I recently met with Richard (not his real name) in my law office in Stittsville (Ottawa) to review his estate planning. In the course of our discussions, he explained that close to a year ago, he had received a letter from his uncle’s lawyer. It said that he was a beneficiary of his uncle’s estate. He still hadn’t received any of his inheritance. As Richard knew I also worked with executors, he asked if I might know what could be taking so long.
I explained that it generally takes an executor a year to a year and a half to administer an estate. This includes locating and probating the Will, if there is one, arranging the funeral and disposition of the deceased’s remains, locating and securing the deceased’s assets and liquidating as necessary including arranging for the sale of real estate, paying debts, filing tax returns, and distributing the estate to the beneficiaries.
However, as I advised Richard, there are many reasons why this process might require more time. This means that beneficiaries might have to wait longer to receive their inheritance. I briefly explained some of the most common reasons for delays.
Errors in tax filings: If the deceased failed to file tax returns or if tax returns were filed but information was incorrect, the executor must catch up on the missed tax filings or correct any errors that were made. These kinds of problems often occur because the deceased was having mental capacity issues in his or her last years.
Delays by Canada Revenue Agency (CRA) in issuing Notices of Assessment: Notices of Assessment for tax filings after death take considerably longer than might be expected for Notices of Assessment issued to a living person. It can take from two to six months for the executor to receive the Notice of Assessment, even if there are no unusual issues or problems with the final tax return or with the estate trust return. If there are problems with the tax returns, issuing the Notice of Assessment will be even further delayed.
Delays by CRA in issuing Clearance Certificates: Under the Canadian Income Tax Act an executor is required to obtain a clearance certificate before distributing estate property that he or she controls. However, the executor cannot request a Clearance Certificate until the executor has received the Notice of Assessment for either or both of the final tax return of the deceased or for the last estate trust return that the executor expects to file. Once the Clearance Certificate has been requested by the executor, typical wait times to receive it are six months or more.
Foreign beneficiaries: If any of the estate beneficiaries live outside Canada, extra steps will be required by the executor. There may be forms to be submitted and taxes may have to be withheld and submitted directly to the Canadian tax authorities. If an executor is not a resident of Canada, additional forms must also be completed.
Disagreements/Litigation: Any sort of disagreement or litigation affecting the estate will cause delay. These can be lengthy. This could be a claim by a creditor that the executor is questioning, a claim by a former or current spouse or by a dependant of the deceased, or unresolved litigation that existed at the time the person died or that has been started since the person passed away, perhaps by a disappointed beneficiary.
Trusts in the Will: If there is a trust for a beneficiary whether in the Will or outside the Will, an inheritance may be payable to the trust and not to the beneficiary directly.
Minor Beneficiary: If a beneficiary of an estate is under the age of 18, in Ontario they are considered a minor and their inheritance cannot be paid directly to them. The executor may opt to pay the inheritance in to Court for the benefit of the minor (who can apply at age 18 to have it paid out) or, if the Will has appropriate provisions, the executor or someone else may be appointed as trustee of the inheritance on behalf of the minor.
As you can see, there are many reasons why the payment of an inheritance to the beneficiary of an estate may be delayed. If you are the beneficiary of an estate and feel you have been waiting far too long for your inheritance, make an appointment with one of our lawyers so we can review your situation and discuss your options.
Or if you are the executor of an estate and are concerned that you are taking too long, make an appointment with one of our lawyers to review what you have done so far and to make sure you are meeting all of your responsibilities.
Reproduction of this blog is permitted if the author is credited. If you have questions or if you would like more information, please call us at 613 836-9915. This blog is not intended to be legal advice but contains general information. Please consult a lawyer or other professional to determine how the information in this blog might apply to you.
Blog posts pre-dated December 1, 2015 were originally published under Neff Law Office Professional Corporation.
