I recently met with Jack (not his real name) at my law office near Stittsville in the City of Ottawa. Jack had a question which many of the executors that I meet with also ask. Jack’s mother had passed away 6 months ago. He had been appointed as the executor of her estate. His mother had left everything to be divided equally among Jack and his brother and sister. Jack’s sister, Susan, was in long-term care due to some serious health issues and her care costs were climbing. Jack was worried about her and wondered if he was allowed (as executor) to give Susan some of her inheritance right away. He and his brother could wait until the estate was ready to be wound up to receive their inheritances.
I explained to Jack that the law requires that an executor treat all residual beneficiaries even-handedly. For example, as you and your brother and sister are equal beneficiaries of the residue of the estate, if you as executor give Susan $50,000 from the estate, you must also give the same amount to yourself and your brother unless your brother and sister consent in writing. Although not the case for Jack, if any of the beneficiaries are minors (under the age of 18) or are mentally incapable, they cannot consent to an unequal distribution as they lack legal capacity.
I went on to advise Jack that if an executor distributes the estate before any of the following, he or she could be in trouble:
- creditors have been notified and any claims dealt with;
- limitation period for a dependant to make a claim has passed (6 months from application for Certificate of Appointment or ‘probate’ as it is sometimes called);
- limitation period for a spouse to elect to an entitlement under the Family Law Act has passed (6 months from the date of death);
- CRA has issued a Clearance Certificate to (a) the date of death (b) the trust year end for the final trust return being filed;
- if there is no Will (an ‘intestacy’), someone has to apply for a Certificate of Appointment of Estate Trustee without a Will and take on the role of executor. As per the Estates Administration Act, no distribution may take place for one year after the date of death. Also if no election was filed pursuant to the Family Law Act, the consent of the spouse or direction of the Court is needed before any distribution can take place.
If you are acting as the executor of an estate and have questions about when and how to make a distribution, make an appointment to meet with one of our lawyers today. Acting as an executor is a big job that comes with a lot of responsibility. Make sure you have all the information and support you need to get the job done right.
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Blog posts pre-dated December 1, 2015 were originally published under Neff Law Office Professional Corporation.