable capital gains were
realised, the trust would pay tax on the taxable capital gains.48

If the trust was a discretionary trust and some or all of the interest
and dividend income was not paid to Tyler during the year, the trust
would not have a deduction and would pay the tax on the interest
and/or dividends.

[Link] Exception for Estate T3 Return

During the administration of an estate, the executor may tax the income in
the estate, or elect to treat the income as being earned by the beneficiary.
If the executor makes this election, a T3 slip is issued and the beneficiary
reports the income on his or her personal tax return in the same way as if
the beneficiary was the beneficiary of a trust.

11.14.3 Calculation and Payment of Trust Taxes

Income taxed in trusts is generally taxed at the top tax rate. There are no graduated
rates. However, the ultimate tax payable (the marginal rate) will depend on the
provincial or territorial tax rate that is applied.

Until 2015, estates and testamentary trusts enjoyed the benefit of the graduated rates
that apply to individuals. However, tax changes that came into force on January 1,
2016, mean that the graduated rates only apply to graduated rate estates and a
very limited number of testamentary trusts. Graduated rate estates that meet strict
requirements are able to apply the graduated rates but only for up to three years.

[Link] Due Dates

All T3 returns are due 90 days after the trust or estates year [Link] have
a year end of December 31 and the return is due 90 days later. In a leap
year, the deadline is March 30 instead of March 31.

Graduated rate estates can choose a year end that is any date up to and
including the anniversary date of the date of death. This allows for tax

48 Capital gains are generally not considered income for trust purposes.

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[Link] CHAPTER 11 — THE STEPS IN ESTATE ADMINISTRATION

planning, and avoids the need to file a T3 return shortly after the date of
death when that date was late in the year.

[Link] Final Trust Return

In the year that an estate winds up, or a testamentary or inter vivos trust is
fully distributed, a final T3 return may be filed for the trust for the shortened
year. For example, if the distribution for a trust will be completed on
May 10, the trustees can file a T3 for the period ended May 10. It is not
necessary to wait until the following year.

[Link] T3 Slips and Beneficiaries

T3 slips must be sent to beneficiaries by the due date for the T3 [Link]
beneficiary will include the T3 slip information on his or her personal tax
return for that calendar year along with employment and other income
sources.

If the graduated rate estate has a year end that is not December 31 (a fiscal
year end), the beneficiary will receive a T3 slip that indicates the total
income allocated for the period ending on the trust’s fiscal year end date.
The income reported on the T3 slip will be reported on the beneficiary’s
personal tax return that includes the trust’s fiscal year end.

Example: A graduated rate estate has a June 30 fiscal year end.

The trustees prepare the trust return for the estate’s June 30, 2015,
fiscal year end and allocate $5,000 of interest income to Ivan, a
revenue (income) beneficiary. Ivan will receive a T3 slip that shows
he received $5,000 in interest income for the period July 1, 2014,
to June 30, 2015. When Ivan prepares his 2015 personal tax return
(which is due April 30, 2016), he will include the $5,000 from his T3
slip. He will not report income paid to him after June 30, 2015. That
income will be reported in the following year.

11.15 DISTRIBUTIONS TO NON-RESIDENTS (NR TAX)

Distributions of income and capital to non-residents of Canada may have tax

consequences for estates and trusts.

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PENALTIES AND INTEREST CHARGES 11.17

When income is paid to a beneficiary not resident in Canada, non-resident withholding

tax (NR Tax) will usually have to be withheld. The withholding rate is 25% unless
there is a treaty with the beneficiary’s home country for a reduced rate. For example,
interest and dividend income paid to beneficiaries who are taxed in the U.S. and
United Kingdom is only 15%.

In addition, if assets are distributed to a non-resident of Canada, there is a deemed

disposition by the trust or estate. If there has been an increase in the FMV of an asset
that is being transferred to a beneficiary, a capital gain may be triggered. If there is
a capital gain, NR Tax will usually have to be withheld on the taxable portion of the
capital gain for Canadian income tax purposes.

11.15.1 Taxation of Beneficiaries in Home Jurisdiction

Distributions from an estate are not usually taxed in the beneficiary’s home country.
However, income received from an estate or trust will often be subject to reporting in
accordance with the beneficiary’s home jurisdiction. Some jurisdictions apply special
rules to distribution of capital from a trust. These rules can be onerous and complex.
Non-resident beneficiaries should be advised to seek tax advice.

11.16 ASSESSMENT NOTICES AND OBJECTIONS

Once the CRA has reviewed the tax return filed, it will issue a Notice of Assessment
agreeing with the amounts reported and tax paid, identifying errors and additional
amounts payable, or refunds due. If the taxpayer disagrees with the Notice of
Assessment, an objection may be filed. For testamentary trusts and estates, the
objection must be filed the later of:

• one year after the filing deadline of the tax return or

• 90 days after the mailing date of the Notice of Assessment.

For inter vivos trusts, the objection must be filed within 90 days after the mailing
date of the Notice of [Link] tax preparer will assist with this process.

11.17 PENALTIES AND INTEREST CHARGES

Failure to file a required tax return by the due date will result in a late filing penalty.
The amount due is 5% of the balance payable, and 1% for each complete month the

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return remains outstanding for a maximum of 12 months. Interest is also charged on

unpaid taxes.

The interest rate due on unpaid taxes is set every three months. It is calculated and
compounded daily beginning from when the tax was due. Where a taxpayer is owed
a refund, the refund is paid with interest from the latest of:

• the 31st day after the return is due,

• the 31st day after the return is filed, or

• the day after the overpayment arises.

Penalties and interest are included on the assessment notice.

Examples: Grace died on November 15, 2014. Her terminal return

will be due May 15, 2015, six months after her date of death. Assume
the final amount due on Grace’s terminal return is calculated to be
$10,000.

If Grace’s terminal return is not filed until August 4, a late filing

penalty of $500 plus $100 per month for the months of June and
July will be payable for a total of $700. In addition, interest at the
prescribed rate, compounded daily, will be assessed from May 16
until August 4.

If the return had been filed, but no tax paid, the late filing penalty
would have been avoided.

If the return had been filed on May 1, 2015 (two weeks before it was
due), and $12,000 had been paid, the CRA will refund the $2,000,
with interest calculated from June 15, 31 days after the return was
due.

11.18 TAX CLEARANCE CERTIFICATE

A Tax Clearance Certificate protects an executor or trustee from personal liability. If

the executor distributes assets of the estate or winds up a trust prior to receiving a
clearance certificate, he or she may be personally liable for any taxes owing if there
are not sufficient funds remaining to cover outstanding amounts due.

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TAX CLEARANCE CERTIFICATE 11.18

A clearance certificate is issued by the CRA. It is written confirmation that all tax
liabilities of the deceased have been paid or that acceptable security for payment
has been provided. The CRA still may reassess in respect of additional taxes within
certain time limits, but the executor or trustee will not be personally liable for any
reassessments.

Once all assessments have been received and any objections settled, and the executor
or trustee is ready to distribute the estate or trust assets, a Tax Clearance Certificate
on Form TX19 from the CRA, and if applicable Revenue Quebec, should be obtained.
The executor or trustee must establish a scheme of distribution on a date chosen by
the executor or trustee that is prior to the date of the request, and calculate the tax
payable as if final distribution had occurred on that date.

Clearance certificates are now issued in anticipation of a final distribution. It is no

longer possible to obtain a certificate limited to a deceased person’s taxes, or for
partial distributions. If interim distributions are to be made, the executor or trustee
will usually require that the beneficiaries provide an indemnity should further
taxes be assessed and there are insufficient funds to cover the liability. In addition a
generous amount is often retained to cover the risk of any further tax assessments.
Each situation will depend on what is [Link] are three general situations.

1. Estate with No Trusts: In this situation the executor will need to

ensure that all past taxes have been paid, along with the taxes due
on the terminal and optional returns. In addition, tax payable on any
estate return income that has not been allocated to beneficiaries must
also be settled.

2. Estates with Testamentary Trusts: In this situation, it is no longer

possible to obtain a clearance certificate for the deceased’s taxes.
Therefore, a clearance certificate can only be requested when the
testamentary trust is wound up. Alternatively, one practice is to wind
up the estate account and apply for a new trust account for each
ongoing trust whether or not there is only one trust or a number
of trusts. In this situation, it seems to still be possible to obtain a
clearance certificate to the date of death.

3. Inter Vivos Trusts: The trustee will request a clearance certificate

prior to winding up the trust. There are no concerns with respect to
the settlor’s personal tax situation.

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11.19 A WORD ON SPOUSAL TRUSTS, ALTER EGO TRUSTS, AND JOINT

PARTNER TRUSTS

As noted above, when a deceased leaves assets to a spouse, or creates a spousal

trust in a Will, special tax rules apply on the terminal return and where there is a
spouse trust, when the spouse dies. (See [Link], Deductions and Non-Refundable
Tax Credits on the Terminal Return). Similar rules apply when an inter vivos trust is
created for a spouse or common-law [Link] settlor reports a deemed disposition
at the settlor’s ACB unless an election is made to increase the ACB. There is a deemed
disposition at FMV when the spouse dies. Similar rules apply to alter ego trusts and
joint spousal or common-law partner trusts.

11.20 DISTRIBUTION

11.20.1 Begin Distributing Assets to Beneficiaries

It is very important that the executor distribute the assets only after he or she is
certain that there are sufficient funds to pay the deceased’s debts and outstanding
taxes.

As discussed at 11.18,Tax Clearance Certificate, the executor should reduce the risk of
personal liability by retaining sufficient funds to cover any unexpected tax liabilities
until obtaining the Tax Clearance Certificate from the CRA (and, if applicable, Revenue
Quebec). Indemnities should also be obtained from beneficiaries.

11.20.2 Distribute Specific Bequests

Gifts of personal belongings are sometimes called bequests. The deceased may have
itemised a list of personal belongings in the Will or attached a letter to the Will
specifying how he or she wants personal possessions to be distributed.

These lists or letters may or may not be legally binding on the [Link] executor
should obtain signed receipts when distributing bequests.

11.20.3 Advise Beneficiaries to Consult with a Financial Advisor

A professional advisor can assist a beneficiary in developing a long-term financial

plan, ensuring that the investment choices the beneficiary makes in handling the
inheritance will help to meet his or her immediate and long-term financial goals. And
he or she can ensure the most advantageous treatment of an inheritance.

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DISTRIBUTION 11.20.7

11.20.4 Arrange for Final Distribution and Obtain Final Releases

After all bequests, legacies, expenses, fees, taxes, and debts have been paid, there may
be remaining assets of the estate, called the residue. Once the clearance certificate
has been obtained, final distribution may be made to the beneficiaries upon approval
of the executor’s accounts (discussed below). The executor should obtain a final
release from each beneficiary prior to releasing the final [Link] release will
protect the executor from any subsequent complaint or claim by a beneficiary.

11.20.5 Advise the Bank to Close the Estate Account

Once the estate is settled, the executor must advise the bank, in writing, to close the
estate account. Keep a copy of the written request to close the account.

11.20.6 Prepare a Reckoning of Executor’s Expenses and Any Executor

Compensation

The executor is entitled to receive compensation for his or her services and
reimbursement of any expenses incurred to carry out the duties as executor. The
fee may be stipulated in the Will or agreed upon by the beneficiaries. Executor
compensation is considered income and must be reported in the income tax return
of the executor. Withholding tax on executor compensation may technically be
necessary. For this reason, it may not be advantageous for an executor who is the
primary beneficiary of the estate to claim compensation. GST/HST can also apply to
executor’s fees in certain circumstances and so an executor is well advised to consult
his or her tax advisors before claiming a fee.

11.20.7 Prepare a Final Accounting

The executor’s final responsibility is to prepare an accounting to the beneficiaries

stating what assets the deceased owned at death, what expenses and debts were
paid, and how the remaining assets were distributed. The accounts will also include
the calculation of the executor compensation.49 The executor should keep records
of every financial transaction, along with all supporting documentation from the
very beginning of the administration of the estate, ensuring that wherever possible a
paper trail is available to support and verify the accounts.

49 See 13.5, Executor Compensation.

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11.20.8 CHAPTER 11 — THE STEPS IN ESTATE ADMINISTRATION

11.20.8 Obtain Approval of Estate Accounts and Releases from Adult

Beneficiaries

When the accounting report is ready, ask the adult beneficiaries to approve it and
have them sign the release form, discharging the executor from further responsibility
in administering the estate.

The executor may also wish to consider having the final report approved by the court,
a process known as “passing your accounts.” This may be required if releases cannot
be obtained from all adult beneficiaries, or some beneficiaries are under the legal age
or mentally incapacitated, or there are any questions about the administration of the
estate, or the executor is claiming compensation. A beneficiary may also require the
executor to pass accounts. See Chapter 13, Estate and Trust Accounts, for more details
about the requirements of passing accounts.

11.21 GLOSSARY

Agent for Executor. A private individual or institution that is appointed by a named

executor to carry out all or selected parts of the estate’s administrative tasks. It
relieves the executor of the burden of administration while retaining the executor’s
decision-making authority.

Asset. Anything owned by an individual.

Beneficiary. The person designated to receive something under a Will, registered

plan, or insurance policy.

Bequest. A gift of personal or household belongings to a person named in a Will.

Bond of Indemnity. A bond to protect the party to whom the bond is issued against
loss or damage.

Capital Gain. The profit earned or realised on the sale or deemed disposition of
certain assets or property.

Codicil. A legal document amending the Will.

Estate. All the assets and liabilities of an individual at the time of death.

Estate Documentation. Documents issued by the court confirming the validity of

the Will and the authority of persons named as executors in the Will.

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GLOSSARY 11.21

Estate Trustee with a Will. Executor in Ontario.

Executor. Person(s) named in a Will to administer the estate of the deceased. In

Ontario, the executor is known as the estate trustee with a Will. In Quebec, the
executor has been known as the liquidator since January 1, 1994.

Graduated Rate Estate (GRE): An estate that arose on an individual’s death if:

• no more than 36 months has passed since the date of death,

• the estate is considered a testamentary trust for tax purposes,

• the individual’s Social Insurance Number (SIN) is provided in the

estate’s return,

• the estate designates itself as a GRE, and

• no other estate designates itself as the GRE of the individual.

Grant of Probate. An order of the court that confirms the executor’s authority
to administer a deceased person’s estate under a Will by confirming the validity of
the Will. In some provinces, this is called Letters Probate. In Ontario, it is called a
Certificate of Appointment of Estate Trustee with a Will.

Intestate. When a person dies without leaving a valid Will.

Joint Tenancy with Right of Survivorship. A form of property ownership by two

or more people with the right of ownership passing to the person or persons who
survive. Normally, property owned in joint tenancy passes to survivors outside of a
[Link] does not apply in Quebec.

Legacy. Gifts of cash to beneficiaries named in a Will. In Quebec, a legacy is a gift to

a beneficiary or beneficiaries named in a Will.

Lessee. A person who pays for and receives the use of property or real estate for a
period of time specified in a lease document.

Letters of Administration. A document issued by a court appointing the

administrator(s) of an estate. It is issued when a person dies intestate (without a Will).
In Ontario, this document is called a Certificate of Appointment of Estate Trustee
without a [Link] is not applicable in Quebec.

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11.21 CHAPTER 11 — THE STEPS IN ESTATE ADMINISTRATION

Letters Probate. A document issued by a court confirming the authority of the

executor named in the Will. It also certifies the Will to be the Last Will and Testament
of the deceased. Letters Probate are known as Grant of Probate in Alberta, Manitoba,
and the Northwest Territories, and as a Certificate of Appointment of Estate Trustee
with a Will in [Link] does not apply to Quebec.

Liability. Also known as debt, it is an amount owed to creditors of the deceased.

Liquidator. Term used in Quebec for the executor of an estate.

Ministerial Order. A document issued by the Minister of Indian and Northern Affairs
naming the executor(s) of the estate under the provisions of the Indian Act.

Non-Registered Investments. Non-tax-sheltered investments such as investments

held outside an RRSP or RRIF. The earnings from these investments are generally
recognised as income in the year they are earned and taxed accordingly.

Notice of Assessment. A form sent to all taxpayers after their tax returns are
processed, informing them of the status of the return, including any corrections to
their returns or rebate applications. It lets them know whether they owe more tax or
what the amount of their refund will be.

Probate. The formal process of proving the Will and confirming the authority of the
executor(s) named in the Will. In Quebec, probate is the process of confirming that
the Will is the deceased’s and that the formalities required by law have been observed.

Probated Will. Applicable in Quebec only, a document issued by the Superior Court
that attests that the Will is the Will of the deceased and that the formalities required
by law have been observed.

Proof of Death. An original, notarised, or certified true copy of a death or burial

certificate, Act of Death, Certificate of Death, or other evidence of death. In Quebec,
legal proof consists of the Act of Death issued by the Registrar of Civil Status.

Registered Retirement Income Fund (RRIF). A plan registered with the CRA that
permits accumulated registered retirement savings to be paid out overtime to provide
an individual with income during retirement. Principal and earnings generated within
the plan remain tax-sheltered until they are withdrawn as income.

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GLOSSARY 11.21

Registered Retirement Savings Plan (RRSP). A plan registered with the CRA that
allows an individual to accumulate savings for retirement on a tax-sheltered basis
until withdrawn.

Residual Beneficiary. The beneficiary (or beneficiaries) to whom the residue of the
estate is left.

Residue. The portion of an estate remaining after all debts, taxes, and expenses have
been paid and all gifts of cash and personal and real (realty) property have been
made.

Right of Survivorship. The right of the surviving joint tenant(s) or holder(s) of

property to ownership of that property after one of them [Link] does not apply in
Quebec.

Rights and Things Tax Return. A third tax return that an executor may file on
behalf of the deceased. Rights and things are amounts that were earned and/or
receivable at the time of death that had not been paid to the person at the time of
death.

Tax Clearance Certificate. A written confirmation issued by the CRA (and Revenue
Quebec, if applicable) that a person’s tax affairs are in order at the date of issue of the
certificate.

Tax-Free Savings Account (TFSA). A registered account that allows Canadian

residents to accumulate savings (subject to certain contribution limits) to meet their
short-term and long-term goals. Investment income earned in the account (whether
interest or dividends) and capital gains are not taxed even when withdrawn.
Contributions to a TFSA and the interest on money borrowed to invest in a TFSA are
not tax-deductible.

Tenants-in-Common. Joint ownership of property where the deceased joint

owner’s share is transferred to his or her estate instead of directly to the surviving
joint owners.

Terminal Income Tax Return. The income tax return filed by an executor for the
year of a decedent’s death, including income from January 1 to the date of death plus
any realised taxable capital gains and allowable capital losses at the time of death.

Testamentary. Of or pertaining to a Will document.

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11.21 CHAPTER 11 — THE STEPS IN ESTATE ADMINISTRATION

Will. A written document conforming to provincial rules that states what the person
wants to happen to his or her assets on his or her death.

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 CHAPTER 12
ADMINISTRATION OF PROPERTY HELD FOR OTHERS
UNDER STATUTORY AUTHORITY

LEARNING OBJECTIVES

12.1 TERMINOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-3

12.2 ADMINISTRATION OF PROPERTY FOR AN INCAPABLE

ADULT PERSON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-4
12.2.1 Applications for Guardian to Manage Financial Affairs . . . . . 12-4
12.2.2 Assessments of Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-5
12.2.3 Assessments of Capacity Under Mental Health Law . . . . . . . . 12-5
12.2.4 Role of Public Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-6
12.2.5 Management Under a Power of Attorney . . . . . . . . . . . . . . . . . . 12-6
12.2.6 Duties of Attorneys and Court Appointed Guardians . . . . . . . 12-6
12.3 ADMINISTRATION OF ASSETS OF ABSENTEES OR
MISSING PERSONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-7
12.4 PRESUMPTION OF DEATH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-7

12.5 LEGISLATION GOVERNING MISSING PERSONS AND

PRESUMPTION OF DEATH BY JURISDICTION. . . . . . . . . . . . . . . . . . . . . 12-7

12-1
 Chapter 12
Administration of Property Held for
Others Under Statutory Authority

Learning Objectives

Knowledge Objectives
• Understand how property is managed for others under trusts and statutory
authority

Skills Objectives
• Identify the need for a statutory guardian and how one is appointed
• Describe the duties and powers of a statutory guardian
• Explain the rules relating to administration of property of an absentee

12.1 TERMINOLOGY

Pass Accounts: The process by which formal accounting records for the assets
of a trust or estate, including the “estate” of a living person, are submitted by the
trustee, attorney, guardian, or other person in charge of managing the financial affairs
and property on behalf of another person to the court for approval. Details are in
Chapter 13, Estate and Trust Accounts.

