This week on Hull on Estates and Succession Planning, Ian and Suzana conduct a quick lesson on capital encroachment and discuss the role of investment accounts in the passing of accounts.

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Posted on April 1^st, 2008 by Hull & Hull LLP

David Smith: Hello and welcome to Hull on Estates. You are listening to Episode #104 on Tuesday, April 1^st, 2008.

Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada.   Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and Wills.  Now, here are today’s hosts.

David Smith: Good afternoon. I’m meeting today with Sarah of my office.  Hello Sarah.

Sarah Fitzpatrick: Hi, how are you today?

David Smith:  Good.  And again, this is David Smith and I’m with Sarah Fitzpatrick.  And today, Sarah, we thought we would talk about issues causing delay in the granting of probate.  And what exactly are we concerned about here?

Sarah Fitzpatrick:  Well, with respect to some of the recent podcasts done by Ian and Suzana considering the process in obtaining Certificates of Appointment for Estate Trustee, we thought it would be useful to consider ways in which to avoid the delay.  Delays are notorious in many estates Courts and it can often be very difficult to obtain probate without having your application sent back for rectification.  So we thought we’d just canvass some of the ways, just practical ways in which you can, when drafting your application, try and avoid some of those delays.

David Smith:  And Sarah, I mean, what’s the concern in terms of delaying the receipt of probate?  If you can’t get probate, what does that prevent you from doing?

Sarah Fitzpatrick:  Well often the estate trustee is anxious to obtain the probate so that they can go ahead and administer certain assets.  And in certain Courts, probate can be granted very quickly, within, for example, a week.  But in other Courts, it can take up to 6 to 8 weeks.  And if, for example, there may be a transfer of property pending, or other assets that need to be administered, delay can seriously jeopardize the ongoing administration of the estate.  So it is important to get your probate as quickly as possible.

David Smith:  Alright.  And you touched on this at the beginning, but probably just as an aside, we should point out that we are podcasting today on Hull on Estates.  Our sister podcast is Hull on Estate and Succession Planning.  And as you’ve pointed out, Sarah, there is a couple of recent podcasts which have been done by Ian Hull and Suzana Popovic-Montag, that touch on some other issues relating to the obtaining of probate.  Again, our focus today is on delay.  So what can cause delay in the obtaining of probate, and what should we consider in the 10 minutes we’ve got today?

Sarah Fitzpatrick:  Most likely the most common error that is sent back for rectification is the names.  The Court insists on total uniformity of names in the Application documents, which means that in your Application, in all of the documents that are required in the Application, there must be total uniformity of the names.  They must be referred to the same throughout the Application.

David Smith: Now Sarah, as a litigation lawyer, I obviously don’t run into this issue quite often that often, and part of the reason you’re obviously podcasting on this issue with me is that in your practice, you do do this sort of work.  To what extent can you comfortably delegate any of those reviews to support staff?  Is that something you can delegate or do you need to do that yourself?

Sarah Fitzpatrick:  Absolutely, certain of the…you know, the Application, can certainly be filled out by clerks that are knowledgeable in this area.  However, it is important to review everything.  Again, errors are very common and not only is it good just to have a second set of eyes reviewing the Application, but again it’s…the Court does insist on uniformity in all of the Application documents and it’s important to review them, the solicitor in charge of the file as well.

David Smith:  And ultimately you, as the solicitor, are accountable for that, right?

Sarah Fitzpatrick:  Exactly, that’s right.  But, for example, with respect to using the same names throughout, often what you’ll find is that the Will may refer to the deceased by a certain name, but that many of the assets are actually registered in a different name.  For example, the Will might be the estate of James Smith, but many of the assets are registered in the name of Jim Smith.  So the Application actually provides in two different lines where you can actually state “in the estate of James Smith” and then there’s a secondary line down below, where you would need to put “also known as Jim Smith”.  And the important issue here is that not only do you need to address that issue in the actual form of the Application, but this needs to be consistent throughout all of the Application documents: the Affidavit, the Certificates.  Everything does need to have that “in the estate of James Smith, also known as Jim Smith”.  And they will send it back if it’s not exactly correct everywhere.

David Smith:  And, of course, if it’s sent back and you’re acting for the executor, is there an obligation to advise the beneficiaries that there has been some delay caused through any kind of inadvertence?

Sarah Fitzpatrick:  David, no, there’s no obligation per se to advise the beneficiaries of the estate.  It may be just a matter of practice.  Certain solicitors can certainly advise, but I wouldn’t say that’s typical practice.  But the errors are so frequent that it would not be unexpected for this to happen quite frequently.

