Executors: What you need to know about probate

Probate[1]. What is it? When is it required? Why is it required? In this post, we’ll discuss probate and its role in the estate administration process.

What is it?

Merriam-Webster defines probate as “the action or process of iStock-147680107.jpgproving before a competent judicial authority that … the last will and testament of a deceased person is genuine”.

More simply put, probate is a court grant that ratifies the appointment of the nominated executor and acknowledges under the court’s seal that the Will has been properly executed and proved before the court that it is the deceased’s ‘last Will’.

When is it required?
Not all estates require that the Will be probated. But there are a multitude of reasons why it would be requested. Although not a comprehensive list, here are a few of the instances where probate could be required:

  • Real property is solely owned or as tenants in common by the deceased.
  • A transfer agent requires probate to deal with shares held in a publicly traded company.
  • A financial institution requests probate in order to release funds held on deposit.
  • A testamentary trust is established under the Will.
  • There are beneficiaries under the age of majority.
  • The executor has pre-deceased or renounces and no alternate executor is named.

Why is it required?
Obtaining probate is a process that protects the executor in the event a newer Will is found. If probate is not obtained and the assets distributed and a newer Will is later discovered with a different distribution scheme, the executor could be liable.

Financial institutions establish policy for determining whether probate is required to release the funds held at their organization. It is often based on how the account is registered and the value of the asset. As with the executor, probate mitigates the financial institution’s risk when releasing funds.

Applying for Probate
Each province has prescribed forms that must be completed to exact standards with respect to details about the deceased and the beneficiaries. In most provinces an inventory of the deceased’s assets and liabilities establishing the value of the estate is required. The original Will accompanies the application to the court along with the required probate fee[2]. Once granted, probate legally authorizes the executor to proceed with administration of the estate.

The Myths
One myth surrounding probate is that probate fees are charged on the entire estate. Probate fees are only charged on assets that will be distributed through the Will. Assets that are considered non-probatable, and therefore not subject to probate fees, include life insurance policies, pension plans and registered plans where a beneficiary other than the estate has been designated.

Another myth surrounding probate fees is that they are excessively high. Admittedly, there are provinces that do have probate fees higher than others, but the fees range from 0.4% (even lower in Alberta) to around 1.7 %. On a $1,000,000 estate the highest probate fee payable in Canada would be approximately $17,000.

It is always prudent to reduce the probate fees the estate will pay through proper estate planning; however, there are times when the cost of avoiding probate may be higher than the probate fees incurred at the time the estate is administered. Discussing options with an estate professional should be done before implementing any strategies to reduce probate fees.

[1] Certificate of Appointment of Estate Trustee (Ontario)
[2] Estate administration tax (Ontario)


Weekly Economic Update

For the week of July 30 – August 3.

Annualized quarter-over-quarter GDP growth in the United States rose to 4.1 percent, marking the largest growth rate since 2014. Although slightly shy of the expected growth of 4.2 percent, the rise was significant from the revised first-quarter GDP reading of 2.2 percent. The growth will more than likely be used by Trump administration to prove the success of recent policy changes. On the contrary, personal consumption jumped by 4.0 percent, exceeding expectations of a 3 percent jump.

Canada’s scheduled releases this week include industrial product price index, month-over-month and year-over-year GDP numbers, Markit Canada manufacturing PMI, and international merchandise trade. Scheduled releases in the United States this week include home sales, personal income and spending, ADP employment data, durable goods, and non-farm employment data. An FOMC rate decision is also scheduled for Wednesday, where markets see less than a 1.3 percent chance for a rate hike.

The Canadian dollar is trading up slightly against the US dollar this morning. Today’s expected range is 1.2995 – 1.3095.

Source: Bloomberg

Weekly Economic Update

For the week of July 23 – 27.shutterstock_721776619

It was a strong day for Canadian economic releases on Friday last week. Both retail sales and consumer prices data blew past expectations, and the Canadian dollar shared in the strength. Following the releases on Friday morning, the Canadian dollar strengthened against the US dollar by over one percent. Unsurprising, markets expectations for rate hikes over the upcoming three meetings increased on Friday slightly.