Public Trustee: The public official who is charged with the responsibility of
protecting the interests of vulnerable and incapable persons under provincial law.
This office is sometimes called the Public Trustee or the Public Guardian and Trustee,
or some variation of these, or in Prince Edward Island, the Official Guardian. In
Quebec, the official is called the Public Curator. In some provinces the office of the

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12.2 CHAPTER 12 — ADMINISTRATION OF PROPERTY HELD FOR OTHERS UNDER STATUTORY AUTHORITY

public trustee has not been created by statute; rather the ministry or department of
government designated has this responsibility.

• Saskatchewan: Department of Community Resources and Employment

• New Brunswick: Department of Social Development

• Newfoundland and Labrador: Department of Health and Community

Services

Grantor: In this chapter and Chapter 1, Powers of Attorney for Property, the grantor
is the individual who makes a power of attorney for property.

Guardian: The person appointed by the court to manage the financial affairs of an
incapable person is a guardian. The terminology varies by province and may also be
referred to as committee (British Columbia, Manitoba), conservator, or trustee. In this
chapter, guardian is not used to refer to a person responsible for the person and
property of a minor, but rather a person who is appointed on behalf of an incapable
adult.

12.2 ADMINISTRATION OF PROPERTY FOR AN INCAPABLE ADULT PERSON

Where an individual becomes incapable, it may become necessary to provide for the
management of the person’s financial affairs.

If a power of attorney for property has been granted, the person appointed in the
power of attorney document will have the authority to act. The attorney will be
subject to the provincial statutory regime for powers of attorney for property.

If the individual has transferred all or a portion of his or her property to an alter ego
or other self-benefit trust, the trustee of the trust will be governed by the common
law of trusts and the provisions of the Trustee Act of the particular jurisdiction.

12.2.1 Applications for Guardian to Manage Financial Affairs

If no arrangements have been made to manage the financial affairs of an incapable

person, generally the courts will have the jurisdiction granted under provincial law to
appoint someone, called a [Link] the public trustee or other provincial
official may have the authority to manage the affairs of the incapable person.

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ADMINISTRATION OF PROPERTY FOR AN INCAPABLE ADULT PERSON 12.2.3

An application for guardianship will be subject to the requirements set out in the
relevant provincial legislation (see 1.11, Substitute Decision Makers by Jurisdiction).
The applicant may have to give notice of the application to interested parties
such as to family members and/or the public trustee. The legislation may set out
who has priority in making an application for guardianship, similar to the priority
for appointing an administrator of an estate. The statutory regime may include the
following requirements:

• posting a bond or other security equal to the value of the assets of the
incapable person,

• a management plan setting out the manner in which the assets will be
invested and managed,

• regular reporting and accounting to the public trustee,

• an assessment of capacity if a finding has not already been made,

• notice to and consent of relatives and third parties including the

public trustee, and

• relationship to the incapable person and reasons he or she should be

appointed.

12.2.2 Assessments of Capacity

Generally an assessment of capacity is required in order to establish whether an

individual is capable of managing his or her financial affairs. Provincial law will set
out the procedure for an assessment of capacity. The persons entitled to make an
assessment of capacity may include physicians, psychologists, social workers, and
other health care professionals. Specific certification or training as an approved
assessor may be required. Consent to the assessment may be required by the person
to be assessed, although the law of the particular jurisdiction should be examined
to determine if it is possible to do an assessment or obtain a court order for an
assessment without consent.

12.2.3 Assessments of Capacity Under Mental Health Law

An individual may be declared incapable under the mental health laws of the
jurisdiction when admitted to a mental health care facility. This route, and the

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12.2.4 CHAPTER 12 — ADMINISTRATION OF PROPERTY HELD FOR OTHERS UNDER STATUTORY AUTHORITY

procedures required, are generally involuntary and may be quite different from the
assessment procedure provided for under capacity legislation for substitute decision
making (which generally must be voluntary).

12.2.4 Role of Public Trustee

When an individual is found to be incapable, the public trustee may have prima
facie authority to manage the financial affairs. The public trustee will defer to an
attorney under a power of attorney, or a court appointed guardian, although details
are province-specific.

12.2.5 Management Under a Power of Attorney

Under a power of attorney, the terms of the document will determine when
the authority commences. If the document has no condition, it will be effective
immediately whether the individual is capable or not. However, the attorney may
not have any obligations or duties until he or she commences to act as attorney.
There may also be a shift in the nature of the obligations once the grantor becomes
incapable. Generally an attorney is an agent during the capacity of the grantor and
is accountable to the grantor. However, once the grantor becomes incapable, the
statutory regime will dictate the duties and obligations and the attorney may have
additional duties and obligations more in the nature of a fiduciary if such duties have
not already arisen or been imposed.

12.2.6 Duties of Attorneys and Court Appointed Guardians

The duties of an attorney acting for incapable persons and of court appointed
guardians will be set out in the provincial legislation. Generally both have a fiduciary
duty to act in the best interest of the incapable person and to account for their
management of property.

An attorney has a duty to account and during incapacity may be compelled by a third
party to prepare and pass accounts, such as the executor or relative of the incapable
person. An attorney may also be required to pass accounts by the grantor.

A guardian is under no duty to preserve the capital of the estate of the incapable
person for the benefit of potential estate beneficiaries.1

1 Re Vickers Estate (1999), 35 E.T.R. (2d) 311.

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LEGISLATION GOVERNING MISSING PERSONS AND PRESUMPTION OF DEATH BY JURISDICTION 12.5

12.3 ADMINISTRATION OF ASSETS OF ABSENTEES OR MISSING PERSONS

Under provincial law, a person may apply to the court under the relevant legislation
to have a person declared missing, and the court may appoint a person to manage
the financial affairs of such person. The public trustee may also be appointed to
manage the property of an absentee. The person appointed has powers, duties, and
obligations as set out in the provincial statute and may be the same or similar to that
of court appointed guardians or trustees, although not necessarily identical.

In some cases the Trustee Act or Public Trustee Act of the province may provide
for the administration of the property of a missing person. For example, in Alberta
the public trustee may be appointed as trustee of the property of a missing person,
and once appointed the pubic trustee may also transfer such property to any other
person the court may direct. See 12.5, Legislation Governing Missing Persons and
Presumption of Death by Jurisdiction.

12.4 PRESUMPTION OF DEATH

Absentee legislation or related legislation may also provide for an application for
presumption of death. Usually such application may be made after a prescribed
period of absence, but it may also be possible to apply for such an order in special
circumstances of peril, such as a plane crash, 9/11-type disaster, or other criteria that
make it reasonable to conclude that the missing person is deceased. If the application
is granted, the estate of the absentee may be administered and distributed as if the
person were deceased. The order as to death must specify the date on which the
person is presumed to have died. The legislation may also permit payment of life
insurance proceeds, but the specific presumption of death legislation and provincial
insurance legislation should be examined. See 12.5, Legislation Governing Missing
Persons and Presumption of Death by Jurisdiction.

12.5 LEGISLATION GOVERNING MISSING PERSONS AND PRESUMPTION OF

DEATH BY JURISDICTION

Jurisdiction Legislation
British Columbia Estates of Missing Persons Act, R.S.B.C. 1996, c. 123
Presumption of Death Act, R.S.B.C. 1996, c. 444
Alberta Public Trustee Act, S.A. 2004, c. P-44.1, Part 2 (property of missing
persons)
Saskatchewan Missing Persons and Presumption of Death Act, S.S. 2009, c. M-20.01

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12.5 CHAPTER 12 — ADMINISTRATION OF PROPERTY HELD FOR OTHERS UNDER STATUTORY AUTHORITY

Jurisdiction Legislation
Manitoba The Missing Persons Act, C.C.S.M., c. M199
Presumption of Death Act, C.C.S.M., c. P120
Ontario Absentees Act, R.S.O. 1990, c. A.3
Declarations of Death Act, 2002, S.O. 2002, c. 14, Sch.
New Brunswick Presumption of Death Act, S.N.B. 1974, c. P-15.1
Newfoundland and Labrador Presumption of Death Act, R.S.N.L. 1990, c. P-20
Nova Scotia Public Trustee Act, R.S.N.S. 1989, c. 379, s. 4 – Missing persons
Presumption of Death Act, R.S.N.S. 1989, c. 354
Prince Edward Island Probate Act, R.S.P.E.I. 1988, c. P-21, s. 38
Yukon Adult Protection and Decision-Making Act,
Public Guardian and Trustee Act, R.S.Y. 2002, c. 174
Presumption of Death Act, R.S.Y. 2002, c. 174
Northwest Territories Public Trustee Act, R.S.N.W.T. 1988, c. P-19
Nunavut Public Trustee Act, R.S.N.W.T. (Nu.) 1988, c. P-19

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 CHAPTER 13
ESTATE AND TRUST ACCOUNTS

LEARNING OBJECTIVES

13.1 INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-3

13.2 REQUIREMENT TO KEEP ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-3

13.2.1 General Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-3
13.2.2 Why Are Accounts Required? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-4
13.2.3 Requirement to Provide Information to Beneficiaries
and Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-5
13.3 BASIC SYSTEM FOR TRUST ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-6
13.3.1 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-6
13.3.2 Form and Types of Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-6
13.4 PASSING ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-7
13.4.1 When Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-7
13.4.2 Common Objections on Passing Accounts. . . . . . . . . . . . . . . . . 13-8
13.4.3 Process to Pass Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-8
13.4.4 Effect of Passing Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-9
13.4.5 Costs of Passing Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13-10
13.5 EXECUTOR COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13-10
13.6 COMMON-LAW RULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13-11

13.7 CHARGING PROVISIONS AND COMPENSATION

AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13-11

13.8 STATUTORY RULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13-12

13.8.1 Executor and Trustee Compensation . . . . . . . . . . . . . . . . . . . . .13-12
13.9 APPROVAL TO COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13-14
13.9.1 Beneficiary Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13-14
13.9.2 Court Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13-15

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13.10 CALCULATING COMPENSATION FOR ESTATES AND
TESTAMENTARY TRUSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13-15
13.10.1 Calculating Executor Compensation Using
“Percentage Guidelines” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13-15
[Link] Ontario Practice (No Compensation Agreement). . .13-16
[Link] Five Factors for Determining Fair and
Reasonable Compensation . . . . . . . . . . . . . . . . . . . . . 13-19
13.10.2 Factors that May Reduce the Compensation Allowance . . .13-19
13.10.3 Agent for Executor Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13-20
13.10.4 Pre-Taking Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13-20
13.11 SHARING COMPENSATION AMONG EXECUTORS AND
TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13-21

13.12 COMPENSATION AND INTER VIVOS TRUSTS . . . . . . . . . . . . . . . . . . . . .13-21

13.13 TAXATION OF EXECUTOR AND TRUSTEE FEES . . . . . . . . . . . . . . . . . .13-21

13.14 LEGACIES IN LIEU OF COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . .13-22

13.15 INDEMNIFICATION FOR ESTATE AND TRUST EXPENSES

AND LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13-22
13.15.1 Court Review of Proper Expenses . . . . . . . . . . . . . . . . . . . . . . . .13-23
13.15.2 Contractual Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13-24
13.15.3 Legal Services to an Estate or Trust . . . . . . . . . . . . . . . . . . . . . . .13-24
13.16 COMPENSATION OF SUBSTITUTE DECISION MAKERS . . . . . . . . . .13-25
13.16.1 Property Guardians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13-25
13.16.2 Attorneys Acting Under an Enduring Power of
Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13-26

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 Chapter 13
Estate and Trust Accounts

Learning Objectives

Knowledge Objectives
• Understand the requirements to keep and pass estate and trust accounts

Skills Objectives
• Explain the requirement to keep accounts
• Describe the basic statements and ledgers required to be kept
• Identify when accounts need to be passed and describe the process

13.1 INTRODUCTION

To some extent the terms “trust” and “estate” are used interchangeably in this chapter,
as are trustee, personal representative, and executor. The obligation to keep records
and any requirement to pass accounts extends to all trusts, not just estates, and
extends to trustees and other fiduciaries as discussed. The discussion relating to
compensation for solicitors and executors or personal representatives relates only to
estates or testamentary trusts as the context requires.

13.2 REQUIREMENT TO KEEP ACCOUNTS

13.2.1 General Duties

The trustee has an obligation to:

• keep trust property separate from personal assets,

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13.2.2 CHAPTER 13 — ESTATE AND TRUST ACCOUNTS

• retain original documents for every transaction and record, including

any paper trail such as receipts, invoices, bank statements, investment
statements, and the like,

• report to beneficiaries on a regular basis, and

• pass accounts when requested or required.

13.2.2 Why Are Accounts Required?

The duty to keep adequate records and accounts is a paramount responsibility of

an executor or trustee. Under provincial legislation, financial records and accounts
must be maintained by trustees and other persons managing property in a fiduciary
capacity. The obligation extends to an executor, personal representative, trustee,
attorney under a power of attorney for property, and any guardian of property of
an incapable person. The records and accounts must be produced for inspection to
those entitled under provincial law upon request. Any expense incurred by the trust,
estate, beneficiaries, or other fiduciary caused by the failure to provide accounts will
be the personal expense of the trustee or other fiduciary.

The obligation to keep accounts is also founded on the fiduciary obligation to

act in the best interest of the beneficiary. If called upon, a trustee must be able to
demonstrate he or she has managed property responsibly, in the best interests of
the beneficiaries, in accordance with the terms of the trust, and not committed any
fraud or other misappropriation. This can only be done if proper financial records
and accounts are kept.

In addition to the legal requirement to keep accounts, there are a number of benefits
to keeping accounts and providing regular, informal financial reports to beneficiaries,
including:

• issues can be dealt with before they grow to become problems

by permitting inquiries to be made and answers given during the
administration of an estate;

• an environment of trust and co-operation is created from a transparent

administration of the trust property that demonstrates fair treatment
of beneficiaries, value for assets sold, and sound investment of trust
funds;

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REQUIREMENT TO KEEP ACCOUNTS 13.2.3

• reduce the risk that beneficiaries will

◦ refuse to approve informal accounts,

◦ demand passing of accounts, or

◦ raise objections upon passing of accounts;

• protect the trustee from accusations of impropriety;

• assist with the preparation of tax returns; and

• keep a record of financial information that may be the basis for trustee
compensation.

13.2.3 Requirement to Provide Information to Beneficiaries and Others

Trustees do not have an obligation to volunteer information. However, they

must provide it if requested by a beneficiary or others as provided by statute.
Trust documents including financial records, receipts, vouchers, and records of
disbursements may be required to be produced for inspection and beneficiaries may
make copies.

However, it may be a good policy for a trustee to provide information voluntarily

and make regular, informal reports for the reasons stated above. Information and
communication fosters trust. Explanations tend to alleviate concerns. Secrecy breeds
suspicion and discontent. A trustee who does not have the confidence and trust of
the beneficiaries may find the administration of the trust much more difficult because
of persistent beneficiary demands and objections.

In some cases, persons other than beneficiaries may have a right to information or
accounts if they have an interest in the [Link] individuals may include creditors
or the public trustee on behalf of a minor, incapable person, or charity. Such persons
may also have a right to compel passing of accounts.

The Will or trust indenture may also set out specific requirements regarding accounts,
providing information to beneficiaries and others, and passing accounts. However, as
a general rule, the Will or trust document cannot relieve the executor or trustee of
the obligations to maintain proper records and accounts or pass accounts.

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13.3 CHAPTER 13 — ESTATE AND TRUST ACCOUNTS

13.3 BASIC SYSTEM FOR TRUST ACCOUNTS

13.3.1 Accounting Principles

Trust accounting is “cash accounting.” All financial transactions are categorised as

either income (revenue) or capital, and as either receipts or disbursements, although
the separation of capital and income may not be necessary in an immediately
distributable estate where there are no trusts. Trust accounting is different from
“accrual” accounting under Generally Accepted Accounting Principles (GAAP), which
are used in preparing financial statements of corporations and businesses.

In categorising a receipt as capital or income, trust principles, not tax principles, are
used. So if a capital asset, such as shares of a corporation, is sold at a gain, the entire
proceeds are recorded as capital, even though for income tax purposes a portion of
the receipt would be included as income.

13.3.2 Form and Types of Statements

No specific form of accounts is required unless the accounts are to be passed, in

which case they must be prepared in “court form” under provincial rules. If accounts
are to be passed, it is important to obtain experienced estate accounting help to
ensure compliance with the formal court rules for trust accounts. Generally accounts
must include the following statements:

• statement of original assets,

• statement of all money received,

• statement of all money disbursed,

• statement of all investments purchased and sold,

• statement of all property remaining on hand at the time the accounts

are prepared,

• statement of liabilities at the time accounts are prepared, and

• statement of compensation claimed by the trustee.

Where there is to be final distribution and accounts are being passed, the statement
of liabilities may include the proposed distribution schedule, pending clearance

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PASSING ACCOUNTS 13.4.1

certificates if still not received, along with any holdbacks or other reasonable reserves
for outstanding matters such as litigation.

13.4 PASSING ACCOUNTS

The requirement to pass accounts is like an audit of the financial records of the trust
or estate. It is the process by which formal accounting records for the assets of a
trust or estate, including the “estate” of a living person, are submitted by the trustee,
attorney, guardian, or other person in charge of managing the financial affairs and
property on behalf of another person to the court for approval. The obligations to
pass accounts and the procedures are particular to each jurisdiction.

13.4.1 When Required

The beneficiaries, public trustee, creditors, or other persons having an interest in the
trust or estate may require accounts to be passed. Where the trustee does not co-
operate, a court order may be obtained to compel passing of accounts.

While beneficiaries and other interested parties may always require the accounts
to be passed, it is not obligatory in all jurisdictions. In Ontario, for example, there
is no obligation to pass accounts. Where not obligatory, it is generally done only at
the request of a beneficiary due to conflicts or where there are minor or incapable
beneficiaries.

Where passing accounts is not obligatory, the trustee may voluntarily decide to pass
accounts even if not requested to do so by a beneficiary or other interested party. If
the trustee decides that a passing of accounts is not necessary for protection from
liability, and the beneficiaries do not insist, an estate or trust can be administered
and fully distributed without passing accounts. However, a trustee should obtain
professional advice regarding the benefit of passing accounts. As an alternative to
passing accounts, the trustee may request the beneficiaries to sign releases and
approvals of the accounts.

If beneficiaries refuse to sign releases and approvals, the trustee must pass accounts,
and the additional cost of the application, assuming there is no wrongdoing on the
part of the trustee, will generally be paid out of the trust or estate. It may also be
necessary to pass accounts to discharge any bond or other security required to be
posted by an executor or trustee.

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13.4.2 CHAPTER 13 — ESTATE AND TRUST ACCOUNTS

Passing accounts is strongly recommended if the estate is insolvent or if there is a

deficiency in assets resulting in abatement (i.e., gifts and distributions required in the
trust or Will cannot be fully satisfied).

Accounts may be passed at intervals during administration of an estate or trust or

only upon termination. There is no set time period for passing accounts, but in order
to limit the development of potential problems and make the task less onerous, it
may be prudent to pass accounts every few years.

13.4.2 Common Objections on Passing Accounts

Where beneficiaries or others are dissatisfied with the conduct of the trustee or
executor, they may refuse to approve informal accounts so that their objections can
be reviewed by the court. Many types of objections may be [Link] most common
ones include the following:

• trustee or executor compensation,

• alleged breaches of trust,

• failure of the trustee or executor to demonstrate the standard of care

required in discharging his or her duties,

• inadequate sale price on disposition of an asset,

• failure to act impartially,

• conflict of interest,

• improper investments resulting in loss or lost opportunity, and

• excessive expenses such as professional fees.

Where a beneficiary or other person entitled to pass accounts has an objection, there
is a formal process to file a notice of objection after the application to pass accounts
has been served.

13.4.3 Process to Pass Accounts

The accounts must be prepared in the required court format under the rules in the
particular jurisdiction for the accounting period since the commencement of the

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PASSING ACCOUNTS 13.4.4

trust or since the close of the accounting period that accounts were last passed. The
accounts are verified by an affidavit sworn by the executor or trustee.

Beneficiaries and other interested parties must be given notice of the request to pass
accounts and may object to the passing of the accounts. Special rules may apply with
respect to notice to minors, incapable persons, and charities.

If there are no objections, the accounts may, in some jurisdictions, be passed “over the
counter” at the court office without a hearing, although the court will not pass the
accounts without being satisfied that they are in order and there are no deficiencies
or irregularities. If a hearing is required, it will be presided over by a judge or other
judicial officer as provided in the applicable provincial rules of court. The accounts
will be presented and reviewed. Upon an application to pass accounts, the court has
the discretion to inquire into any matter with respect to the administration of the
estate, including any alleged misconduct of the trustees, and provide for relief. The
court may:

• inquire into any complaint or claim of misconduct,

• require additional information be submitted,

• hear evidence,

• decide any disputed matter,

• order a trial of an issue,

• vary the compensation of the trustee,

• assess any legal bill charged to the estate, and

• award damages payable to the trust or estate.

Once the accounts are passed, the court will issue an order approving the accounts.