David Smith:  Right, and I guess the only reason that sort of occurred to me was just again wearing my litigator hat, if you’ve got a contentious relationship between the executor and the beneficiaries, obviously you want to perhaps communicate any deficiencies to the beneficiaries, if there’s any…if it’s particularly acrimonious.  Sometimes my practice is even if it’s over the top, you advise them of every single delay, just so that they know that things are being done.

Sarah Fitzpatrick:  Right, well certainly just on that, in terms of advising beneficiaries, one issue is the Notices.  And that’s another area which can cause delay.  The Court is insistent, you do need to serve the Notices of Application on all the beneficiaries.  Now the Notice doesn’t affect the legal rights of the beneficiaries in any way.  But the Court still does require that the Notices of Application be served on all the beneficiaries and as importantly, the names of the beneficiaries need to be identical to the names referred to in the Will, as well.  So that’s another key point to keep in mind when serving the Notices of Application on the beneficiaries and keeping them advised of that.

David Smith:  Okay, so good tip, Sarah.  Now, you know, shifting away from the actual form of the Application, why don’t we touch now on some specific situations.  I’m thinking particularly of holograph Wills, just because that’s near and dear to my heart.  I run into it in litigation context on occasion.  What specific challenges are presented by holograph Wills that may cause delay if not dealt with properly?

Sarah Fitzpatrick:  Well, first of all, we’re going to need an Affidavit in the holograph Will, attesting to the signature.  And what can often cause delay is that there can often be only one beneficiary or major beneficiary and ostensibly there could be a conflict of interest if the beneficiary is signing the Affidavit attesting to the testator’s signature.  So that’s one area that you do need to be concerned about.  However, I don’t think there’s any legal restriction on a major beneficiary signing the Affidavit attesting to the signature.  And often, of course, there’s no one else that’s available to do that.  In my experience, I’ve had cases where often there may be a cheque from a bank, for example, and you can often have the bank teller sign an Affidavit attesting to the signature.  But certainly, when there is only a single beneficiary able to swear that Affidavit, that can certainly cause delay.

David Smith:  Okay, and certainly the characteristic of a holograph Will is not only that it’s signed by the deceased, but is wholly made in the handwriting of the deceased.  And I presume, of course, that the Affidavit would reference that fact as well?

Sarah Fitzpatrick:  That’s right.  And I…and further to that point as well, I think that this is a case if there was a sole beneficiary of the estate, and they were the only ones that could sign the Affidavit, it would very well be a case that would be referred to a judge.

David Smith:  Okay, for our last topic we can touch on, and we’re not going to hit everything obviously, let’s just talk briefly about administration bonds.  I mean these, you know, just uttering that phrase causes me anxiety because every time I’ve encountered bonds in the litigation context, they’ve been very difficult to obtain.  Can you just tell me briefly what problems administration bonds can cause in the context of obtaining probate and how that can cause delay?

Sarah Fitzpatrick:  That’s right, David.  In a case where you have an Application without a Will, or if it’s an Application with a Will where the estate trustee is either…well the Applicant is either not named in the Will, or the estate trustee is resident outside of Ontario, the Court is going to require either a bond or an Order dispensing with the bond.  And, as David mentioned, the bonds are notoriously difficult to obtain these days.  And so typically you’re left with the option of getting an Order from the Court dispensing with the bond.  What you’re going to need to obtain here is consent of all the beneficiaries, and you’re going to need an Affidavit from the Applicant as well.

David Smith:  Right.  The bond just boils down to an issue of trust, doesn’t it?  I mean, I’ve always found it kind of…the surprising thing about bonds, to my mind, is the executor is chosen by the testator because he or she is someone they trust.  Yet here you’ve got a situation where the Court orders that they’ve got to post security and that there’s a concern that they may not be trustworthy.  I always find that a little bit odd.

Sarah Fitzpatrick:  Yeah, exactly.  The Court is obviously protecting the beneficiaries in the event of negligence by the estate trustee.

David Smith:  Right, but I suppose if it’s good estate planning and the executors…the beneficiaries like the executor, trust the executor, then the bond might well be waived.

Sarah Fitzpatrick:  That’s right. And certainly the bond is a requirement when you have an Application without a Will as well.  So there may not have been an estate trustee named, so that can be critical as well.

David Smith:  Okay, that’s great Sarah.  So thanks so much.  It was a lot of…it was very interesting rather, doing this topic, and I look forward to podcasting again.

Sarah Fitzpatrick:  Great, thanks.

This has been Hull on Estates with the lawyers of Hull & Hull.  The podcast you have been listening to has been provided as an information service.  It is a summary of current legal issues in estates and estate planning.  It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.

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