Retail sales grew by two percent for the month of May, twice as much as the one percent growth that was expected, and a drastic improvement from the 0.9 percent drop that was seen in April. Excluding autos, sales growth was closer to 1.4 percent (against expectations of a lesser 0.5 percent). The details of the release show that growth was seen in ten out of eleven measured sub-sections, with the largest upside contribution coming from new car dealers. The lone decline came from the supermarkets section.

Not to be outshined, consumer prices also beat expectations, growing by 0.1 percent and 2.5 percent on a month-over-month and year-over-year basis respectively. Expectations for the two measures were zero percent and 2.3 percent. Growth of 2.5 percent year-over-year marks the fastest acceleration seen since 2012. The largest upside contributor this month was transportation costs, while the largest drag was seen from the recreation and education category.

The Canadian dollar is trading relatively flat against the US dollar this morning. Today’s expected range is 1.3088 – 1.3188.


Weekly Economic Update

For the week of July 16 – 20.

The University of Michigan sentiment posting in the United States dropped to a level of 97.1 for the month of July, missing expectations of 98.0, and falling from June’s posting of 98.2. The detail also notes the decreased reading of inflation for both current conditions and predictions for 1 year, and 5-10 year. The decrease will most likely fuel the ongoing fire of the debate on whether or not the Federal Reserve will proceed to increase interest rates.

In the Federal Reserve’s semi-annual monetary policy report, the central bank re-affirmed its position of gradually hiking interest rates. The Federal Reserve also confirmed their belief these hikes will be able to exist along with an expanding economy, strong labor numbers, and an inflation rate close to target level. If the Reserve is planning to stick to their original plan, they will need to hike interest rates twice more in 2018 (after already hiking twice this year).

Even though oil prices are down slightly this morning, the Canadian dollar is currently trading up against the US dollar. Today’s expected range is 1.3092 – 1.3192.

Source: Bloomberg

Weekly Economic Update

For the week of July 9 – 13.shutterstock_251419789_tree top sun beams_e.jpg

According to Statistics Canada, the unemployment rate for June rose to 6.0 percent due to a strong surge in the labour force of 76k. The Canadian economy added 32k jobs in June, while consensus expectations were for a 20k gain, with about 30 percent of the job gains coming in the full-time category (+9k). Goods producing jobs (+47k) saw a strong bounce back with gains coming in for both construction (+27k), and manufacturing (+11.3k). Service producing jobs were down (-15k), led by the wholesale/retail sector (-14k), and accommodation/food services down (-16k). On a regional level, Ontario (+35k), Saskatchewan (+8k), and Manitoba (+4k) added jobs in June, while the jobs market either remained flat, or shrank in other provinces.

The US June job report was strong with the US economy adding 213k jobs, exceeding expectations of 195k. The number of employed people in the workforce was up by 102k, and the number of unemployed people increased by 499k. Due to increased labour force participation, the unemployment rate increased to 4.0 percent from 3.8 percent. Goods producing jobs showed continued strength, with gains in both manufacturing (+36k) and the auto (+12k) industry. Service providers also boosted payrolls, led by education/health services (+54k), and professional/business services (+50k). Average hourly earnings saw an increase of 2.7 percent from the previous year, which was less than the expected 2.8 percent.

Scheduled economic data releases in Canada this week include housing starts, building permits, the new house pricing index, and existing home sales. Meanwhile, the Bank of Canada is scheduled to announce its rate decision on Wednesday. Consensus among economists surveyed by Bloomberg is for the Bank to increase its target for the overnight rate to 1.50 percent. Current market implied probabilities of a rate hike through OIS trading shows an 85 percent probability of a rate hike. Major releases in the US this week include PPI, CPI, the import price index, and the University of Michigan Sentiment gauge.

Both US and Canada government yields are trading 2 to 3bps higher with S&P futures higher (+9.4). The Canadian dollar is currently trading at 1.3075 against the US dollar; today’s expected range is 1.3025 – 1.3125.