13.4.4 Effect of Passing Accounts

An order passing accounts will bind the beneficiaries with respect to any objections
for the accounting periods covered by the order. The order will also relieve the
trustee of any future liability with respect to trust property for that period except in
the case of fraud, mistake, or non-disclosure.

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13.4.5 CHAPTER 13 — ESTATE AND TRUST ACCOUNTS

Because passing accounts brings closure to any objections and relieves the trustee
of liability, trustees often pass accounts voluntarily to ensure contentious issues
or decisions regarding complex assets or large estates are not re-opened at a later
date. Passing of accounts is often done when new trustees are appointed, either as a
condition of court approval for a retiring trustee or to protect the new trustee from
liability arising from any acts taking place prior to his or her appointment.

Trust companies routinely have accounts passed as a matter of policy and risk
management.

13.4.5 Costs of Passing Accounts

The cost of preparing informal accounts and communicating with beneficiaries

and others is generally included in the executor’s compensation. Assuming no
wrongdoing or neglect on the part of the executor, the cost of passing accounts and,
in some cases, the additional cost of preparing accounts in formal court format are
proper expenses of the estate.

13.5 EXECUTOR COMPENSATION

One of the potentially most contentious issues for beneficiates is executor

compensation (or that of the personal representative, as the case may be). Beneficiaries
often do not appreciate the time, responsibility, and extent of the duties that are
involved in administering an estate and any testamentary trusts. Beneficiaries may
expect family members to act for free, assuming that this is appropriate. Executors
and trustees who are family members may also share this expectation before their
duties commence but often realise during the course of the administration that the
time and trouble involved merits compensation.

It may be prudent for the executor to discuss the basis for compensation with
beneficiaries at the initial meeting, or at an early time in the administration of the
estate, to educate beneficiaries and prevent surprise and objections later. Where
possible, an agreement or acknowledgement in writing should be obtained.

When final accounts are prepared, a statement of trustee compensation should be

included. Generally the executor may not take compensation without approval by the
beneficiaries. If beneficiaries do not approve, or cannot approve due to incapacity, the
executor will be forced to pass accounts to authorise the amount of compensation.

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CHARGING PROVISIONS AND COMPENSATION AGREEMENTS 13.7

13.6 COMMON-LAW RULES

One of a trustee’s core obligations is the duty of loyalty, which requires that a trustee
not put him- or herself in a position where personal interests are in conflict with
the trustee’s duties. If a trustee seeks compensation from a trust, the trustee is in a
conflict of [Link] are three exceptions to this rule.

1. The Trust Has a Charging Provision: The settlor can permit a

conflict of interest in the trust document by explicitly providing for
the trustee to be paid compensation.

2. Beneficiaries Consent: If all the beneficiaries are adults and have

full legal capacity, the beneficiaries may consent.

3. Court’s Inherent Power: The courts have an inherent power to

allow remuneration. However, this is rarely used given the statutory
power that is now provided for in all jurisdictions.

13.7 CHARGING PROVISIONS AND COMPENSATION AGREEMENTS

There are two approaches commonly used to provide for compensation in Wills and
trusts. One approach is to incorporate the terms of payment within the document.
The executor or trustee may or may not have been a party to the decisions on the
rate and terms of the compensation. The provision must be clearly spelled out in
order to be binding.1 A provision that authorises compensation, or authorises a trustee
or executor who is also a professional to charge professional fees for professional
services provided to the estate or charge, is sometimes referred to as a “charging
provision.”

The second approach, often used by corporate executors and trustees, is to enter an
agreement with the testator or settlor setting out a detailed fee scale. The agreement
addresses the amount of compensation or rates that will be applied, as well as when
and how compensation will be [Link] agreements may also specifically address
annual expenses for tax return preparation and other estate or trustee expenses for
professional services such as investment management fees. The signed agreement is
then incorporated by reference into the Will.

1 See Re Bryant Isard & Co., 57 O.L.R. 471, [1925] 4 D.L.R. 157 (Ont. C.A.); Stephen v. Miller, [1918] 2 W.W.R.
1042, 40 D.L.R. 418 (B.C. C.A.), affd (1919), 59 S.C.R. 690, 49 D.L.R. 698 (S.C.C.).

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13.8 CHAPTER 13 — ESTATE AND TRUST ACCOUNTS

13.8 STATUTORY RULES

13.8.1 Executor and Trustee Compensation

The Trustee Act of each jurisdiction provides for a court to allow compensation to
an executor or trustee that is “a fair and reasonable allowance for the care, pains and
trouble and the time spent in administering the estate or trust.” It is important to
note that the legislation suggests the general criteria or factors to be considered are
care, pains, trouble, and time spent. Students should review their own legislation for
the specific language and any unique features about their legislation. See Figure 13.1,
Legislation for Compensation of Executors, Trustees, and Property Guardians, for
the relevant sections of each jurisdiction’s Trustee Act for the provisions governing
compensation, and special features to be noted.

Figure 13.1: Legislation for Compensation of Executors, Trustees, and Property

Guardians

Jurisdiction Trustee Act Limits, Compensation Agreements,

Additional Legislation
British Columbia Trustee Act, R.S.B.C. • Applies to trustees, personal representatives,
1996, c. 464, ss. 88, and property guardians. Two fees are
89, 97 identified:
• The first is a maximum of 5% on the gross
aggregate value, including capital and
income, of all assets.
• The second is an annual care and
management fee not exceeding 0.4% of the
average market value of the assets.
• A compensation agreement is binding.
Alberta Trustee Act, R.S.A. 2000, • Applies to trustees of trusts only.
c. T-8, ss. 44-46 • Compensation for personal representatives is
governed by Schedule 1 of the Surrogate Rules,
Alta Reg 130/95 under the Judicature Act, R.S.A.
2000, c. J-2. It lists the criteria the court must
consider when determining the compensation,
including the management of testamentary
trusts. Also addresses additional fees, care and
management fees, pre-taking, sharing fees,
and fee agreements.
• Compensation of trustees appointed under
the Adult Guardianship and Trusteeship Act, S.A.
2008, c. A-4.2 is governed by s. 66 of that Act
and not the Trustee Act.

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STATUTORY RULES 13.8.1

Jurisdiction Trustee Act Limits, Compensation Agreements,

Additional Legislation
Saskatchewan Trustee Act, S.S. 2009, • Applies to trustees, personal representatives,
c. T-23.01, ss. 52-53 and property guardians.
• The court may vary terms of a Will or trust,
setting compensation if not sufficient (but not
a contract).
• Permits pre-taking with notice to certain
beneficiaries.
Manitoba Trustee Act, R.S.M. • Applies to trustees, personal representatives,
1987, c. T160, ss. 90 and guardians.
• The court must approve a compensation
agreement.
Ontario Trustee Act, R.S.O. • Applies to trustees, personal representatives,
1990, c. T.23, s. 61 and guardians.
• A compensation agreement is binding.
Quebec Civil Code of Québec, • Liquidator (art. 789).
S.Q. 1991, c. 64, arts. • Trustee (art. 1300).
789, 1300, and 2134 • Curator (art. 2134)
New Brunswick Trustees Act, R.S.N.B. • Applies to trustees, personal representatives,
1973, c. T-15, s. 38 and guardians.
• A compensation agreement is binding.
Newfoundland and Trustee Act, • Applies to trustees and personal
Labrador R.S.N.L.1990, c. T-10, representatives.
s. 52 • Two fees are identified:
• The first is a maximum of 1/20 (5%) on the
gross aggregate value, including capital and
income, of all assets.
• The second is an annual care and
management fee not exceeding 1/250 (0.4%)
of the average market value of the assets.
• A compensation agreement is binding.
Nova Scotia Trustee Act, R.S.N.S. • S. 62 is limited to trustees and guardians.
1989, c. 479, s. 62 • A compensation agreement is binding.
• Compensation for a personal representative is
governed by the Probate Act, S.N.S. 2000, c. 31,
and cannot exceed 5% (s. 76).
• A compensation agreement is binding on an
executor unless the executor renounces it in
accordance with s. 77 of the Probate Act, N.S.S.
2000, c. 31.
Prince Edward Island Trustee Act, R.S.P.E.I. • S. 31 is limited to trustees, guardians, and
1988, T-8, s. 31 committees.
• The Act is silent on compensation agreements.
• Compensation for a personal representative
is governed by the Probate Act, R.S.P.E.I. 1988,
c. P-21, and cannot exceed 5% (s. 11)

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13.9 CHAPTER 13 — ESTATE AND TRUST ACCOUNTS

Jurisdiction Trustee Act Limits, Compensation Agreements,

Additional Legislation
Yukon Trustee Act, R.S.Y. 2002, • Applies to trustees, executors, and guardians.
c. 223, ss. 49-54 • A compensation agreement is binding.
Northwest Territories Guardianship and • Applies to trustees, executors, and guardians.
Trusteeship Act, • A compensation agreement is binding.
S.N.W.T. 1994, c. 29, • See also s. 36(2)(q) of the Guardianship and
ss. 49-54 Trusteeship Act, S.N.W.T. 1994, c. 29, and
reference to prescribed fees for a trustee
appointed under that Act to manage the affairs
of an incapable person.
Nunavut Trustee Act, [Link]. 2013, • Applies to trustees, executors, and guardians.
c. 20, s. 47, ss. 49-53 • A compensation agreement is binding.
• See also s. 36(2)(q) of the Guardianship and
Trustee Act, S.N.W.T. (Nu.) 1994, c. 29, and
reference to prescribed fees for a trustee
appointed under that Act to manage the affairs
of an incapable person.

13.9 APPROVAL TO COMPENSATION

Subject to a compensation agreement in a trust or Will, an executor or trustee must

obtain approval to the proposed compensation before charging the fees to the trust
or estate. There are two ways to obtain approval — from the beneficiary(ies) or from
the court.

13.9.1 Beneficiary Approval

If all the beneficiaries of the estate are adults and have legal capacity, they may
approve an executor’s compensation.

This rule also applies to the approval of a trustee’s fees. However, when a trustee of a
continuing trust is requesting approval to fees for services to date, and not at the time
of final distribution, beneficiary approval is only possible if all current, future, and
contingent beneficiaries consent. As a result, it is less likely for a testamentary trustee
to be able to rely on this process.

Where beneficiary approval is possible, the executor or trustee will set out the
request for approval in writing. The request should set out the details supporting the
calculation of the compensation to ensure that the beneficiary understands how the
fees are [Link] written consent should be retained on file.

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CALCULATING COMPENSATION FOR ESTATES AND TESTAMENTARY TRUSTS 13.10.1

Prior to requesting approval to compensation, the executor or trustee must provide

the beneficiaries with a full accounting of the administration, which will demonstrate
the nature of the assets managed and all receipts and disbursements.

13.9.2 Court Review

When it is not possible to obtain beneficiary consent, or all beneficiaries do not

consent, the executor or trustee can apply to the courts to pass the accounts and
seek approval to the compensation claimed. Disputes about the accounts, including
expenses, are addressed during the passing. Once disputes are resolved, if there are
any, the court will consider the question of the compensation.

13.10 CALCULATING COMPENSATION FOR ESTATES AND TESTAMENTARY

TRUSTS

Subject to the limits on the amount of compensation for the provinces of British
Columbia, Prince Edward Island, Nova Scotia, and Newfoundland and Labrador
(see Figure 13.1, Legislation for Compensation of Executors, Trustees, and Property
Guardians), the legislation in each jurisdiction provides no further guidance on
how to calculate executor or trustee compensation. As a result, a percentage-based
approach for determining an appropriate fee for executor and trustee fees has evolved.
However, although these “usual percentage” calculations may provide a starting point,
the courts have ruled that the resulting calculation must be assessed against a set of
criteria that has been laid down in the case law. This two-step process is summarised
at 13.10.1, Calculating Executor Compensation Using “Percentage Guidelines.”

13.10.1 Calculating Executor Compensation Using “Percentage Guidelines”

The general practice is to charge fees to an estate and the ongoing trusts as follows:

1. Capital Fees: Up to 5% on the value of the assets passing through the

estate is charged against the capital of the estate assets. The executor
normally calculates the fee based on the date of death value.

• Ontario Students: See [Link], Ontario Practice (No

Compensation Agreement).

2. Revenue Fees: Up to 5% of the value of income collected in the

estate or trust each year is charged to the income collected.

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[Link] CHAPTER 13 — ESTATE AND TRUST ACCOUNTS

3. Care and Management Fees: Up to 0.4% of the average market

value of the assets of the trust each year. This fee is often allocated
between the capital and revenue accounts. Historically it has been
allocated 2/3 to capital and 1/3 to revenue. This fee is charged to
ongoing testamentary trusts. An executor may also seek to charge
this fee where an estate requires ongoing management pending a
prolonged administration before final distribution.

These three categories of fees generally continue to be used today and are used
in many compensation agreements. Compensation agreements may adjust the
percentage applied and/or the allocation of the care and management fees between
capital and income.

NOTE: Although the Trustee Acts’ rules apply to an inter vivos trust, most inter vivos
trusts address trustee compensation in the document or an agreement and the capital
fee is much less than 5%.

An example of executor and trustee compensation is found in Figure 13.2, Executor

and Trustee Compensation Calculations — Example.

[Link] Ontario Practice (No Compensation Agreement)

In Ontario, where there is no compensation agreement, a different

approach is used to calculate the fees. Rather than charging a single
percentage against capital and revenue as set out above, the general rule is
to charge up to 2.5% on the value of the asset or cash received, including
revenues, and 2.5% on the value of the asset or cash distributed. Because
the initial charge to the capital is based on the date of death value of an
asset, if the asset is sold at a gain, an additional fee is charged against the
gain when it is realised.

13-16
CALCULATING COMPENSATION FOR ESTATES AND TESTAMENTARY TRUSTS [Link]

Figure 13.2: Executor and Trustee Compensation Calculations — Example

Kyle died, leaving an estate worth $1,000,000. After legacies, taxes, and estate
expenses, there was an ongoing trust for his wife, Alexis, worth $750,000. On
the death of Alexis, the estate was to be distributed to their three children or
the survivor of them. The executor and trustee was Kyle’s friend and business
partner, Liam.

The administration of the estate was completed 13 months after Kyle’s death.
Liam wanted to charge a fee for his services as executor. Because all the
beneficiaries were adults and capable, he can ask them to consent to his fees
to date. In this example, there is no gift over to grandchildren if a child pre-
deceases Alexis, so Liam does not need to apply to court for approval.

Based on the usual percentages, and before adjustments, Liam’s fees would be
calculated as follows:

• Capital fee: $50,000 ($1,000,000 x 5%).

• Revenue fee: If the estate earned $10,000 in interest and

dividends in the period, an additional $500 ($10,000 x 5%)
would be charged against the revenue earned.

• Future fees to be charged to the trust, which will need to be

approved:

• Revenue fee: 5% against the income earned each year

• 0.4% on the average value of the trust. Example:

Assuming the trust was worth $800,000 at the end of

the first year, the care and management fee would be
$3,200. One-third ($1,067) would be charged against
the revenues and two-thirds would be charged against
capital ($2,133).

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[Link] CHAPTER 13 — ESTATE AND TRUST ACCOUNTS

NOTE: There are two approaches to calculating the

average market value. One way is to take the value at
the beginning of the year and the end of the year, and
divide by 2. In this case, the average would have been
$775,000 ($750,000 + $800,000)/2) and the fee would
be recalculated as applicable. A second approach where
there is a compensation agreement may be to charge the
fee at the end of each month or quarter, based on the
value as of that date.

Ontario Exception: Applying the Ontario method, the fees would

be charged as follows:

• Capital fee on assets collected at date of death: $25,000

($1,000,000 x 2.5%)

• Capital fee on expenses of $250,000: $6,250 ($250,000 x 2.5%)

• Revenue fee on revenue collected: $250 ($10,000 x 2.5%)

• Revenue fee on revenues paid to Alexis: $250 ($10,000 x 2.5%)

• If Liam had sold a property during the estate administration, an

additional fee would be charged on the gain realised from date
of death. Example: If the date of death value was $200,000 and
the proceeds of sale were $225,000, $625 would be charged on
the gain realised ($25,000 gain x 2.5%).

• Future fees to the trust will be:

◦ 2.5% on the income received,

◦ 2.5% on the income distributed,

◦ 2.5% on the net realised gains each year,

◦ 2.5% on amounts paid out to beneficiaries, and

◦ 0.4% annual care and management fee.

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CALCULATING COMPENSATION FOR ESTATES AND TESTAMENTARY TRUSTS 13.10.2

[Link] Five Factors for Determining Fair and Reasonable

Compensation

Once the usual percentages are applied, it is necessary to review the final
amount and consider the five factors set out in the case law to determine
what is fair and reasonable in the circumstances.2 In assessing the
reasonableness of the remuneration, courts consider:3

1. the trust’s magnitude,

2. the care and responsibility springing therefrom,

3. the time occupied in performing its duties,

4. the skill and ability displayed, and

5. the success that attended its administration.

The court has a wide discretion within these guidelines. Each case will
be determined based on the facts. Although time is only one factor that is
considered, time records may be of assistance and should be kept where
possible to help support a claim.

13.10.2 Factors that May Reduce the Compensation Allowance

An executor’s compensation may be disallowed where the trustee has been guilty
of serious misconduct. Where the misconduct began later in the administration,
an allowance for the period up until the misconduct began may be permitted.
Misconduct may include any breach of the duties owed by the executor or trustee.

Compensation might also be disallowed if the work was totally unnecessary or if the
executor or trustee agreed to accept the role for no compensation.

Compensation may also be reduced by the amounts paid to agents who assisted the
executor and carried out tasks that the executor could have performed personally
unless the Will specifically authorised the agent to be hired. Each case is decided
based on the facts. Assuming the executor or trustee was permitted to hire the agent
and was not improperly delegating his or her duties, the question is whether or not

2 Re Jeffery Estate (1990), 39 ETR 173 (Ont. Surr. Ct.).

3 Toronto General Trusts Corp. v. Central Ontario Railway (1905), 6 O.W.R. 350 (Ont. H.C.) at 354; Laing
Estate v. Hones (1998), 41 O.R. (3d) 571 (C.A.).

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13.10.3 CHAPTER 13 — ESTATE AND TRUST ACCOUNTS

the expense is a proper expense or should be deducted from the compensation

allowed to the executor or trustee. When making the decision, a court considers the
complexity of the management, prudent practice, and the executor’s or trustee’s own
skills.4

13.10.3 Agent for Executor Services

When a corporate trustee or law firm provides administration services to executors

who do not have the time or skill to administer the estate, the fees paid to the agent
will likely reduce the executor’s entitlement to compensation. The executor should
be advised of this prior to entering the agreement to ensure there are no disputes
once the work has been completed.

13.10.4 Pre-Taking Compensation

Generally compensation may not be charged until it has been approved by the
beneficiaries or the court. Where the executor or trustee pre-takes compensation, he
or she may be ordered to repay the amount in excess of the amount finally approved,
with interest, from the time of pre-taking.

It has been suggested that the courts in Ontario have returned to a hard line on pre-
taking.5 As a result, there are two schools of thought:6

• View #1: The rule is strict — pre-taking is not permitted and is a

breach of trust. The amounts should be repaid, with interest, until
determined by the court.

• View #2: There will be an exception to pre-taking in limited situations.

Where permitted, as long as the fees taken do not exceed the final
amount approved, there is no breach. If the amount taken exceeds
the amount approved, the excess must be repaid to the trust plus
interest.7 An example where this may be permitted is when a trustee
wishes to claim the annual care and management fee. In the William
George King Trust case, Misener J. noted on the burden of the cost to

4 For a review of recent cases on this issue, see Widdifield at para. 11.12.
5 See Widdifield at para. [Link] authors do not comment on trends in other provinces.
6 The “two schools of thought” are described by Greer J. in Re Pilo Estate, [1998] O.J. No. 4521 (Gen. Div.) at
para. 56; see also Re Byrne Estate, 2004 CanLII 190 (ON SC), 2004 CanLII 190 (ON S.C.) per Lalonde J., at
paras. 63-66.
7 See Re William George King Trust, 1994 CanLII 7497 (ON SC), 1994 CanLII 7497 (ON S.C.) per Misener J., at
para. 11.

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TAXATION OF EXECUTOR AND TRUSTEE FEES 13.13

trust if annual applications are made each year to pass accounts and
obtain approval to the fees.

Corporate trustee compensation agreements specifically address the timing for

payment of compensation to avoid these issues.

13.11 SHARING COMPENSATION AMONG EXECUTORS AND TRUSTEES

When dealing with executor compensation, the courts look at the compensation to
be awarded generally for the work done. The court does not become involved in
the division of the compensation among trustees. A dispute between executors and
trustees will likely be a separate action and because it does not affect the estate or
trust, all costs incurred in the dispute will likely be paid for by the parties personally.

