Settling an estate after a person has died can take a considerable amount of time, usually longer than expected. Can it be settled in 6 months? Maybe, but it's unlikely. 12 months? Sometimes, but in my experience it takes 12-18 months to sort out most areas of the middle class. “But I just have to cancel a few withdrawals and close the bank account,” you say. There's usually more to it than that, so without getting bored with all the finer details, let's talk about some of the time-consuming tasks.
The funeral is now over, family members have returned home and everyone is starting to resume their daily routines. But not the executor … that person's role has just begun. Since the will probably needs to be verified, let's start by generating a list of assets and liabilities, including the values as of the date of death. This is an iterative process, requiring you to contact a lot of companies and since most of these companies require a copy of the death certificate, you will need to mail one to them or you will need to introduce yourself in person. Here are some questions to get you thinking:
- Where are the bank accounts and what are the balances?
- What is the outstanding mortgage balance on the house?
- Are the monthly condominium fees up to date?
- Have property taxes been deferred?
- What is the value of Canada Savings Bonds and / or GICs? Tip: need to determine accrued interest.
- If the person was independent, what is the value of the company's shares?
- Are there any assets and / or debts outside of Canada, such as a house in Arizona or Florida? Don’t forget about timeshares. You may need to apply for probate again in these other jurisdictions.
- What is the value of the coin collection? Art? Hockey cards? Jewelry?
OK, the list of assets and liabilities is complete and you (or your lawyer) have the probate documents ready. In my experience, the homologation register usually takes 2-3 months to process the documents. Sometimes earlier, but don't count on it.
While you wait for the probate grant to be issued, we can prepare the house for sale, including deciding what to do with any property. Some things can be given to family members, some can be sold, and some will need to be thrown away. Do any necessary work around the home, such as painting and carpet cleaning.
If the deceased was self-employed, there may be a business to run. Someone will need to supervise the staff and there may be clients requiring attention. This business is probably of value, so the executor needs to make sure that value is maintained. Consider professional assistance.
The final income tax return will need to be filed and possibly a declaration of trust for the estate itself. Each of these will take time for the Canada Revenue Agency to process, and you should also request customs clearance certificates, again, each taking time for the CRA to process.
Well, so far it's been fine. Even though we've been working on it for several months, at least everything is progressing. But wait! One of the children is upset because he was left out of the will, so he will take legal action to challenge the terms of the will. Now all bets are off because everyone knows how long it will take to settle this estate. Make no mistake … this is becoming all too common, especially with the ever increasing value of estates.
Now is the time to distribute the proceeds of the estate. The assets were sold, debts paid, tax returns filed and lawsuits settled. Before distributing the money, the beneficiaries must pass the accounts, which means they must approve the expenses. It can be quick and easy, or long and lengthy. By the way, you kept detailed accounting records, didn't you? Sorry, I forgot to mention this little detail earlier.
In addition to everything described above, the executor likely has other obligations, such as family and work. The executor may also have to figure out how to settle an estate in the first place, may be uncomfortable with a computer, and may simply procrastinate. But the clock continues to run while the beneficiaries wait.
To sum up, settling an estate can take a surprisingly long time, and it can take a long time.