Compensation agreements with corporate trustees generally deal with the corporate
trustee’s entitlement to compensation. Payment to other co-executors and co-trustees
may or may not be addressed. If additional fiduciaries have been appointed and they
wish to seek compensation, legal advice may be required. It may be necessary to
obtain consent from the beneficiaries or apply to court.

13.12 COMPENSATION AND INTER VIVOS TRUSTS

As noted above, the Trustee Acts’ rules also apply to inter vivos trusts. However, it
is more common to see compensation addressed in the trust or in a compensation
agreement. Compensation agreements will vary between corporate trustees and other
professionals. Where possible, students are encouraged to review the agreements
used in their companies and firms.

While care and management fees and revenue collection fees may be included in
a compensation agreement, the approach to charging capital fees may vary. For
example, one approach is to charge a “set up fee” to compensate for the work
involved in setting up the inter vivos trust and to charge a “distribution fee” when
assets are distributed. Fees might also be customised for different types of assets, such
as private company shares or real estate.

13.13 TAXATION OF EXECUTOR AND TRUSTEE FEES

If an executor or trustee charges compensation, the amount received is treated

as taxable income. If the executor or trustee is an individual and does not include
the compensation as business income, it is treated as income from an office or

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13.14 CHAPTER 13 — ESTATE AND TRUST ACCOUNTS

employment. All applicable taxes must be charged, including GST/HST if applicable,

and withholdings from the fees may be required, including Canada Pension Plan
(CPP) premiums.8

13.14 LEGACIES IN LIEU OF COMPENSATION

If a Will leaves a legacy to the executor, there is a rebuttable presumption that the
legacy was intended to be in lieu of compensation. Unless the Will specifically
indicates that the legacy is in lieu of compensation, an executor who wishes to claim
compensation must rebut the presumption by providing evidence to show that the
legacy was intended to be in addition to compensation.

Although it is not difficult to rebut the presumption, the executor’s success will
depend on the facts. Factors include the relationship of the executor to the testator,
the amount of the legacy, gifts to other beneficiaries, and the wording used.9 Legal
advice may be required, and if any disputes cannot be resolved, an application to court
may be required to determine whether or not the legacy is in lieu of compensation.

Where a legacy is in lieu of compensation, it will usually be treated as a legacy and

will not be treated as taxable income.10

13.15 INDEMNIFICATION FOR ESTATE AND TRUST EXPENSES AND

LIABILITIES

The common law recognises that an executor or trustee should be reimbursed for
proper expenditures required in the administration. The right to reimbursement is
also referred to as the right of indemnification. While the usual practice is for an
executor or trustee to pay for expenses directly from the estate or trust assets, if this
is not possible, it may be necessary to advance the funds on behalf of the estate or
trust to prevent a loss and or penalties. Legislation also recognises this entitlement to
reimbursement. See Figure 13.1, Legislation for Compensation of Executors, Trustees,
and Property Guardians.

Beneficiaries may dispute an expense for a number of [Link] include:

8 For more information, see Chapter 1 in the CRA Guide T4001, Employer’s Guide – Payroll Deductions and
Remittance – “Employment by a Trustee”.Accessed Dec. 20, 2014. See also Tax Interpretation 2012-0462961C6
E – 2012 Ont CTF Q10 – Executors’ Fees and Withholding.
9 See Widdifield at para. 11.2 for case examples.
10 However, the language in the Will is important. The CRA may treat the legacy as income from an office. Tax
advice should be obtained to confirm whether or not the legacy may be taxable. See Boisvert v. R., 2011 TCC
290 (CanLII), and Messier v. R., 2008 TCC 349 (CanLII).

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INDEMNIFICATION FOR ESTATE AND TRUST EXPENSES AND LIABILITIES 13.15.1

• the necessity of an expense incurred,

• the reasonableness of the amount paid,

• the decision as to whether the expense should be borne by the capital

beneficiaries or the revenue beneficiaries, and/or

• the executor or trustee is personally liable for expenses or liabilities

under a contract.

Beneficiaries may also argue that the expense incurred should be deducted from the
compensation awarded to the executor.

13.15.1 Court Review of Proper Expenses

Expenditures and payment of estate liabilities will be reflected in the estate and trust
accounts provided to the beneficiaries. If the beneficiaries dispute any aspect of
the accounts, it will be necessary to resolve the dispute in a court passing. Disputes
may relate to expenses incurred, the amount of the sale proceeds received or the
appropriateness of the sale price, or any other transaction that affects the amount
that a beneficiary might receive.

Generally, if the executor or trustee incurs the expense in good faith and the
expenditure benefits the estate or trust, it will be approved. However, the general
duty of care always applies.

Examples: If Amber is the trustee of a trust and hires an auctioneer to assist with
the valuation and sale of household goods, and the commissions paid are double the
commissions charged by another auctioneer,Amber may be required to reimburse the
estate for the excess amount paid unless she can demonstrate why it was necessary
and appropriate to pay the higher commissions.

Similar considerations will apply when other professional fees are incurred, including
accounting fees, tax return preparation fees, investment management or advisory
fees, real estate commissions, and legal services.

Given the many reasons for a beneficiary to dispute an expenditure or liability paid,
there are many cases dealing with a wide variety of situations that attempt to settle
when an expense or liability was properly incurred. Executors and trustees need to

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13.15.2 CHAPTER 13 — ESTATE AND TRUST ACCOUNTS

remain vigilant when making decisions to incur expenses or to accept a bill presented
for [Link] rule is well summarised in this statement:

The rule is fairly simple: a trustee will be indemnified in respect of expenses

properly incurred in the context of an administration. The difficulty, however,
lies in the fact that the propriety of a given expense will often be judged
by the beneficiaries after the event and in light of its outcome. A trustee,
however, does not have the benefit of hindsight.11

13.15.2 Contractual Liabilities

When an executor or trustee enters a contract to deal with third parties, it is

important to recognise the executor’s or trustee’s legal position. Generally, an
executor or trustee enters contracts personally and not as an agent of the estate,
trust, or beneficiaries. Where the contract is properly entered, the executor or trustee
is entitled to indemnification if the executor or trustee is liable for any losses or
liabilities arising under the contract. However, personal liability may also arise, for
which there is no indemnity. It is for this reason that a prudent trustee attempts to
ensure that an executor’s or trustee’s personal liability is limited whenever a contract
is entered with a third party. The validity of such agreements will depend on the
circumstances.

13.15.3 Legal Services to an Estate or Trust

When an executor or trustee is also providing legal services to a trust, it is necessary

for the Will or trustee to specifically permit the executor or trustee to charge his or
her professional fees for those services. This avoids a breach of the duty of loyalty
and situations where there is a conflict of interest. Where an executor or trustee is
providing legal services in addition to executor or trustee services, the legal services
should be identified separately from executor and trustee services to avoid any
confusion as to the basis for the expense and the methods used to determine the
amount due. The clause in the Will that authorises these fees is also referred to as a
charging provision. See 13.7, Charging Provisions and Compensation Agreements.

Alberta, Saskatchewan, Manitoba, Ontario, Nova Scotia, Yukon, Northwest

Territories, and Nunavut: The Trustee Acts in these jurisdictions specifically
permit a barrister and solicitor to charge for professional work done in connection

11 Suzana Popovic-Montag,“Revisiting a Trustee’s Right to Indemnification,” (2003) 50 ETR (2d) 161 at pp. 185-
6. Students interested in this topic are referred to this article for a thorough analysis of the categories of
indemnification and related issues.

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COMPENSATION OF SUBSTITUTE DECISION MAKERS 13.16.1

with the trust.12 However, clear records must be kept to ensure that legal services are
distinguished from administration tasks that are not eligible for the same fees.

13.16 COMPENSATION OF SUBSTITUTE DECISION MAKERS

Substitute decision makers for financial affairs (e.g., property guardians and attorneys
acting under an enduring power of attorney) are allowed to be reimbursed for their
proper [Link] entitlement to compensation, however, is less consistent across
jurisdictions.

13.16.1 Property Guardians

The legislation that provides for the appointment of a property guardian addresses
the right to compensation. In some jurisdictions, a property guardian is required to
pass accounts before a public official annually, or at some other frequency. In other
jurisdictions, the court may order an accounting. In addition, most jurisdictions
permit certain people with an interest in the adult’s estate to apply to court for an
order asking that the property guardian pass his or her accounts.

Compensation is usually fixed at the time the accounts are passed. In most if not all
jurisdictions, the approach to compensation is similar to that used for executors and
trustees. See Figure 13.1, Legislation for Compensation of Executors, Trustees, and
Property Guardians, for those provinces where their respective Trustee Acts cover
guardians.

Ontario: Ontario has established a prescribed fee scale for substitute decision makers
under the Substitute Decisions Act, 1992.13 Property guardians and attorneys acting
under a continuing power of attorney may charge the following without approval:

• 3% on capital and revenue receipts,

• 3% on capital and revenue disbursements, and

• an annual fee on the average market value of the assets at the rate of
0.6% or 3/5 of 1%.

The guardian or attorney may apply to the public guardian and trustee for an
additional allowance.

12 See sections ATA s. 45, STA s. 52, MTA s. 90(4), OTA s. 61(4), NSTA s. 63,YTA s. 53, NWTTA s. 54, NTA s. 53.
13 S.O. 1992, c. 30.

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13.16.2 CHAPTER 13 — ESTATE AND TRUST ACCOUNTS

Northwest Territories and Nunavut: These two territories have established

a prescribed fee scale for trustees appointed to manage the financial affairs of an
incapable person. The following fees may be charged monthly, quarterly, or annually
as follows:

• 2.5% on capital and income receipts,

• 2.5% on capital and income disbursements, and

• 2/5 of 1% on the annual average value of the assets as a care and

management fee.

British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, Prince Edward

Island, Northwest Territories, and Nunavut: These jurisdictions require an
annual or other periodic accounting to certain people, a public official, or the court.
Compensation is approved at this time (except see regulation for the Northwest
Territories and Nunavut).

Yukon: A guardian is required to maintain accounts and to produce them to the

adult, the public trustee, or the court on request.

New Brunswick, Newfoundland and Labrador, and Nova Scotia: Certain

people may apply to court to have the guardian pass his or her accounts.

13.16.2 Attorneys Acting Under an Enduring Power of Attorney

At common law, an attorney cannot charge compensation. It must be approved by

the donor, or in the case of an enduring power of attorney, it must be included in the
document. In some situations, a separate contract may be sufficient.

The following provinces have provisions specifically addressing compensation. All

others appear to be silent. Some contemplate compensation, but the authority for the
compensation is not set out.

British Columbia: Compensation must be in the document (Power of Attorney Act,

s. 24).14

14 R.S.B.C. 1996, c. 370.

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COMPENSATION OF SUBSTITUTE DECISION MAKERS 13.16.2

Saskatchewan: A reasonable fee may be charged (Powers of Attorney Act, 2002,

s. 27).15

Ontario: See 13.16.1, Property Guardians, for the allowance permitted for an attorney
acting under a continuing power of attorney.

Nova Scotia: An attorney can apply to court to have a compensation claim allowed
(Powers of Attorney Act, s. 5).16

15 S.S. 2002, c. P-20.3.

16 R.S.N.S. 1989, c. 352.

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 CHAPTER 14
FOREIGN PROPERTY, MULTIPLE JURISDICTIONS, AND
SUCCESSION

LEARNING OBJECTIVES

14.1 INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-3

14.2 MULTIPLE JURISDICTIONS AND FOREIGN LAW . . . . . . . . . . . . . . . . . . 14-4

14.3 DOMICILE AND RESIDENCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-6

14.4 MOVABLE AND IMMOVABLE PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . 14-7

14.5 APPLICATION OF LAW GOVERNING SUCCESSION . . . . . . . . . . . . . . . 14-7

14.5.1 Law Governing Estate Administration . . . . . . . . . . . . . . . . . . . . . 14-8
14.5.2 Law Governing Succession of Property — Estate
Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-8
14.5.3 Intestate Distribution within Canadian Provinces and
Territories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-9
14.5.4 Testamentary Succession within Canadian Jurisdictions . . . 14-9
14.5.5 Dependant Relief in Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14-10
14.5.6 Summary of Choice of Law Rules . . . . . . . . . . . . . . . . . . . . . . . . .14-10
14.6 FORCED HEIRSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14-11
14.6.1 Examples of Countries Where Forced Heirship May
Affect Canadian Estates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14-12
14.6.2 Application of Forced Heirship Rules . . . . . . . . . . . . . . . . . . . . .14-13
14.7 CASE STUDIES OF FORCED HEIRSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . .14-13

14.8 INHERITANCE AND ESTATE TAX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14-15

14-1
 Chapter 14
Foreign Property, Multiple
Jurisdictions, and Succession

Learning Objectives

Knowledge Objectives
• Understand how the laws of other jurisdictions can apply to succession of
foreign property

Skills Objectives
• Explain the difference between residence and domicile
• Identify movable property and immovable property
• Describe the importance of identifying the law governing making a Will and the
succession of foreign property

14.1 INTRODUCTION

Where an individual owns property in another province or country, particularly real

property or “immovable property,” it may be appropriate to have a separate Will, or an
international Will (if applicable in that jurisdiction (see 3.7.6, International Wills)), to
deal with property in the other jurisdiction to facilitate administration of the foreign
estate (see also [Link], Property Outside the Jurisdiction).

This chapter deals more particularly with identifying client situations in which foreign
law may affect the succession of property of a deceased individual who is resident or
domiciled in one of Canada’s provinces or territories and assumes that such person is
a Canadian citizen except where otherwise [Link] the previous chapters
in these materials it has been assumed that the deceased individual is both resident

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14.2 CHAPTER 14 — FOREIGN PROPERTY, MULTIPLE JURISDICTIONS, AND SUCCESSION

and domiciled in the same province or territory. However, this chapter will examine
the difference between residence and domicile and how the application of laws of
succession will vary under conflict of laws rules if residence and domicile are not in
the same jurisdiction, both internationally and within Canada.

14.2 MULTIPLE JURISDICTIONS AND FOREIGN LAW

The choice of law rules under conflict of laws will determine how the laws of other
jurisdictions may apply to testate and intestate succession. The specific effect of
foreign laws on the succession of property of Canadian residents is beyond the scope
of this material. It is essential that the potential application of laws outside Canada (or
of another jurisdiction within Canada) is recognised and that specialised professional
advice, including advice from professionals in other jurisdictions, be obtained where
appropriate.

Throughout these materials it has also been implicitly assumed that the law of the
province or territory of residence generally governs matters relating to succession,
including Wills, intestacy, claims against an estate, and estate and trust administration
(although there has been a separate discussion of the application of the law of
Quebec). This is not necessarily the case. Within Canada, the laws of a province or
territory other than that of residence may [Link] could occur where:

• there is property in another jurisdiction,

• there is a dependant or beneficiary in another jurisdiction, or

• the individual is domiciled outside the province or territory of

residence.

Questions of jurisdiction and application of laws of other provinces, territories, and

countries may arise in a number of circumstances. In this chapter the focus will
include the laws of other countries, although it is important to recognise that laws of
other provinces and territories may also impact Wills, succession, and administration
of estates and trusts, and these are also discussed.

It is beyond the scope of these materials to specifically identify all situations in which
the laws of other jurisdictions may affect the succession of property or administration
of an estate or trust under a Will of an individual resident in Canada. However, as a
general guideline, the laws of a foreign jurisdiction, either its national law if it has a

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MULTIPLE JURISDICTIONS AND FOREIGN LAW 14.2

unitary political system of government or that of a province or state within a foreign

country that has a federal system, may apply where:

• the individual has his or her domicile in another country even though
resident in Canada,

• the individual is a citizen, sometimes called a “national,” of another

country, or

• property is located in another jurisdiction.

Conflict of laws rules determine three issues:

1. which court has jurisdiction to determine an issue,

2. which law applies to a particular issue, and

3. whether a court will enforce the legal judgment of another

jurisdiction.

This chapter mainly focuses on item 2 and identifies situations where the law of other
jurisdictions might impact on succession of property of a person who died resident
or domiciled in Canada. The conflict of laws rules can be helpful in many cases to
determine which law applies.

However, it is not an easy task to determine how the rules apply since not only are
the concepts and principles complex but also each jurisdiction may have its own
conflict of laws rules, which in turn may result in different outcomes.

Conflict of laws rules generally include a consideration of a number of factors or

concepts.

• The “situs” of property, or its location for legal purposes, which is

divided between movable and immovable property under common-
law principles with different choice of law rules for each type.

• Citizenship

• Domicile

• Residence

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14.3 CHAPTER 14 — FOREIGN PROPERTY, MULTIPLE JURISDICTIONS, AND SUCCESSION

Whenever a Canadian resident or citizen is domiciled in another country, is a citizen

of another country, or has property in another country, particularly immovable
property, the laws of that other country may apply to the succession of property in
that country upon his or her death.

14.3 DOMICILE AND RESIDENCE

Laws relating to personal matters of individuals, including laws of succession, are

usually decided on the basis of the laws of the place where the individual has his or
her permanent home. For this purpose it is recognised that an individual may reside
in one place, perhaps temporarily, but have his or her permanent home in another
place to which at some time in the future he or she contemplates returning on a
permanent [Link] is the concept of domicile.

There are three types of domicile.

1. The domicile of origin is determined at birth by the place of birth

and will continue to be the domicile of an individual throughout his
or her life unless one of the other domicile rules subsequently applies.

2. Domicile of choice is the place where an individual, after attaining

the age of majority, takes up residence with the intention of remaining
indefinitely.

3. Domicile of dependency is conferred by operation of law upon

those persons who, by reason of legal or mental disability, are unable
to acquire a domicile of choice, including minors and certain mentally
incapable persons.

In some jurisdictions outside Canada, domicile of birth or dependency may be

determined by the domicile of the father, or that of the mother if born outside marriage.

Domicile and residence are not the same, although for many individuals the place of
residence will be the place of domicile unless he or she has an intention to return in
the future to live permanently in another jurisdiction (usually where he or she was
domiciled in the past).

Domicile may be the place where the person has his or her residence or the place
where the person has the centre of his or her affairs, the seat of his or her wealth, and
the affection of his or her family.

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APPLICATION OF LAW GOVERNING SUCCESSION 14.5

For example, a business executive who is transferred from the U.S. to work for the
Canadian subsidiary of his corporate employer may remain domiciled in the U.S. if
he or she retains connections in the U.S. and/or intends to return to the U.S. when
the work assignment is completed or in retirement and does not intend to remain
permanently within Canada.

14.4 MOVABLE AND IMMOVABLE PROPERTY

Movable property includes any property that is portable. The legal definition of
movable property includes all personal property, such as goods, chattels, and
personalty. It also includes intangible property, such as negotiable instruments and
securities.

Immovable property includes real property, anything permanently affixed to real

property, or any interest in real property. Immovable property includes land, buildings,
mining rights, leaseholds, and rights to receive rent or income from real property.

The situs of property is the location of property for legal purposes, such as taxation
and conflict of laws. The situs of real property is generally the jurisdiction where
the property is physically located. For intangible personal property, which has no
physical attributes, the rules vary. Generally debts are considered located where the
debtor resides. Registered shares of corporations were originally considered to be
located in the place where the share register of the corporation was maintained and
a transfer of the shares could be effected or the jurisdiction where the corporation
was incorporated. With more modern investment practices, shares are often held
with financial intermediaries and may exist only in electronic records with no
share certificate. The location of shares and other financial intangibles in these
circumstances is difficult and the law is evolving.1

14.5 APPLICATION OF LAW GOVERNING SUCCESSION

Under conflict of laws rules, the choice of law that applies for the purposes of
succession depends on whether the property is movable or immovable. For
movable property, generally, the law of the domicile of the deceased governs, and for
immovable property the law of the jurisdiction where the property is located (the
“lex situs”) governs.

1 See, for example, Re Bloom Estate (2004), 27 B.C.L.R. (4th) 176 (S.C.), where the situs of publicly traded
shares held in an electronic account were found to be located at the securities department of the financial
intermediary in Ontario and not subject to probate fees in British Columbia.

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14.5.1 CHAPTER 14 — FOREIGN PROPERTY, MULTIPLE JURISDICTIONS, AND SUCCESSION

Under Canadian common law, as a general rule indirect interests in land located
in Canada (such as mortgages) may be considered immovable for the purpose of
determining the lex situs for the purpose of conflict of laws rules, even though they
are personalty for the purposes of domestic law (i.e., the applicable succession law
that applies once the jurisdiction governing the property has been chosen) with
perplexing results.2 In one case, for example, mortgages secured against land in
British Columbia were not subject to probate fees in Saskatchewan since for probate
fee purposes they were considered immovable, but they were governed by the law of
Saskatchewan for the purposes of succession and distribution on intestacy as for this
purpose they were considered personalty.3

In addition, Canadian courts generally take the position that they have no jurisdiction
with respect to land or real property outside Canada.

So, for example, suppose country X has forced heirship rules and the laws of
succession in X apply to all citizens of X. An individual who is a citizen of X with real
property located in X may need to address the forced heirship rules in X even if he or
she is resident or domiciled in Canada.

14.5.1 Law Governing Estate Administration

The law of the administration of the estate generally is the law of the country where
the personal representative received the original grant of probate. Within Canada the
grant is usually issued from the jurisdiction in which the Canadian resident had his
or her residence or where his or her property is located. Provincial rules will dictate
whether or not the grant can be obtained in the province, and provincial statutes
may allow for grants even if there is no property in the province if the deceased was
resident or domiciled in the province.

Once the grant of probate has been issued in the principle jurisdiction, the grant may
be used in another jurisdiction as an ancillary grant or resealed grant, to deal with
property in that other jurisdiction.

14.5.2 Law Governing Succession of Property — Estate Distribution

With respect to matters of succession relating to distribution of property to

beneficiaries, including intestate distribution, capacity to make a Will, and dependant

2 Stephen G. A. Pitel and Nicholas S. Rafferty, Conflict of Laws (Toronto: Irwin Law, 2010) at 309-310.
3 Hogg v. Provincial Tax Commission, [1941] 4 D.L.R. 501 (Sask. C.A.).

14-8
APPLICATION OF LAW GOVERNING SUCCESSION 14.5.4

relief, these matters are governed by the law of the last domicile of the deceased for
movable property and by the law of the situs of immovable property. Generally these
are also the rules under which forced heirship rules of foreign countries may apply.

14.5.3 Intestate Distribution within Canadian Provinces and Territories

For the purposes of intestate distribution within Canadian jurisdictions, the law of
the domicile will apply to movables and the law of the situs will apply to immovables.

Assume John, who was domiciled in Ontario, died intestate and owned a ski chalet in
Whistler, British Columbia, at the time of his [Link] law of Ontario will determine
the distribution of all his real and personal property located in Ontario and all
personalty outside Ontario. However, the law of British Columbia will apply to the
intestate distribution of his British Columbia property. This could result in multiple
preferential shares being accumulated for the benefit of the spouse to the detriment
of his children’s entitlement. However, the courts have resisted this result, tending to
avoid “double dipping” by restricting the aggregate preferential share to the highest
amount available among the relevant jurisdictions.4

14.5.4 Testamentary Succession within Canadian Jurisdictions

The common-law rule is that the choice of law for testamentary succession is the law
of the situs in the case of land and the law of the last domicile of the deceased for
movable property. However, most provincial and territorial statutes have permitted
testators to use the forum of several different countries with respect to movables.
For example, the Alberta Wills and Succession Act5 and the Ontario Succession Law
Reform Act6 allow other laws to be considered with regard to the formal and essential
validity of a Will.

The law of testamentary succession includes the formal validity of a Will (i.e.,
execution), capacity, essential validity of the Will, and interpretation of the Will.
“Essential validity” of a Will includes questions such as the validity of gifts to
witnesses or relatives of witnesses, forced heirship, compliance with the rule against
perpetuities and accumulations, the validity of a charitable gift, testamentary capacity,
and whether a Will was free and voluntary and not subject to fraud, mistake, or undue
influence sufficient to make it invalid.

4 Re Thom Estate (1987), 50 Man. R. (2d) 187 (Q.B.), although a slightly different approach was adopted in Re
Valt Estate (1994), 20 OR. (3d) 378 (Gen. Div.) with annotation by Vaughan Black (1994), 4 E.T R. (3d) 2.
5 R.S.A. 2010, c. W-12, ss. 41-45.
6 R.S.O. 1990, c. 26, ss. 36-41.

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14.5.5 CHAPTER 14 — FOREIGN PROPERTY, MULTIPLE JURISDICTIONS, AND SUCCESSION

14.5.5 Dependant Relief in Canada

The ability to make a claim for dependant relief within Canada, in terms of the court’s
jurisdiction, is not necessarily confined to the laws of the jurisdiction in which the
deceased was domiciled. Generally the applicable legislation contains no conflict of
laws rules. An award for relief affects testamentary freedom. In Corlet,7 a widow who
had resided with her husband in Alberta at the time of his death was not entitled to
make a claim for dependant relief in Alberta because her husband was domiciled
outside the province at the time of death and all property consisted of movables,
which as a result were not considered to be property located in Alberta or subject to
such claims.

14.5.6 Summary of Choice of Law Rules

The table in Figure 14.18 outlines the choice of law rule depending on the issue and
whether property is movable or immovable.

Figure 14.1: Choice of Law Rules9

Legal Issue Law that Applies to Movable Law that Applies to
Property9 Immovable Property
Capacity to make a Will, including Law of domicile at relevant time Law of situs
age requirements — i.e., when Will executed
Formal validity of Will (execution) Law of domicile at death Law of situs
Essential validity of Will (see 14.5.4, Law of domicile at death Law of situs
Testamentary Succession within
Canadian Jurisdiction)
Construction of Will Law intended by testator — Same as for movables
rebuttable presumption is law
of domicile at time Will made
Intestacy Law of domicile at death Law of situs
Dependant Relief in Canada — Law of domicile at death Law of situs
analogous to essential validity
of Wills

7 Re Corlet Estate, [1942] 2 W.W.R. 93 (Alta. S.C.).

8 This table is taken in part from Margaret R. O’Sullivan, Dealing with Assets Outside the Jurisdiction,
presented at the Ontario Bar Association, Trusts and Estates Section, February 23, 2010, and is used with the
author’s permission.
9 Note that Canadian provincial law, including that in Alberta and Ontario, may permit variation with respect
to movables. See 14.5.4, Testamentary Succession within Canadian Jurisdiction, and Pitel and Rafferty, supra
note 2 at 355-357.

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FORCED HEIRSHIP 14.6

14.6 FORCED HEIRSHIP

Forced heirship refers to laws that limit testamentary freedom by providing that on
death property must pass to certain family members of the deceased. Forced heirship
is part of the succession law of civil jurisdictions, such as those in Latin America and
continental Europe. In addition, Muslim countries, such as Saudi Arabia, have forced
heirship laws based on Sharia law. Generally under the forced heirship rules, the
surviving spouse, children, and other relatives of a deceased person are entitled to
receive fixed shares or specific property in the estate. Usually the forced heirship
rules apply only to certain property, or to a portion of the estate, leaving the deceased
person to dispose of the remainder of his or her estate by Will as he or she chooses.

Forced heirship can be likened to the rules of intestacy. Intestate distribution is, by
formula, among family members where there is no Will. Forced heirship provides a
formula for distribution among family members that overrides or takes precedence
over the Will.

In Quebec, the automatic right to family patrimony of a surviving spouse as a first

charge on the property of the estate is a form of forced heirship since the right to
payment takes precedence over the Will. Rules relating to spousal rights on the death
of one’s spouse in respect of the deceased spouse’s property in the common-law
jurisdictions and to dependant relief can also be considered a form of forced heirship,
although they usually require a court application and have subjective criteria that
affect the entitlement. Forced heirship rights are usually automatic and prescribed by
a formula that is dependent only on the relationship to the deceased and the size of
the estate.

The rules of forced heirship depend on the jurisdiction. Generally transfers on death
that violate the forced heirship rules are void or voidable or the property may be
clawed-back into the estate if gifts have been made during lifetime that offend the
forced heirship regime.

For a worldwide map of legal systems showing common-law, civil-law, customary-law,

and Muslim-law jurisdictions, see the website project of the University of Ottawa at
[Link]

The Hague Convention on the Law Applicable to Trusts prescribes rules for
determining the applicable law to govern a trust. Article 15 requires subscribing
states to honour mandatory succession rights, especially those of the spouse and

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14.6.1 CHAPTER 14 — FOREIGN PROPERTY, MULTIPLE JURISDICTIONS, AND SUCCESSION

relatives. In Canada, eight of the provinces have ratified the Hague Convention: British
Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Prince Edward Island,
Nova Scotia, and Newfoundland and Labrador. None of the territories or Ontario or
Quebec are parties to the Hague Convention on the Law Applicable to Trusts.10

Some offshore jurisdictions, such as Bahamas, have enacted rules to permit individuals
in certain circumstances to protect their estates against forced heirship claims.

Forced heirship is part of Sharia law and may apply in Muslim countries. Testators
in Canada who are Muslim may wish to voluntarily comply with the forced heirship
formula even though it has no legal authority in Canada.

14.6.1 Examples of Countries Where Forced Heirship May Affect Canadian

Estates

European countries with forced heirship rules, whereby certain family members of
the deceased have mandatory succession rights, include Belgium, Cyprus, France,
Germany, Italy, the Netherlands, Portugal, Spain, and Sweden. However, there are
particular details to be aware of in each of these jurisdictions. The list below is a
sample of the highlights in some of these countries and is not complete.

• Cyprus: Forced heirship may apply to the estates of persons who

are domiciled in Cyprus unless the individual or his or her father
was born outside Cyprus in a country of the British Commonwealth.
Immovable property located in Cyprus may be subject to the laws of
succession in Cyprus regardless of the status of the deceased owner.11

• France: Forced heirship applies to all property. Under conflict of laws

rules, if the person is domiciled outside France, forced heirship rules
will apply only to immovable property in France.

• Germany: Forced heirship applies to German nationals. Thus, the

estate of German citizens is subject to forced heirship rules in favour
of the surviving spouse, descendants, or parents of the deceased.

10 It should be noted that Canada is not a party to the Hague Convention on the Law Applicable to Succession
to the Estates of Deceased Persons. The Hague Convention on the Law Applicable to Succession to the
Estates of Deceased Persons deals with creating rules for succession to property on death primarily based on
“habitual residence” for the limited number of jurisdictions who have signed and ratified it.
11 STEP Directory and Yearbook, 2016, at 201.

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CASE STUDIES OF FORCED HEIRSHIP 14.7

• Monaco: Forced heirship will apply to Monegasque nationals.

• Spain: Forced heirship laws apply to Spanish nationals.

14.6.2 Application of Forced Heirship Rules

As has already been discussed at 14.2, Multiple Jurisdictions and Foreign Law, the
choice of law rules can be extremely difficult to apply, and thus it may be appropriate to
seek additional professional advice, including opinions from the foreign jurisdictions
involved. For example, in jurisdictions where forced heirship rules apply to nationals
(i.e., citizens) of a particular country, their application may extend further to persons
who are not nationals of the particular jurisdiction. This could occur because the
choice of law rules may refer to another jurisdiction, which in turn may refer to a
further jurisdiction to determine which law governs. This is the result in Monica of
Monaco (see the case studies in 14.7).

14.7 CASE STUDIES OF FORCED HEIRSHIP12

Monica of Monaco

Monica was born in Belgium and is a Belgian national. She marries Randall, a
Canadian citizen, who was born and raised in Thunder Bay, Ontario. Monica and
Randall reside in Ottawa, where they raise a family and have successful careers
in government and the high-tech industry, respectively. They acquire a luxury
condominium in Monaco, in Randall’s name, ornately decorated with Monica’s
valuable European art collection, which she inherited from her parents. They
then become non-residents of Canada and retire to Monaco to enjoy lots of
sunshine, fine wine and cuisine, and low taxes.

Unfortunately, their plans are short-circuited when Monica unexpectedly

passes away, only a few years after their retirement.

Issues: What law governs succession to Monica’s art collection? Is Monica’s

Ontario Will (which she executed several years before her departure from
Canada), which provides for a trust to hold her art collection for Randall’s
lifetime use with the remainder of her estate outright to Randall, valid?

12 These examples are taken from Margaret R. O’Sullivan, supra note 8, and used with the author’s permission.

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14.7 CHAPTER 14 — FOREIGN PROPERTY, MULTIPLE JURISDICTIONS, AND SUCCESSION

Analysis: To deal with the issues, the governing law (choice of law) under
conflict of laws rules must be determined; specifically, what is the governing
law for:

• the validity of Monica’s Will?

• the law for succession of her art collection?

Monica was resident in Monaco and a national of Belgium at the time of

death. Monaco law refers to the law of nationality in general, including private
international law (not just the internal law), to determine the validity of her
Will should she die resident in Monaco.

The law of Belgium would be referred to since Monica was a Belgian citizen.
Belgian law provides that the law of the person’s “domicile” (under Belgian law
that means the place where the person had their principal “establishment” or
residence) is the law governing the validity of the person’s Will for any movable
property. Therefore, Monegasque law will apply to determine the validity of
Monica’s Will, since she was resident in Monaco at the time of death.

Monegasque law does not, in general, recognise the common-law concept of

the trust. Therefore, the trust for her art collection under her Will may not be
valid. Monegasque law would not allow all of Monica’s estate to pass to Randall
since it has a “forced heirship” regime that requires her children receive a share
of her estate.

French Retreat

Robert and his wife, Heather, frequently travel together throughout Europe for
their gourmet food import business. They decide that it would make sense to
have a residence as a base for their business travels — and for pleasure — and
settle on a seaside villa on the south coast of France near St. Tropez. They take
title each as to a 50% interest.

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INHERITANCE AND ESTATE TAX 14.8

Their Ontario lawyer, in taking instructions for their Wills, obtains French advice
as to how to deal with the French residence. They are advised under French
law that forced heirship rules law prevent them from passing the property
to each other absolutely on death. If this is their objective, one approach is to
have each of them have a French Will gifting the maximum amount allowed
under French law to the other and rely on their four children to gift or release
the interest they are each entitled to receive to their surviving parent. They
proceed to execute French Wills to that effect.

Several years later, Robert dies. Heather, who is the executor under the
French Will, decides to sell the property. At death, the residence had a value of
€1,000,000.

What is the process and outcome?

Although Heather is the executor, on the death of Robert, his interest in the
residence, subject to liabilities, is transmitted to the heirs under forced heirship
rules.

Under French law, Heather and her four children have a right to receive a share
of the property or its proceeds. If the children “waived” their rights, Heather
could become the sole owner and could proceed to sell the property without
the involvement of the children. In this particular situation based on the values
and facts, French advice is that in light of the value of the property, each child
should not waive his or her interest, and the property should pass to them to
minimise French succession duty since each beneficiary has an exemption that
can be utilised for such purpose. The sale can take place after the distribution,
and after the sale each child could choose to gift the sale proceeds he or she
receives to Heather.

14.8 INHERITANCE AND ESTATE TAX

Many countries impose inheritance or estate taxes of one kind or another. Such taxes
may apply to citizens of the country regardless of residence or to those who are
domiciled in the country regardless of residence or citizenship.

For example, the U.S. imposes the U.S. estate tax on the worldwide property of any
“U.S.” person no matter where resident. “U.S.” person means any individual who is

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14.8 CHAPTER 14 — FOREIGN PROPERTY, MULTIPLE JURISDICTIONS, AND SUCCESSION

domiciled in the U.S., has U.S. citizenship, or holds a U.S. green card. Even Canadian
residents who are not considered U.S. persons are subject to the U.S. estate tax regime
on assets considered situate in the [Link] U.S. system has some unique features.

• A U.S. resident who is still domiciled in Canada is exempt from U.S.

estate tax except in respect of his or her U.S. situs property. However,
it is likely that the U.S. revenue authorities would argue that the
individual is domiciled in the U.S. if he or she resided there other than
on a temporary basis.

• U.S. citizens living in Canada are also subject to U.S. estate tax on their
worldwide estate under U.S. law, even if there is no property located
in the U.S., and are entitled to restricted treaty relief.

• The estate of a Canadian resident may be subject to U.S. estate tax if

the deceased owned U.S. “situs” property on death, although the tax
will be payable only on U.S. situs property.“U.S. situs property” for this
purpose includes not only real property or an interest in real property
located in the U.S. but also other property, including securities issued
by a U.S. entity such as shares of a U.S. public corporation.

• The worldwide estate of a Canadian resident may be subject to

U.S. estate tax if he or she holds a U.S. green card that has not been
surrendered as the U.S. may consider he or she is “domiciled” in the
U.S.

Many other countries, including the U.K., impose inheritance taxes in respect of
certain property located in the foreign jurisdiction.

14-16
 APPENDICES
TABLE I — TABLE OF LEGISLATION

Canada

Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982, being
Schedule B to the Canada Act 1982 (UK), 1982, c.11

Civil Marriage Act, S.C. 2005, c. 33

Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.)

Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.)

British Columbia

Estates of Missing Persons Act, R.S.B.C. 1996, c. 123

Family Law Act, 2011 S.B.C., c. 25

Mental Health Act, R.S.B.C. 1996, c. 288

Patients Property Act, R.S.B.C. 1996, c. 349

Power of Attorney Act, R.S.B.C. 1996, c. 370

Presumption of Death Act, R.S.B.C. 1996, c. 444

Probate Fee Act, S.B.C. 1999, c. 4, s. 2

Public Guardian and Trustee Act, R.S.B.C. 1996, c. 383

Representation Agreement Act, R.S.B.C. 1996, c. 405

Trustee Act, R.S.B.C. 1996, c. 464

Wills, Estates and Succession Act, S.B.C. 2009, c.13

Supreme Court Rules, B.C. Reg. 221/90, Appendix C, Schedule 1

Alberta

Adult Guardianship and Trusteeship Act, S.A. 2008, c. A-4.2

Dower Act, R.S.A. 2000, c. D-15

TOL-1
APPENDICES — TABLE I — TABLE OF LEGISLATION

Estate Administration Act, S.A. 2014, c. E-12.5

Judicature Act, R.S.A. 2000, c. J-2

Mental Health Act, R.S.A. 2000, c. M-13

Personal Directives Act, R.S.A. 2000, c. P-6

Powers of Attorney Act, R.S.A. 2000, c. P-20

Public Trustee Act, S.A. 2004, c. P-44.1, Part 2

Trustee Act, R.S.A. 2000, c.T-8

Wills and Succession Act, S.A. 2010, c. W-12.2

Surrogate Rules, Alta. Reg. 130/95, Schedule 2

Saskatchewan

Administration of Estates Act, S.S. 1998, c. A-4.1

Adult Guardianship and Co-decision-making Act, S.S. 2000, c. A-5.3

Dependants’ Relief Act, 1996, S.S. 1996, c. D-25.01

Family Property Act, S.S. 1997, c. F-6.3

Health Care Directives and Substitute Health Care Decision Makers Act, S.S. 1997,
c. H-0.001

Homesteads Act, 1989, S.S. 1989-90, c. H-5.1

Intestate Succession Act, S.S. 1996, c. I-13.1

Mental Health Services Act, S.S. 1984-85-86, c. M-13.1

Missing Persons and Presumption of Death Act, S.S. 2009, c. M-20.01

Powers of Attorney Act, 2002, S.S. 2002, c. P-20.3

Public Guardian and Trustee Acts, S.S. 1983, c. P-36.3

The Queen’s Bench Act, 1998, S.S. 1998, c. Q-1.01

Trustee Act, S.S. 2009, c.T-23.01

Wills Act, 1996, S.S. 1996, c. W-14.1

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 APPENDICES — TABLE I — TABLE OF LEGISLATION

Manitoba

Dependants Relief Act, S.M. 1989-90, c. 42; C.C.S.M., c. D37

Family Property Act, R.S.M. 1987, c. 24; C.C.S.M., c. F25

Health Care Directives Act, S.M. 1992, c. 33; C.C.S.M., c. H27

Homesteads Act, S.M. 1992, c. 48; C.C.S.M., c. H80

Intestate Succession Act, S.M. 1989-90, c. 43; C.C.S.M., c. I85

Law Fees and Probate Charge Act, R.S.M. 1987, c. L75; C.C.S.M., c. L80

Mental Health Act, S.M. 1998, c. 36; C.C.S.M., c. M110

Powers of Attorney Act, S.M. 1992, c. 62; C.C.S.M., c. P97

Presumption of Death Act, R.S.M. 1987, c. P120; C.C.S.M., c. P120

Public Guardian and Trustee Act, S.M. 2013, c. 46; C.C.S.M., c. P205

The Beneficiary Designation Act (Retirement, Savings, and Other Plans), C.C.S.M.,
c. B30

The Missing Persons Act, C.C.S.M., c. M199

Trustee Act, R.S.M. 1987, c.T160; C.C.S.M., c.T160

Wills Act, R.S.M. 1988, c. W150; C.C.S.M., c. W150

Vital Statistics Act, C.C.S.M., c. V60

Vulnerable Persons Living with a Mental Disability Act, S.M. 1993, c. 29; C.C.S.M.
c. V90

Ontario

Absentees Act, R.S.O. 1990, c. A.3

Declarations of Death Act, 2002, S.O. 2002, c. 14, Sch.

Estate Administration Tax Act, 1998, S.O. 1998, c. 34, s. 2(6)

Estates Act, R.S.O. 1990, c. E.21

Estates Administration Act, R.S.O. 1990, c. E.22

Family Law Act, R.S.O. 1990, c. F-3

Health Care Consent Act, 1996, S.O. 1996, c. 2, Sch. A

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APPENDICES — TABLE I — TABLE OF LEGISLATION

Mental Health Act, R.S.O. 1990, c. M.7

Public Guardian and Trustee Act, R.S.O. 1990, c. P.51

Substitute Decisions Act, 1992, S.O. 1992, c. 30

Succession Law Reform Act, R.S.O. 1990, c. S.26

Trustee Act, R.S.O. 1990, c. 23

Quebec

Civil Code of Québec, S.Q.1991, c. 64 (C.C.Q.),

Art. 414-492

Art. 613–702

Art. 684 to 695

Art. 2166-2185

Title Four: Wills

Public Curator Act, R.S.Q. c. C-81

Tariff of Court Costs in Civil Matters and Court Office Fees, c.T-16, r. 11.3, s. 17

New Brunswick

Devolution of Estates Act, R.S.N.B. 1973, c. D-9

Family Services Act, S.N.B. 1980, c. F-2.2

Infirm Persons Act, R.S.N.B. 1973, c. I-8

Marital Property Act, S.N.B. 2012, c. 107

Mental Health Act, R.S.N.B. 1973, c. M-10

Presumption of Death Act, S.N.B. 2012, c. 110

Probate Court Act, S.N.B. 1982, c. P-17.1, Schedule A

Property Act, R.S.N.B. 1973, c. P-19, ss. 56-58.7

Provision for Dependants Act, R.S.N.B. 2012, c. 111

Public Trustee Act, S.N.B. 2005, c. P-26.5

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 APPENDICES — TABLE I — TABLE OF LEGISLATION

Retirement Plan Beneficiary Act, S.N.B. 1982, c. R-10.21

Trustees Act, S.N.B. 2015, c. 21

Wills Act, R.S.N.B. 1973, c. W-9

Prince Edward Island

Consent to Treatment and Health Care Directives Act, R.S.P.E.I. 1988, c. C-17.2

Dependants of a Deceased Person Relief Act, R.S.P.E.I. 1988, c. D-7

Designation of Beneficiaries Under Benefit Plans Act, R.S.P.E.I. 1988, c. D-9

Family Law Act, R.S.P.E.I. 1988, c. F-2.1

Mental Health Act, R.S.P.E.I. 1988, c. M-6.1

Powers of Attorney Act, R.S.P.E.I. 1988, c. P-16

Probate Act, R.S.P.E.I. 1988, c. P-21

Part IV

Public Trustee Act, R.S.P.E.I. 1988, c. P-32.2

Trustee Act, R.S.P.E.I. 1988, c.T-8

Newfoundland and Labrador

Adult Protection Act, S.N.L. 2011, c. A-4.01

Advance Health Care Directives Act, S.N.L. 1995, c. A-4.1

Enduring Powers of Attorney Act, R.S.N.L. 1990, c. E-11

Family Law Act, R.S.N.L. 1990, c. F-2, ss. 18-34.1

Family Relief Act, R.S.N.L. 1990, c. F-3

Intestate Succession Act, R.S.N.L. 1990, c. I-21

Mental Health Care and Treatment Act, S.N.L. 2006, c. M-9.1

Mentally Disabled Persons’ Estates Act, R.S.N.L. 1990, c. M-10

Pension Plans Designation of Beneficiaries Act, R.S.N.L. 1990, c. P-5

Presumption of Death Act, R.S.N.L. 1990, c. P-20

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APPENDICES — TABLE I — TABLE OF LEGISLATION

Public Trustee Act, S.N.L. 2009, c. P-46.1

Services Charges Act, S.N.L. 1998, c. S-13.2, s. 4

Trustee Act, R.S.N.L. 1990, c.T-10

Wills Act, R.S.N.L. 1990, c. W-10

Nova Scotia

Adult Protection Act, R.S.N.S. 1989, c. 2

Beneficiaries Designation Act, R.S.N.S. 1989, c. 36

Estate Actions Act, R.S.N.S. 1989, c. 152

Incompetent Persons Act, R.S.N.S. 1989, c. 218

Intestate Succession Act, R.S.N.S. 1989, c. 236

Involuntary Psychiatric Treatment Act, S.N.S. 2005, c. 42

Matrimonial Property Act, R.S.N.S. 1989, c. 275

Personal Directives Act, S.N.S. 2008, c. 8

Powers of Attorney Act, R.S.N.S. 1989, c. 352

Presumption of Death Act, R.S.N.S. 1989, c. 354

Probate Act, S.N.S. 2000, c. 31, s. 87

Public Trustee Act, R.S.N.S. 1989, c. 379, s. 4

Testators’ Family Maintenance Act, R.S.N.S. 1989, c. 465

Trustee Act, R.S.N.S. 1989, c. 479

Vital Statistics Act, R.S.N.S. 1989, c. 494

Wills Act, R.S.N.S. 1989, c. 505

Yukon

Adult Protection and Decision-Making Act, S.Y. 2003, c. 21

Dependants Relief Act, R.S.Y. 2002, c. 56

Enduring Power of Attorney Act, R.S.Y. 2002, c. 73

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 APPENDICES — TABLE I — TABLE OF LEGISLATION

Estate Administration Act, R.S.Y. 2002, c. 77, Part 10

Family Property and Support Act, R.S.Y. 2002, c. 83

Mental Health Act, R.S.Y. 2002, c. 150

Presumption of Death Act, R.S.Y. 2002, c. 174

Public Guardian and Trustee Act, R.S.Y. 2002, c. 174

Retirement Plan Beneficiaries Act, R.S.Y. 2002, c. 197, as amended SY 2012, c. 15

Trustee Act, R.S.Y. 2002, c. 223

Wills Act, R.S.Y. 2002, c. 230

Rules of Court (effective Sept. 15, 2008), Appendix C, Schedule 1

Northwest Territories

Dependants Relief Act, R.S.N.W.T. 1988, c. D-4

Family Law Act, S.N.W.T. 1997, c. 18

Guardianship and Trusteeship Act, S.N.W.T. 1994, c. 29

Intestate Succession Act, R.S.N.W.T. 1988, c. I-10

Mental Health Act, R.S.N.W.T. 1988, c. M-10

Personal Directives Act, S.N.W.T. 2005, c. 16

Powers of Attorney Act, S.N.W.T. 2001, c. 15

Public Trustee Act, R.S.N.W.T. 1988, c. P-19

Retirement Plan Beneficiaries Act, R.S.N.W.T. 1988, c. R-6

Trustee Act, R.S.N.W.T. 1988, c.T-8

Wills Act, R.S.N.W.T. 1988, c. W-5

Probate, Administration and Guardianship Fees Regulations, R-005-2002, Schedule

Nunavut

Beneficiaries Designation Act, R.S.N.W.T. 1988, c. R-6, as duplicated for Nunavut by

section 29 of the Nunavut Act, S.C. 1993, c. 28

Dependants Relief Act (R.S.N.W.T. 1988, c. D-4), S.C. 1993, c. 28, s. 29(1)

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APPENDICES — TABLE I — TABLE OF LEGISLATION

Family Law Act, S.N.W.T. (Nu.) 1997, c. 18

Guardianship and Trusteeship Act, S.N.W.T. (Nu.) 1994, c. 29

Intestate Succession Act, R.S.N.W.T. (Nu.) 1988, c. I-10

Mental Health Act, R.S.N.W.T. (Nu.) 1988, c. M-10

Powers of Attorney Act, [Link]. 2005, c. 9

Public Trustee Act, R.S.N.W.T. (Nu.) 1988, c. P-19

Trustee Act, R.S.N.W.T. (Nu.) 1988, c.T-8

Wills Act, R.S.N.W.T. (Nu.) 1988, c. W-5

Court Fees Regulations, R-010-2007, Sched. B

International Conventions

Hague Convention on the Law Applicable to Trusts

Convention Providing a Uniform Law on the Form of an International Will

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 TABLE II — TABLE OF CASES

Adare v. Fairplay, [1956] O.R. 188, [1955] O.W.N. 950 (C.A.) ................................. 5.7

Ashton Estate v. South Muskoka Memorial Hospital Foundation, 2008 CanLII

21421 (Ont. S.C.) ............................................................................................. 4.4.10

Banks v. Goodfellow (1870), L.R. 5 Q.B. 549 ......................................................... 3.3.4

Banque nationale du Canada c. Sciascia-Trapani, 2002 CanLII 39948 (Que.

C.A.) ................................................................................................................... 7.3.3

Banton v. Banton (1998), 164 D.L.R. (4th) 176 (Ont. Gen. Div.) ...............1.9.6, 1.10.4

Bloom Estate, Re, (2004), 27 B.C.L.R. (4th) 176 (S.C.) .......................................... 14.4

Boehm (In the Goods of), [1891] P. 247 ............................................................... 3.3.8

Boisvert v. R., 2011 T.C.C. 290 .............................................................................. 13.14

Bowen Estate v. Bowen, Court No. 0395/01, unreported, August 30, 2001
(Ont. S.C.) ........................................................................................................... 3.10

Bradley Estate, Re, (2000), 31 E.T.R. (2d) 16 ...................................................... 1.10.2

Branch v. Branch Estate, 2004 NBQB 258.......................................................... 6.5.13

Brander, Re, [1952] 4 D.L.R. 688 (B.C. S.C.) ......................................................... 3.3.8

Brown v. Rotenberg, [1946] O.W.N. 353 ............................................................... 3.6.2

Bryant Isard & Co., Re, 57 O.L.R. 471, [1925] 4 D.L.R. 157 (Ont. C.A.) ................. 13.7

Butts Estate v. Butts (1999), 27 E.T.R. (2d) 81 (Ont. Gen. Div.) ........................... 6.5.13

Byrne Estate, Re, 2004 CanLII 190 (ON S.C.) ................................................... 13.10.4

Campbell v. French (1797), 2 Ves. 321, 30 E.R. 1033 ............................................. 3.3.8

Canada Trust Co. v. Ontario Human Rights Commission (sub nom. Re Leonard
Foundation Trust) (1990), 37 O.A.C. 191, 69 D.L.R. (4th) 321, 74 O.R. (2d) 481
(C.A.) .............................................................................................................. [Link]

Carlisle Estate, Re, 2007 SKQB 425 (CANLII)....................................................... 9.3.5

Clarke v. Darraugh (1884), 5 O.R. 140 (H.C. Ch. Div.) ....................................... [Link]

Corlet Estate, Re, [1942] 2 W.W.R. 93 (Alta. S.C.) ................................................ 14.5.5

Cowan v. Allen (1896), 26 S.C.R. 292 ................................................................. [Link]

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APPENDICES — TABLE II — TABLE OF CASES

Cummings v. Cummings, 2003 CanLII 64218, 15 E.T.R. (3d) 81, 223 D.L.R. (4th) 732
(Ont. S.C.); affirmed 2004 CanLII 9339, 5 E.T.R. (3d) 93, 235 D.L.R. (4th)
474 (Ont. C.A.) (sub nom. Re Cummings Estate); leave to appeal to Supreme
Court of Canada refused .................................................................................. 6.5.13

Currie v. Currie Estate (1995), 166 N.B.R. (2d) 144 (C.A.) ................................. 6.5.13

Davis, Re, [1963] 2 O.R. 666, 40 D.L.R. (2d) 801 (C.A.) ........................................ 3.3.4

Desharnais v. Toronto Dominion Bank, 2002 BCCA 640 (CanLII), affirming

2001 BCSC 1695 (CanLII) ................................................................................ 4.4.10

Dewitt v. Taggart Estate, 2006 CanLII 26979 (Ont. S.C.) ....................................... 3.8.3

Diver, Re, [1936] O.W.N. 255 (C.A.) ................................................................... [Link]

Dring v. Ziefflie (2004), 10 E.T.R. (3d) 121 (B.C.S.C.) ......................................... 6.5.13

Earl [Link] (sub nom. Wilhelm v. Hickson), (2000), 189 Sask. R. 71,
2000 SKCA 1 (CanLII) (C.A.) ....................................................................4.1.2, 4.2.2

Egan Estate, Re, [1994] O.J. No. 84, 1994 Carswell Ont 2730 (Ont. Gen.
Div.) ............................................................................................................... 11.11.2

Esterhuizen v. Allied Dunbar, [1998] 2 FLR 668 (Eng. H.C.) .................................. 4.5

Ethier Estate, Re, (2000), 35 E.T.R. (2d) 219 (Ont. S.C.) ..................................... [Link]

Eurig Estate, Re, [1998] 2 S.C.R. 565 ...........................................................8.4, [Link]

Garrett v. Zwicker (1976), 15 N.S.R. (2d) 118 (C.A.) .......................................... 6.5.13

Gelinas, Re, [1923] O.J. No. 445 (H.C.) .............................................................. [Link]

Godelie v. Pauli (Committee of), (1990), 39 E.T.R. 40 (Ont. Dist. Ct.) .................. 1.3.2

Goodman, Re, (1998), 24 E.T.R. 194 (B.C. S.C.) .................................................. 1.10.1

Graham v. Bonnycastle, 2004 ABCA 270 (CanLII) ................................................ 4.1.2

Granovsky Estate v. Ontario (1998), 21 E.T.R. (2d) 25 (Ont. Gen. Div.) ............ [Link]

Hall v. Bennett, 2003 CanLII 7157 (Ont. C.A.) ...................................................... 4.1.1

Jeffery Estate, Re, (1990), 39 ETR 173 (Ont. Surr. Ct.) .................................... [Link]

K, Re, [1988] All E.R. 358 (Ch. D.) ......................................................................... 1.3.2

Keller v Keller Estate, [2003] P.E.I.J. No. 10 (T.D.)............................................... 6.5.13

Kennell v. Abbott (1799), 4 Ves. 802, 31 E.R. 416 ................................................... 3.3.8

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 APPENDICES — TABLE II — TABLE OF CASES

Kerzner Estate, Re, [2008] O.J. No. 3262 (S.C.) ................................................. [Link]

Kidd v. Canada Life Assurance Co., [2010] O.J. No. 658 ......................................... 3.2

Kingsbury [Link], [1901] A.C. 187 (H.L.) .......................................................... 3.8.6

Kirkwood v. MacMillan, 2008 BCSC 91, 2008 CEAG .......................................... 5.5.11

Laing Estate v. Hones (1998), 41 O.R. (3d) 571 (C.A.) ................................... [Link]

Lamarche c. Olé-Widholm, 2002 CanLII 37315 (Que. C.A.) (CanLII en

français) ............................................................................................................. 7.3.3

Leach v. Egar (1990), 38 E.T.R. 65 (B.C. C.A.) ........................................................... 5.7

Lightfoot, Re, (1985), 50 O.R. (2d) 346 (H.C.) ....................................................... 3.8.3

M. v. H., [1999] 2 S.C.R. 3 .......................................................................................... 6.7

Madsen Estate v. Saylor, 2007 SCC 18, [2007] 1 S.C.R. 838 .........................3.6.4, [Link]

Marshall v. Broadhurst (1831), 1 Tyrwhitt 349 ............................................. [Link]

Mayrand v. Dussault (1909), 38 S.C.R. 460 .......................................................... 3.3.5

Messier v. R., 2008 TCC 349 (CanLII).................................................................... 13.14

Millar Estate, Re, [1938] S.C.R. 1, [1938] 1 D.L.R. 65 ............................................ 3.9.1

Neufeld v. Neufeld (2004), 2004 BCSC 25 (CanLII), 5 E.T.R. 188 (S.C.) .............. [Link]

Noik v. Noik Estate, [2004] O.J. No. 2479 (C.A.) ................................................ [Link]

Nova Scotia (Attorney General) [Link], 2002 SCC 83, [2002] 4 S.C.R. 325 ...... 6.6.2

Nurse, Re, (1921), 20 O.W.N. 428 (Ont. H.C.) .................................................... [Link]

Nystrom v. Nystrom (2006), 25 E.T.R. (3d) 297 (Ont. S.C.J.) .................................... 3.2

O’Hagan v. O’Hagan (2000) 31 E.T.R. (2d) 3 ...................................................... 1.10.3

Ostrander v. Kimble Estate (1996), 146 Sask. R. 64 (Q.B.) .................................. 6.5.13

Peach Estate, Re, 2009 NSSC 383 (S.C.) ............................................................. [Link]

Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795.................................. 3.6.4, [Link]

Perrie, Re, (1910), 21 O.L.R. 100 (K.B.) .............................................................. [Link]

Pettkus v. Becker, [1980] 2 S.C.R. 834 ................................................................ [Link]

Reference re Same-Sex Marriage, 2004 SCC 79 ...................................................... 6.7

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APPENDICES — TABLE II — TABLE OF CASES

Robertson v. Fleming (1861), 4 Macq 167 ............................................................ 4.1.2

Roelofs (Estate of Marinus Johannes (Rien)) (2004), 12 E.T.R. (3d) 241,

2004 MBQB 280............................................................................................ [Link]

Rogers Estate v. Rogers, [2006] N.B.J. No. 568 (Q.B.) ......................................... [Link]

Ross v. Caunters, [1979] 3 All E.R. 580, [1980] 1 Ch. D. 297..................................... 4.1

Royal Bank of Canada v. North American Life Assurance Co., [1996] 1 S.C.R.
325, 96 DTC 6157 .............................................................................................. 9.3.4

Rozon v. Transamerica Life Insurance Co. of Canada, Court No. 98-CV-8449,

unreported, November 30, 1999 (Ont. C.A.); dismissing unreported, March 15,
1999 (Ont. Gen. Div.) ...................................................................................... [Link]

Ruffolo v. Juba-Ruffolo, 2005 BCCA 26, 2005 CEAG ................................................ 5.6

Saleh v. Reichert (1993), 50 E.T.R. 143 ............................................................. [Link]

Saunders [Link] (1841), 49 E.R. 282, 4 Beav. 115 (Eng. Rolls Ct.); affirmed
(1841), 41 E.R. 482, 1 Cr. & Ph. 240 (Eng. Ch. Div). ............................................ 4.4.4

Sawdon Estate v. Sawdon, 2014 ONCA 101 (CanLII) ...................................... [Link]

Schaefers Estate, Re, (2008), 93 O.R. (3d) 447, 2008 CanLII 46929 (S.C.) ............ 1.8.7

Siegel v. Siegel (1995), 177 A.R. 282 (Q.B.) .......................................................... 6.5.13

Sorochan v. Sorochan, [1986] 2 S.C.R. 38 .......................................................... [Link]

Stang v. Stang Estate, [1998] 7 W.W.R. 551 (Alta. Q.B.) ....................................... 6.5.13

Stephen v. Miller, [1918] 2 W.W.R. 1042, 40 D.L.R. 418 (B.C. C.A.), affd (1919),
59 S.C.R. 690, 49 D.L.R. 698 (S.C.C.) ................................................................... 13.7

Sun Life Assurance Co. of Canada v. Taylor, 2008 SKQB 402 (CANLII) ............... 9.3.5

Tataryn v. Tataryn Estate, [1994] 2 S.C.R. 807 ................................................... 6.5.13

Thom Estate, Re, (1987), 50 Man. R. (2d) 187 (Q.B.) .......................................... 14.5.3

Toronto General Trusts Corp. and Central Ontario R.W. Co., Re, (1905),
6 O.W.R. 350 (H.C.)..................................................................................... [Link]

Valt Estate, Re, (1994), 20 O.R. (3d) 378 (Gen. Div.) ........................................... 14.5.3

Vickers Estate, Re, (1999), 35 E.T.R. (2d) 311...................................................... 12.2.6

Vout v. Hay, [1995] 2 S.C.R. 867 ............................................................................ 3.3.7

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 APPENDICES — TABLE II — TABLE OF CASES

Wagner [Link] Cleef (1991), 5 O.R. (3d) 477 (Div. Ct.) ........................................ 10.2.3

Walker v. Dubord , 1992 CanLII 2095, (1992) 45 E.T.R. 209 (B.C. C.A.) ............. [Link]

Weinstein [Link] (Litigation Guardian of) (1997), 19 E.T.R. (2d) 52

(Ont. Gen. Div.) ..................................................................................................... 3.2

West Estate, Re, 2003 ABQB 205............................................................................ 3.3.6

White v. Jones, [1995] 1 ALL E.R. 691 (H.L.) .......................................................... 4.1.2

Whittingham v. Crease (1978), 88 D.L.R. (3d) 353, 1979 CanLII 286 (B.C.
S.C.) ................................................................................................................... 4.1.2

William George King Trust, Re, 1994 CanLII 7497 (ON SC), 1994 CanLII 7497
(ON S.C.) ....................................................................................................... 13.10.4

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 GLOSSARY

Abatement. The reduction of testamentary gifts where, after paying all debts and
liabilities, the remaining assets of the estate are insufficient to make all testamentary
gifts (i.e., gifts under the Will must be reduced to raise the funds necessary for
meeting the shortfall).

Ademption. The failure of a specific gift in a Will because at the time of death the
testator does not own the specific property gifted. In such a scenario, the gift is said
to have adeemed and the beneficiary receives nothing.

Agent for Executor. Usually a trust company, the executor engages the services
of an agent in order to relieve the executor of much of the “legwork” involved, but
the executor retains all decision-making authority. The agent carries out only those
administrative duties assigned by the executor whether limited or comprehensive.

Attorney. A person who is appointed to act as the substitute decision maker under
a power of attorney for property. It may also refer to the substitute decision maker in
a personal or health care directive. The person appointed need not have any special
qualifications and in this context does not mean “lawyer.”

Bequest. A gift of personal property in a Will.

Bond of Indemnity. A form of security given to indemnify the party to whom

the bond is issued against loss or damage. These may be required as a condition of
appointing an administrator of an estate or guardian of property for an incapable
person.

Class Gift. A gift that is made to a defined group of persons, called a “class.”The group
is often a group of persons related to the donor, such as children or grandchildren,
but any defined or otherwise ascertainable group can be the object of a class gift.

Codicil. A testamentary document amending the Will. A codicil must conform to all
the requirements of a Will in order to be valid.

Conflict of Laws Rules. Determine three issues: which court has jurisdiction to
determine an issue; which law applies to a particular issue; and whether a court will
enforce the legal judgment of another jurisdiction.

GLO-1
APPENDICES — GLOSSARY

Conventional Will. A Will that is authorised under the ordinary rules in the laws of
the applicable jurisdiction as to formalities of form and execution.

Corporate Attorney. A trust company can be appointed as power of attorney,

usually where no suitable individual is available to act as attorney.

Demonstrative Gifts. Gifts of money that the testator intended to be paid out of
a designated fund, but in the event that the designated fund no longer exists or has
been diminished to a point where it cannot satisfy the amount of the gift, then the
gift can be paid from elsewhere in the estate. One can think of demonstrative gifts as
lying somewhere between specific gifts and general gifts.

Dependant. An individual who is receiving support from another person, or to

whom another person has a legal obligation to provide support. Generally a spouse,
common-law spouse, and minor child of the deceased are considered dependants.
However, for the purposes of dependant relief, a dependant is a person entitled to
make a claim against the estate of a deceased person who failed to provide adequate
support; and for this purpose dependant is specifically defined and actual dependence
or a support obligation may or may not be required.

Devise. A testamentary gift of real property, such as land.

Domicile. The jurisdiction where an individual either resides permanently or to

which at some time in the future he or she contemplates returning on a permanent
basis. It is relevant for conflict of laws rules and for other legal matters such as U.S.
estate and gift tax.

Enduring Power of Attorney. This refers to a power of attorney that is valid during
any period of subsequent mental incapacity on the part of the grantor. It is also called
a “continuing power of attorney.”

Estate Trustee with a Will. The formal name for an executor in Ontario when
probate is granted.

Estate. All the property owned by an individual. If the person is deceased, it generally
refers to the property passing under the Will or on intestacy as opposed to property
passing outside the estate by operation of law (rights of survivorship) or beneficiary
designation. If the person is living, it refers to all their property. For example, an
attorney under a power of attorney for property manages the grantor’s “estate.”
Formerly, estate referred only to real property at the time of death or during lifetime.

GLO-2
 APPENDICES — GLOSSARY

Executor. The person named in a Will to administer the estate. In Quebec, the
executor is known as the liquidator.

Executor’s Year. A beneficiary may not enforce any distribution or any payment of
income during the first year of administration of the estate, on the assumption that
the executor (or administrator) needs time to prepare the estate for distribution (i.e.,
gather and value assets, pay taxes, and settle all debts and claims).

Family Patrimony. This is the property that spouses, including those in a civil-law
union, must share on breakdown of the relationship or death in Quebec. It includes
all family residences and furnishings (excluding collector’s items), vehicles used by
the family, and benefits under a retirement plan except plans providing death benefits
to the surviving spouse. On death the value must be shared between the surviving
spouse and the heirs of the deceased. The right is to a payment, not to the property
itself.

Fiduciary Duty. In trust and estate law, this is the obligation that the trustee,
including an executor and administrator, has to act in the utmost good faith for
the best interests of the beneficiaries. It requires that the trustee avoid conflicts of
interest and self-benefit.

Forced Heirship. Laws that limit testamentary freedom by providing that on death
property must pass to certain family members of the deceased.

General Gifts. Gifts that do not describe specific property. For example, if the Will
says “$10,000 to Sarah if she survives me,” this gift would be a general gift since the
$10,000 can be funded from any property of the estate other than property which
itself is the subject of a specific gift.

General Power of Attorney. This is a power of attorney that permits the attorney
to do anything the grantor can do, subject only to the restrictions imposed by law.
At common law, a general power of attorney is not valid during any subsequent
incapacity of the grantor unless specifically stated.

Gift Over. An alternate gift to a substitute or replacement beneficiary if a gift or

other benefit to a first-identified beneficiary fails.

Grant of Probate. A formal process presided over by the court in the relevant
jurisdiction. It confirms the executor’s appointment under the Will and prevents any
subsequent challenge to his or her authority or limits his or her potential liability in

GLO-3
APPENDICES — GLOSSARY

the event a subsequent Will is discovered or the Will is declared invalid. Sometimes
called Letters Probate or Letters of Administration.

Grantor. The individual who gives a power of attorney. Sometimes called a “donor.”

Guardian: The person appointed by the court, or under statutory authority to

manage the financial affairs of an incapable adult individual, is called a guardian. The
terminology varies by province and may also be referred to as committee (British
Columbia, Manitoba), conservator, or trustee. Guardian also generally refers to the
person legally responsible for the person and property of a minor.

Holograph Wills. A form of valid Will that does not require any witnesses. The only
formal requirement is that the entire Will must be written in the handwriting of the
testator and signed by the testator. It is not recognised in all provinces.

Immovable Property. Any real property, anything permanently affixed to real

property, or any interest in real property. Immovable property includes land, buildings,
mining rights, leaseholds, and rights to receive rent or income from real property.

Insolvent. The inability to pay one’s debts as they fall [Link] estate will be insolvent
when all the debts, liabilities, and expenses exceed the realisable value of estate assets.

Inter Vivos Trust. A trust set up during the lifetime of the settlor.

Intestate. To die without a Will or the individual who dies without a Will. The estate
will be divided and distributed according to a formula set out in the law of each
province.

Joint with Right of Survivorship (Joint Tenancy). A form of property ownership

by two or more people with the right of ownership passing to the person or persons
who survive a deceased joint owner. The ownership of property owned in joint
tenancy passes to survivors outside of a Will. Rights of survivorship for jointly held
property do not exist in Quebec.

Joint Wills. In the past they were used for a husband and wife where one Will was
made for both instead of two separate Wills. They are almost never seen in practice
today.

Legacy. A gift of personal property in a Will.

GLO-4
 APPENDICES — GLOSSARY

Letters of Administration. Grants an administrator the same authority and duties

as executor but is required where there is no Will.

Letters Probate. A grant given by a court certifying that the Will that is attached
to the grant has been duly proved and registered with the court and verifying the
executor’s authority named under the Will.

Liquidator. Term used in Quebec for the executor or administrator of an estate.

Living Will. The directive or instruction component of a personal directive document.

It sets out the directions with respect to the individual’s preferences, wishes, and
instructions regarding personal care decisions. It is not binding at common law. In
common usage, a living Will is often thought to be restricted to end-of-life decisions,
but it may be the subject of any personal care decision.

Maker. The individual who makes a personal directive is the “maker.” Other terms
include “director,”“grantor,” and “principal.”

Mirror Wills. Separate Wills made by two individuals that are identical, except
they substitute each other. They are commonly made by married couples where the
surviving spouse is the primary beneficiary with identical gifts over to surviving
children or issue on the death of the survivor.

Movable Property. Any property that is portable. The legal definition of movable
property includes all personal property, such as goods, chattels, and personalty. It also
includes intangible property, such as negotiable instruments and securities.

Multiple Wills. As suggested, this is where more than one valid Will [Link] are
used when it may be appropriate for a testator to deal with separate assets of his or
her estate.

Mutual Wills. Used by two or more individuals who have agreed to dispose of their
property in a certain way and there is an agreement, implied or otherwise, that the
individuals will not change the terms of his or her Will after the death of the other
individual. Mutual Wills are sometimes used by spouses in a second marriage.

No Heroic Measures Clause. An end-of-life clause in the living Will component of

a personal directive. It expresses the wish of the maker that in the event the maker
suffers from a terminal illness or condition with no prospect of recovery or the
resumption of any quality of life, usually to be determined in the opinion of a medical

GLO-5
APPENDICES — GLOSSARY

practitioner, then extraordinary or other life-sustaining medical treatments are to be

withdrawn and the maker is to be administered only “comfort care” for the alleviation
of pain even if such comfort care hastens death.

Notarial Will. This is a special form of Will prepared by a notary in Quebec. It need
not be probated.

Pass Accounts: The process by which formal accounting records for the assets of
a trust or estate, including the “estate” of a living person, is submitted by the trustee,
attorney, guardian, or other person in charge of managing the financial affairs and
property on behalf of another person to the court for approval.

Per Capita. Method of dividing a gift or fund among a number of individuals. Per
capita is Latin for “by head” and essentially means that each person who is in the
described group will receive an equal share.

Per Stirpes. A manner of dividing a particular gift or fund among the issue (meaning
descendants) of an individual by “stocks” or by roots. It is also sometimes described
as a division “by representation.”

Personal Directives. A personal directive is the document executed or instructions

given by an individual (in Chapter 2 called a “maker”) to provide instructions or
directions for personal care and/or health care decisions in the future when that
individual is incapable of making such decisions and appoints a substitute decisions
maker (in Chapter 2 called a “proxy”) to make decisions about his or her personal care
when [Link] deal only with the person’s physical environment and physical
body and can never be exercised if the individual is capable of making personal or
health care decisions themselves. Also called “power of attorney for property” and
“personal and health care directives.”

Power of Attorney for Property. A power of attorney is a written document that

authorises a substitute decision maker, called an “attorney,” to manage the financial
affairs of the grantor. It may be called a power of attorney, or in the province of
Quebec, a “mandate.” In Ontario, there is a distinction between the terms “power of
attorney for property” and “power of attorney for personal care.”

Grant of Probate. This is the formal approval issued by the court acknowledging
the validity of the Will and confirming the authority of the executors.

Probated Will. A Will for which a grant of probate has been issued.

GLO-6
 APPENDICES — GLOSSARY

Proponent of a Will. The person, usually the executor, asserting the validity of a
Will by making an application for the grant of probate.

Proxy. The person who is given the authority to make personal care or health care
decisions, although the specific term varies by [Link] terms are “agent,”
“delegate,”“substitute decision maker,”“attorney for personal care,” or “attorney.”

Prudent Investor Rule. The general rule under modern trust legislation in most
Canadian jurisdictions regarding the obligation of an executor or trustee to exercise
care and skill in the management of trust or estate investments and the discretion to
choose investments within his or her discretion rather than being restricted to a pre-
approved list of specific investments that are permitted.

Public Trustee: The public official who is charged with the responsibility of
protecting the interests of vulnerable and incapable persons under provincial law.
This office is sometimes called the public trustee or the public guardian and trustee,
or some variation of these, or in Prince Edward Island, the official guardian. In
Quebec, the official is called the public curator. In some provinces, the office of the
public trustee has not been created by statute, rather the ministry or department of
government designated has this responsibility.

Residuary Gift. Gift of the residue or residuary property of the estate, which is the
portion of the estate that remains after the payment of debts, taxes, and all the other
types of gifts have been given.

Residue. After all debts are paid, all specific gifts made, and any other financial
obligations satisfied, the balance of the assets of the estate form the “residue.”
Typically the residue of the estate may be divided into an equal number of shares
to be divided among all the members of a class, or to be divided among a number of
named beneficiaries.

Right of Survivorship. The right for ownership of property to pass to the surviving
joint owners on the death of one owner. This applies only to property held jointly
with a right of survivorship, or as “joint tenants.”The property will only pass through
the estate of an owner when the last surviving joint owner dies. This right does not
exist in Quebec.

Situs of Property. The location of property for legal purposes such as taxation and
conflict of laws. The situs of real property is generally the jurisdiction where the
property is physically located.

GLO-7
APPENDICES — GLOSSARY

Specific Gift. A gift of specific property rather than cash or other property from a
non-specific source. For example,“my Jaguar” is a specific gift, whereas $1,000 is not.

Specific Power of Attorney. This is a power of attorney that exists for a specific
purpose or for a limited time period, such as for a specific transaction when the
grantor is ill or absent, or dealing with a specific type of property such as interests in
a business or corporation, or for a specified period when the grantor will be out of
the country. It is sometimes referred to as a “limited power of attorney.”

Springing Power of Attorney. This is a power of attorney that is subject to

a condition precedent to be of effect. For example, a power of attorney could be
subject to the condition that it has effect when the grantor is out of the country on
military service or only after two medical doctors have certified the grantor to be
mentally incapable of managing property.

Tax Clearance Certificate. A written confirmation issued by the CRA (and Revenue
Quebec, if applicable) that, according to the CRA’s records, a person’s tax affairs are
in order at the date of issue of the certificate. It permits a distribution by a trustee or
executor from a trust or estate without personal liability.

Tenants-in-Common. Joint ownership of property without a right of survivorship.

A deceased owner’s share passes through the estate. It is the opposite of a joint
tenancy, where there is a right of survivorship.

Testamentary Disposition. A gift that is intended to take place on death and is

generally made by Will. Testamentary gifts can be contrasted with inter vivos gifts,
which are intended to take effect during the lifetime of the donor.

Testate. The state of dying with a [Link] can be contrasted with “intestate.”

Testator. The person who makes a [Link] female version from the Latin is “testatrix,”
but “testator” is now used to refer to either gender except in a specific Will made by
a female individual.

Ulysses Agreements. An advance instruction, typically given by a person with a

known mental illness, to prevent the maker from the consequences of expressing
inappropriate and unwanted instructions made subsequently when under the
influence of mental illness.

GLO-8
 APPENDICES — GLOSSARY

Undue Influence. Refers to overpowering influence exerted by someone on the

testator that caused the testator to execute the Will or to include a particular provision
in it. Where the testator has been unduly influenced, the Will is not the result of the
testator’s voluntary actions. If it is shown that a testator was unduly influenced, then
the Will or provision in question will be invalidated.

Will in Solemn Form. Where there is a dispute about granting probate or any
question about the validity of the Will, the Will in question must be specifically
“proved” before the court to be certified as a valid Will. This is a more formal process
than a grant of probate. Once certified in this manner, the Will is said to be proved in
solemn form.

Will. The document that disposes of the estate of an individual called the “testator”
upon death. A “testament” also refers to a Will. Formerly, a Will referred to a document
that disposed of land and a testament referred to a document that disposed of
personal property on death. Now the two terms are used interchangeably.

GLO-9
 BIBLIOGRAPHY

Black, Howard W. Wills and Estates Cases, Text, and Materials (Toronto: Emond
Montgomery Publications Limited, 2009)

CCH Canadian Estate Administration Guide

CCH Canadian Estate Planning Guide

Chow, Grace, Ian Pryor, John Poyser, and Larry Frostiak. Taxation of Trusts and
Estates: A Practitioner’s Guide 2015 (Toronto:Thomson Canada Ltd., 2015)

Gillen, Mark. Law of Trusts (Toronto: STEP Canada, 2009)

Harvey, Cameron, and Linda Vincent. The Law of Dependants’ Relief in Canada, 2nd
ed. (Toronto:Thomson Carswell, 2005)

Howlett, David A. Estate Matters in Atlantic Canada (Toronto: Carswell, 1999)

MacKenzie, James. Feeney’s Canadian Law of Wills, 4th ed. (Markham: LexisNexis/
Butterworths, 2000-2009)

O’Sullivan, Margaret R. Dealing with Assets Outside the Jurisdiction, presented at the
Ontario Bar Association,Trusts and Estates Section, February 23, 2010

Oosterhoff,A. H. Oosterhoff on Wills and Succession, 6th ed. (Toronto: Carswell, 2007)

Pitel, Stephen G. A., and Nicholas S. Rafferty. Conflict of Laws (Toronto: Irwin Law,
2010)

Popovic-Montag, Suzana. “Revisiting a Trustee’s Right to Indemnification,” (2003) 50

ETR (2d) 161

Poyser, John E. S. “Estate Planning for Clients with Diminished Capacity: Deathbed
Wills,”Vol. 29, No. 3 (2010), Estates, Trusts and Pensions Journal

Roy, Marilyn Piccini.“Demystifying the Quebec ‘Fiducie’ or Trust,” 11th National STEP
Conference, June 19, 2009,Toronto, Ontario

BIB-1
APPENDICES — BIBLIOGRAPHY

Roy, Marilyn Piccini. Practice Note, “Useful Information for the Settlement of Estates
with Quebec Connections: Will Search Certificates and Marriage Contracts,” Vol. 27,
No. 1 (2007), Estates, Trusts and Pensions Journal

Royal Bank of Canada. “Settling an estate — An executor’s kit” [05466 (09/2009)]

brochure

Schnurr, Brian A. Estate Litigation, 2nd ed. (Eagan, MN: Westlaw, Estates &Trusts
Source, 2010)

“Solicitors’ Will-Making Duties,” [2002] MULR 4, (2002) 26 Melbourne University of

Law, available on the Internet

Sweatman, Jasmine M. Guide to Powers of Attorney (Aurora: Canada Law Book, 2002)

Sweatman, Jasmine M. Powers of Attorney and Capacity: Practice and Procedure

(Toronto: Canada Law Book, 2014)

Thériault, Carmen S. Widdifield on Executors and Trustees, 6th ed., Looseleaf Service
(Toronto: Carswell)

Van Cauwenberghe, Christine. Wealth Planning Strategies for Canadians, 2015

(Toronto: Carswell, 2014)

Waters, Donovan W.M., Q.C., Mark R. Gillen, and Lionel D. Smith. Waters’ Law of Trusts
in Canada, 4th ed., (Toronto: Carswell, 2012)

BIB-2
 INDEX

Accounts Role of Agent, 10.2.11

Basic System, 13.3 Role of Executor, 10.2
cash accounting, 13.3.1 avoid conflict of interest, 10.2.4
forms and statements, 13.3.2 co-operate with other executors,
Charging Provisions, 13.7 10.2.1
Common-law Rules, 13.6 deal with closely held
Compensation corporations, 10.2.9
agreements, 13.7 distribute the estate, 10.2.10
approval to, 13.9 fiduciary duty, 10.2.2
calculating, 13.10 impartiality, 10.2.5
and inter vivos trusts, 13.12 preserve capital, 10.2.7
sharing, 13.11 renouncing appointment, 10.2.1
of substitute decision makers, retain professionals, 10.2.3
13.16 standard of care, 10.2.6
Executor Compensation, 13.5 wind up business, 10.2.8
statutory rules, 13.8, Figure 13.1 Role of Solicitor, 10.3
Indemnification for Expenses and Testamentary Trust, 10.4, 10.6
Liabilities, 13.15 Trust versus Estate Administration, 10.6
Legacies in Lieu of Compensation, 13.14
Legislation, 13.8, Figure 13.1 Alter Ego Trust, 9.3.9, 10.6, 11.19
Managing, 1.6.3, 13.2
Avoiding Litigation, 4.7
communicate with beneficiary,
Loss Prevention, 4.7.1
13.2.3
legal requirement, 13.2.2 Attorney (for Property)
obligation, 13.2.1 Duties of Attorney 1.6
responsibility of executor, 13.2.2 accountability, 1.6.3
Other Personal Representatives, 13.16 duties and powers, 1.6.2
Passing, 13.4 keeping accounts, 1.6.3, 13.2
cost, 13.4.5 mandatory, 1.6.1
failure to pass, 13.4.2 voluntary, 1.6.1
hearing required, 13.4.3 Estate Planning Under 1.10
pass over the counter, 13.4.3 advance on inheritance, 1.10.1
results of passing, 13.4.4 estate freeze, 1.10.3
timing, 13.4.1 reduce U.S. estate tax, 1.10.2
Taxation of Fees, 13.13 reduce value of estate, 1.10.2
transfer to inter vivos trust, 1.10.4
Administering Trusts and Estates
where permitted 1.10.5
Executor’s Year, 10.4
Powers of Attorney
Income Tax, 10.8
limitation of powers, 1.5.1
Insolvent Estates, 10.5
personal acts or appointments, 1.5.2
Overview, 10.1

IND-1
APPENDICES — INDEX

Barriers to Will-Making. See also Eligibility, 1.4.1

Benefits to Will-Making; Intestacy. criteria, [Link], [Link]
Cost, 5.2.3 Multiple Attorneys, [Link], [Link], 1.8.2
Deathbed Wills, 5.2.4 avoiding conflicts among attorneys,
Discomfort, 5.2.1 [Link]
Family Relationships, 5.2.2 different attorneys for separate
property, [Link]
Beneficiary Designations, 3.2, 3.6.5,
4.3.4, 7.3.8, [Link] Claims Against Estate. See Claims
Under Dependant Relief; Claims
Benefits to Will-Making. See also Under Family Law
Intestacy. Legislation, 6.3, 6.5, 6.6, 6.8, 6.9
Avoid dependant relief, 6.5, 6.8
additional administrative costs, limitation periods, 6.10
5.2.6 property, 6.3, 6.9
additional taxes, 5.2.9 limitation periods, 6.10
distribution, 5.2.8 provincial, 6.3, 6.8, 6.9
intestacy, 5.1, 5.2.5, 5.2.6 Other
Certainty of Death, 5.1.4 benefit recipients, 6.5.11
Choice of, 5.1 life interest in real property, 6.6
beneficiaries, 5.1.1
disposition of assets, 5.1.2 Claims Under Family Law
executor, 5.1.3 Common-law Spouses, 6.5.4
Probate Fee Saving Strategies, 5.2.10, Property, 6.2, 6.3, 6.4
Chapter 9 common-law spouse, 6.2
Provision for Minor Children, 5.2.7 discourage a claim, 6.4.2
Tax Planning Strategies, 5.2.10, exceptions, 6.4.1
Chapter 9 provincial variations, 6.3.1–6.3.10,
Chapter 7
Choice of Attorney, 1.4 spousal claim against child’s
Appropriateness, 1.4.2 inheritance, 6.4.3
age, [Link] Same-sex Partner, 6.5.3
alternate or successive attorneys, Support, 6.2, 6.5.3, 6.5.4
[Link]
appointing children, [Link] Claims Under Dependant Relief, 6.5
Canadian controlled private Age of Majority (by Jurisdiction), 6.12
corporations, [Link] Amount, Criteria, [Link]
complexity of the assets, [Link] additional, [Link]
corporate attorney, [Link] Assets Used to Satisfy Orders, 6.5.9
family situation, [Link] Awards Found in Legislation, 6.16
financial management skills, [Link] Claimant
investment knowledge, [Link] adult child, [Link]
location/residence, [Link], 1.8.1 child, 6.5.5
willingness to act, [Link] married spouse, 6.5.3

IND-2
 APPENDICES — INDEX

minor child, [Link] specific gifts, [Link]

other relationships, 6.5.6 testamentary expenses, [Link]
Common-law Spouses, 6.5.4 testamentary trusts, [Link], [Link]
criteria, 6.11 Minor Beneficiaries, 4.3.7
provincial variations, 6.5.4 Other, 4.3.9
Definition, 6.5.2 Powers of Executors, 4.3.8
Definition of Spouse, 6.14 Revocation, 4.3.1
Dependant Entitlement and Criteria, 6.15 Testimonium Clause, 4.3.10
Effect of Intestacy, 6.5.1
Eligibility Dependant Relief. See Claims Under
of applicant, 6.5.3–6.5.6 Dependant Relief.
of claim, 6.5.1, 6.5.2
Drafting Powers of Attorney, 1.9,
of common-law spouse, 6.5.4
4.1, 4.2
Financial Dependence, 6.5.2, [Link], 6.5.6
Accountability, 1.9.8
Moral Obligation, 6.7
Consent to Obtain Information, 1.9.3
Jurisdictions outside B.C.,
Dependants, 1.9.6
[Link]–[Link]
Donor’s Name, 1.9.1
Tataryn, 6.7.1, 6.7.2
Effective Date, 1.9.4
Qualify as Dependant (by Jurisdiction),
Extra-Provincial Requirements, 1.9.10
6.13
Family Home, 1.9.5
Quebec, 6.5.4. See also Quebec Issues.
Gifts, 1.9.6
Same-sex Partners, 6.5.3
Land, 1.9.2
Types of Awards, [Link]
Recite Duties of Attorneys, 1.9.9
Waive Obligations, 6.5.7
Separation or Divorce, 1.9.7
Conflicts of Interest, 4.1.3
Estate Administration Process,
Contents of a Will. See also Will Chapter 11
Drafting. Advertise for Creditors, 11.11, Figure 11.4
Appointment of Executors, 4.3.5 Alter Ego Trusts, 11.19
Beneficiary Designations, 4.3.4 Beneficiary Designations in Registered
Declaration, 4.3.1 Plans (by Jurisdiction), Figure 11.3
Definitions, 4.3.2 Dispute Debts and Claims, 11.12,
Disposition of Estate, 4.3.6 Figure 11.5
common disaster clause, [Link] Distribute Estate, 11.20
dispose of or retain assets, [Link] Housekeeping Tasks, 11.5
general gifts, [Link] Identify Liabilities, 11.10
gift over, [Link] Joint Partnership Trusts, 11.19
hotchpot clause, [Link] Manage Assets of Estate, 11.6–11.9
personalty clause and Prepare Income Taxes, 11.13–11.18
memorandum, [Link] Relationship with Beneficiary, 11.3
remainder of personal effects, Spousal Trusts, 11.19
[Link] Step-by-Step Process, 11.2
Valuing the Estate, 11.5–11.6

IND-3
APPENDICES — INDEX

Execution of Will. See Will Drafting; where two or more issue,

Valid Will. 5.5.4, [Link]
spousal share where children pre-
Forced Heirship. See also Multiple deceased with issue, 5.5.8
Jurisdictions. Legislation, 5.9
Applying Rules, 14.6.2 Misconceptions, 5.3
Case Studies, 14.7 assets will pass outside estate,
Definition, 14.6 5.3.3, 5.7
Hague Convention on the Law common-law spouse entitled on
Applicable to Trusts, 14.6 intestacy, 5.3.2, 5.5.13
Impact on Canadian Estates, 14.6.1 spouse inherits everything, 5.3.1
Partial, 5.4
Foreign Property. See Multiple Rules for No Spouse or Issue, 5.10
Jurisdictions. Spouse Not Entitled on Intestacy, 5.11
Spouse Preferential Share, Figure 5.1
Inter Vivos Trust, 1.10.4, 3.6.3, 10.6
Survivorship Rules, 5.7
Inter Vivos Gifts, 3.2, 3.6.1, [Link]
Multiple Jurisdictions
Intestacy. See also Benefits to Will- Dependant Relief, 14.5.5
Making; Barriers to Will-Making. Domicile, 14.3
Appointment of Administrator, 5.6 Essential Validity of Will, 14.5.4
Case Studies, 5.8 Estate Administration, 14.5.1
Common Accident, 5.7 Estate Distribution, 14.5.2
Definitions of Spouse/Common-law Estate Tax, 14.8
Spouse (by Jurisdiction), 5.12 Forced Heirship, 14.6
Dependant Relief Claims, 6.5.1 case studies, 14.7
Distribution, Statutory Regime, 5.5, 7.3.3 Foreign Law, 14.2
children or issue only, 5.5.5 Immovable, 14.4
common-law spouse, 5.5.10, 5.5.11, Inheritance Tax, 14.8
6.5.4 Intestacy within Canada, 14.5.3
disqualification of spouse Movable, 14.4
entitlement, 5.5.13 Residence, 14.3
distributive share, 5.5.1
Obtain Grant of Probate, 8.5
division among children and issue,
Deliver Notice of Application, 8.5.4
4.4.8, 5.5.6, [Link], 5.8
Estimate Value of Estate, 8.5.6
matrimonial home, 5.5.9
Locate
multiple spouses, 5.5.12
Will, 8.5.2
no spouse, children or issue, 5.5.7
affidavit of execution, 8.5.3
preferential share, 5.5.1
Prior to Paying Fees, [Link]
same-sex spouse, 5.12
Required Documents, 8.5.1
share of spouse
Security Requirement, 8.5.7
where no issue, 5.5.2, [Link]
where only one child, 5.5.3,
[Link]

IND-4
 APPENDICES — INDEX

Personal Directives (Powers of Purpose, 2.3

Attorney for Personal Care) Specific Medical Directions, 2.11.1
Appointment Component, 2.1 Where No Directive, 2.9
Capacity to Make, 2.7 Validity without Proxy Consent, 2.5
Definitions Values and End-of-Life Decisions, 2.11.3
agent. See proxy.
attorney. See proxy. Powers of Attorney for Property,
attorney for personal care. See Chapter 1, [Link]
proxy. Assets Outside the Jurisdiction, 1.8.1
delegate. See proxy. Common-law Principles, 1.1.4
director. See maker. created by contract, 1.1.4
grantor. See maker. duty to account to the grantor,
health care decision 2.2.6 1.1.4
living will, 2.2.4 fiduciary duty to act in good faith,
maker, 2.2.2 1.1.4
no heroic measures clause, 2.2.5, granted only in financial matters,
2.11.2 1.1.4
personal care decision 2.2.6 remuneration and reimbursement,
personal directive, 2.2.1 1.1.4, 1.8.6
principal. See maker. revokable by grantor at any time,
proxy, 2.2.3 1.1.4
substitute decision maker. See termination, 1.1.4
proxy. Dealing with Real Property, 1.8.3
Ulysses agreements, 2.2.7 Definitions, 1.1.1
Directive Component, 2.1 attorney, [Link]
Distinguished from Powers of Attorney committee. See guardian for
for Property 2.1 property.
Enforceability, 2.6 continuing power of attorney. See
care is consistent with the enduring power of attorney.
directive, 2.6 donor. See grantor.
maker is incapable, 2.6 enduring power of attorney,
subject to last known wishes, 2.6 [Link]
valid directive requirements homologation, 1.2.1
satisfied, 2.6 estate, [Link]
Formalities, 2.8 general, [Link]
Health Care Only Decisions, 2.4 grantor, [Link]
Jurisdictional Differences, 2.2.1 guardian for property, [Link]
No Heroic Measures, 2.11.2 limited power of attorney. See
Proxy, Choice of, 2.10. See also Choice specific power of attorney.
of Attorney for Property. specific, [Link]
characteristics, 2.10.2 springing, [Link], 1.1.6
eligibility, 2.10.1 substitute decision maker. See
multiple proxies, 2.10.3 attorney.

IND-5
APPENDICES — INDEX

Disadvantages of Court Appointed Hotchpot Clause, 9.4

Guardian, 1.2.3 Not Priority, 9.1
Distinguished from a Trust, 1.1.7 Risks
trust as an alternative, 1.8.5 cost/benefit analysis required, 9.1.5
Drafting. See Drafting Powers of distribution spoiled, 9.1.4
Attorney. beneficiary designations,
Misconceptions [Link]
bank powers of attorney, [Link] “out of order” death, [Link]
existence of a Will, [Link] increased income tax, 9.1.3
family home, [Link] compromised principal
joint accounts, [Link] residence exemption,
not exclusive, [Link] [Link]
trading authorisation, [Link] pass on taxes to joint owners,
No Power of Attorney, 1.2.2 [Link]
Origin, 1.1.3 Strategies. See Probate Planning
Provide for Incapacity and Enduring Strategies.
Powers, 1.2.1
Provincial Variation, 1.1.5, 1.11 Probate Fees, 8.4, Figures 8.1–8.2
Purpose, 1.2.1 Effect of Debts, 8.4.3
Removal and Termination, 1.7 Flat Rates, 8.4.1
by courts, 1.8.7
Probate – Grant of
renunciation, 1.7.3
Duties, 8.2
revocation, 1.7.1
court officials, 8.2.3
separation or divorce of spouse or
estate registrar, 8.2.2
partner, 1.7.2
Jurisdiction, 8.2.1
Status Indians, 1.8.4
Legislation, 8.6
Validity, 1.3
Procedures, 8.1, 8.5
capacity, 1.3.2
before grant, 8.1.5
execution, 1.3.1
grant not required, 8.1.6
five-part test, 1.3.2
obtaining, 8.1.2
witnesses, 1.3.1
proving the Will in common form,
Probate Fee Planning, Figures 8.2.4
8.1–8.2 proving the Will in solemn form,
Benefits 8.2.4
cost/benefit analysis required, 9.1.5 required documents, 8.5.1
creditor protection, 9.2.5 responsibility, 8.1.1
privacy, 9.2.1 waiver, 8.1.7
savings Purpose, 8.1.3
executor’s fees, 9.2.2 ensure claims expire, 6.10, [Link]
legal fees, 9.2.3 limits executor’s liability, [Link]
shelter assets from claims, 9.2.4 prevents subsequent challenge,
Case Studies, [Link], 9.4.1, 9.5 [Link]

IND-6
 APPENDICES — INDEX

Types, 8.3 one estate, [Link]

administration de bonis non origin of strategy, [Link]
administratis with Will annexed, outside Ontario, [Link]
8.3.5 No Need for Probate, 9.3.12
administration de bonis non Pass Assets Outside Estate
administratis, 8.3.4 beneficiary for life insurance,
ancillary letters probate, 8.3.7 [Link], [Link], [Link]
letters of administration pendent executory trusts, [Link]
lite, 8.3.6 quick receipt of funds, [Link]
letters of administration with Will Presumption of Advancement, 9.3.8
annexed, 8.3.3 case law, [Link]
letters of administration, 8.3.2 cost of litigation, [Link]
letters probate, 8.3.1 evidence of testator’s intentions,
resealing, 8.3.8 [Link]
When Required, 8.1.4 Reduce the Value of Assets
deal with Will substitutes, 9.3.2
real property, [Link] Registered Plans, 9.3.4
third parties, [Link] jurisdictional differences, [Link]
defend claim, [Link] limited creditor protection, [Link]
not required, 8.1.6, 8.4.2 resulting tax, [Link]
on intestacy, [Link] Trusts, 9.3.5, 9.3.9
protect executor, [Link] Will Substitutes
resolve validity of Will, [Link], inter vivos gifts, [Link]
8.2.4. See also Valid Will. trusts, [Link]
waiver, 8.1.7
Probate Taxes, 8.4, Figures 8.1–8.2
Probate Planning Strategies, 9.3.1
Alter Ego Trusts, 9.3.9 Property Held for Others
Corporation to Hold Assets, 9.3.10 Absentee, 12.3
match assets with debt, [Link] presumption of death, 12.4
shelter value of shares, [Link] Definitions, 12.1
Jointly Held Property with Right of Incapable Adult, 12.2
Survivorship, [Link] appoint guardian for financial
consider consequences of matters, 12.2.1
transfers, [Link] assessments of capacity, 12.2.2,
deemed disposition, [Link] 12.2.3
disadvantages, [Link], [Link], duties of attorneys, 12.2.6
[Link] power of attorney, 12.2.5
with spouse, [Link] role of public trustee, 12.2.4
Joint Partner Trusts, 9.3.9 Legislation, 12.5
Multiple Wills Missing Persons, 12.3
drafting of, [Link]
isolate assets, 9.3.6

IND-7
APPENDICES — INDEX

Property Held Jointly with Right mandate, [Link]. See also

of Survivorship, 3.2, 3.6.4, 5.7, Personal Directives,
[Link] Definitions, proxy.
notarial Will, 7.1.1. See also Wills –
Provincial Legislation Principles, Definition.
Absentee and Presumption of Death, Where Issues May Arise, 7.2
12.5 changing residence, 7.2.2
Advertise for Creditors, Figure 11.4 immovables, 1.1.6, 7.2.1
Anti-Lapse Rules, 3.13 insurance policies, 7.2.2
Beneficiary Designations in Registered residence of beneficiary, 7.2.3
Plans, Figure 11.3 Unique Features, 7.3
Compensation of Executors,Trustees, beneficiary designations, 7.3.8
and Property Guards, Figure 13.1 compensatory allowance, 7.3.4
Definition of Spouse for Dependant distribution on intestacy, [Link]
Relief, 6.14 family partrimony, 6.3.5, 7.3.3
Definitions of Spouse/Common-law calculating, Figure 7.1
Spouse for Intestate Succession, 5.12 jointly held property, 7.3.10
Dependant Entitlement and Criteria, 6.15 mandate in anticipation of
Dependant Relief, 6.8 incapacity. See springing power
Dependant Relief Awards, 6.16 of attorney.
Dispute Claims Against Estate, Figure 11.5 marriage contract registry, 7.3.7
Intestacy Rules for No Spouse or Issue, other spousal rights
5.10 matrimonial regimes, 7.3.5
Intestate Succession, 5.9 claim for dependant relief,
Powers of Attorney, 1.11 7.3.5
Probate Fees, 8.6, Figures 8.1–8.2 probate, 7.3.6
Spousal Rights to Division of Property, Revocation, [Link]
6.9 springing power of attorney,
Spouse Not Entitled on an Intestacy, [Link]
5.11 spouses
Spouses Preferential Share or civil unions, 7.3.2
Equivalent, Figure 5.1 de facto, 7.3.9
Wills, 3.14 married, 7.3.2
Wills Made by Minors, 3.11 trusts, 7.3.1
Wills registry, 7.3.7
Quebec Issues
Civil Law Revoking a Will, 3.5
overview, 7.1 Change in Marital Status, 3.5.2
the practice of law, 7.1.1 divorce, [Link]
Definitions marriage, [Link]
liquidator, 7.2.1. See also Overt Act of Testator, 3.5.1
Intestacy, Appointment of holograph codicil, [Link]
Administrator. lost Will, [Link]

IND-8
 APPENDICES — INDEX

Rules of Practice, 4.1.3 gifts over, 4.4.5

jointly held property, 4.4.2, 9.3.7
Valid Will lapse, 4.4.5
Capacity of Testator, 3.3.4 minor beneficiaries, 4.4.6
Claims Against Estate, 3.3.4 no contest clause, 4.4.3
Fraud, 3.3.8 per capita distribution, 4.4.9
Mistake per stirpes division, 4.4.8, Figure
three categories, 3.3.8 4.1, 5.5.6
Privileged Wills, 3.3.4 revocation clauses, 4.4.10
Requirements, 3.3.1, 3.3.2 Rule in Saunders [Link], 4.4.4
Substantial Compliance, 3.3.3 specific property, 4.4.7
Suspicious Circumstances, 3.3.7 Troubleshooting, 4.8
Undue Influence, 3.3.5 assets, 4.8.2
onus of proof, 3.3.6 avoiding claims, 4.8.4
avoiding intestacy, 4.8.6
Will Drafting beneficiaries, 4.8.1
Contents. See Contents of a Will. distribution. 4.8.5
Duty of Solicitor, 4.1 income tax, 4.8.3
avoid litigation, 4.1, 4.7.1 liabilities, 4.8.2
capacity of testator, 4.1.1
conflicts of interest, 4.1.3 Will Kits. See Will Drafting,
discourage claims, 6.4.2 Homemade Wills; Valid Will.
liability of solicitor, 4.1.2
Execution, 3.3.2, 4.5. See also Valid Will. Wills – Principles
Homemade Wills, 4.6 Amendment, 3.4
Instructions Characteristics of a Will, 3.2
alert testator to problems, 4.2 Definition, 3.1.1
checklists, 4.2.1, 4.7.1, 4.8 codicil, 3.4
choice of executor, 4.2.4 conventional Will, 3.1.1
attributes, [Link] intestate, [Link]
how many, [Link] notarial Will, [Link]
possible appointees, [Link] proponent, [Link]
disclosure testamentary disposition, [Link]
family situation, 4.2.3, 4.7.1 testate, [Link]
financial, 4.2.2, 4.7.1 testator, [Link]
guard against intestacy, 4.2.6 Will, [Link]
personal effects, 4.2.5 Will in solemn form, [Link]
reflect wishes of testator, 4.2 Effect of Marriage (by Jurisdiction), 3.12
residue, 4.2.6 Four Essential Elements, 3.2
solicitor’s notes, 4.2.5 Legislation, 3.8.3, 3.11
Issues. See also Wills – Principles. Testamentary Freedom Limited, 3.9
anti-lapse, 4.4.5 contrary to public policy, 3.9.1
cascading succession, 4.4.1 contrary to Charter, [Link]

IND-9
APPENDICES — INDEX

control or restrain marriage, joint, 3.7.4

[Link] mirror, 3.7.2
void for repugnancy, [Link], multiple, 3.7.5
4.4.4 probate fee planning, [Link].
dependant relief, 3.9.2 See also Chapter 9.
renunciation of gift, 3.9.4 property outside jurisdiction,
spousal rights, 3.9.3 [Link]
Testamentary Gifts, 3.2, 3.8. See also mutual, 3.7.3
Wills Substitutes. Valid Will. See Valid Will.
ademption, 3.8.5
anti-lapse rule, 3.8.3 Will Substitutes
class gifts, 3.3.2, 3.8.6 Beneficiary Designations, 3.6.5. See also
gift over, 3.8.2 Chapter 9.
lapsed, 3.8.2, 3.8.6 Gifts
reduction of, 3.8.4 donatio mortis causa, 3.6.2
substitute beneficiary, 3.8.2 inter vivos, 3.2, 3.6.1
types, 3.8.1 Inter Vivos Trust, 3.6.3
Testamentary Powers, Delegation of Joint with Right of Survivorship, 3.6.4.
power of appointment, 3.10 See also Chapter 9.
Types, 3.7
holograph, 3.3.3, 3.7.1
international, 3.7.6

IND-10