Source: Bloomberg

You’ve been named executor. Now what? A 6 step guide to estate administration.

shutterstock_90567055Being named executor for an estate is both an honour and a responsibility. It means that while grieving the loss of a loved one, you also have the obligation to make sure their last wishes are fulfilled.

It can be difficult to get started, and it’s worth taking some time to research the steps involved in administering an estate.

There are SIX main activities related to estate administration you will need to address as executor (although not all activities within each step may apply to you):

Step 1
Locate the Will. Common places to look include safety deposit boxes, personal files, or a home safe. It could also be on file with a professional advisor such as Concentra Trust, a financial advisor, an accountant or lawyer.

Step 2
Make funeral arrangements. There are many decisions to make when arranging a funeral, usually in a short time period. Regardless of instructions or wishes from either the deceased or their family members, as executor, you are ultimately responsible for funeral arrangements.

Step 3
Protect the estate. This includes rerouting mail, ensuring any vacant property is properly insured, notifying financial institutions, advertising for creditors, and safekeeping any valuables.

Step 4
Inventory assets and liabilities. This is required for the probate application and may include contacting government agencies, such as the CRA and Service Canada, locating property titles, valuing assets, as well as notifying lenders and credit card companies. Once the statement of assets and liabilities is completed, you’ll need to provide a copy to the beneficiaries.

Step 5
Complete the Probate application. Probate is commonly required when real property is held solely in the deceased’s name. Probate may also be required by a financial institution. There are three ways you can complete a probate application: do it yourself; have a lawyer complete it; or call Concentra Trust.

Step 6
Distribute estate assets. You will need to file the required tax returns to receive a CRA Clearance Certificate. You will then be able to prepare a final report for the beneficiaries. The beneficiaries must approve the report, your executor’s fee, and sign a release before you can distribute the estate assets and close the estate account.

Since some of these steps are complex, it can be wise to enlist the help of a professional. Our experienced advisors offer executors advice and guidance through the entire estate process. You may only need a little advice, or you may want a complete solution. Our expert team is professional, compassionate, and knowledgeable. And we’re here to help.

Joan McAulay
Senior Personal Trust Specialist
Concentra Trust

For a no cost, no obligation consultation with an estate specialist, call 1-800-788-6311 #1888 or email executorease@concentra.ca.

This information cannot be considered to be legal, tax, real estate or financial planning advice, nor replace professional advice, but can serve as a helpful reference.


Weekly Economic Update

For the week of July 2 – 6.

Canadian GDP came in at 0.1 percent month over month in April, vs expectations of zero percent growth (economists believed poor weather conditions in April could’ve negatively impacted results). Both Manufacturing and Utilities sales increased for April; Manufacturing increased to 0.8 percent, while Utilities increased to 1.6 percent. Retail sales, however, declined 1.3 percent. On an annual basis, GDP matched consensus at 2.5 percent. The economy is currently on track for growth to accelerate beyond 2 percent in the second quarter.

US personal income in May increased 0.4 percent, while spending decreased 0.2 percent, falling short of the expected 0.4 percent increase. Although the spending rate remained unchanged after adjusting for inflation, the savings rate increased to 3.2 percent, due to incomes exceeding the spending rate.

The University of Michigan’s reading in June for concerns about the economic impact of a trade war came in at 98.2 (expectations were for a 99.0 reading). The expectations measure also decreased to 86.3 from May’s 89.1 reading. However, the conditions gauge measuring Americans’ perception of their finances was up 116.5 from 111.8 in May.

The Canadian dollar is currently trading up against the US dollar. Today’s expected range is 1.3097 – 1.3197.

Source: Bloomberg

Weekly Economic Update

For the week of June 25 – 29.

Retail sales for April fell by 1.2 percent on a month-over-month basis, going against the  expectations for a flat zero percent posting. Excluding auto sales, the decline lessened to 0.1 percent. March retail sales increased from 0.6 percent to 0.8 percent on a month-over-month basis. Stats Canada noted the weaker than expected performance could be due to “poor weather”.

In addition to a weak retail sales release, consumer prices also missed expectations for the month of May, posting at 0.1 percent on a month-over-month basis (vs. expectations for 0.4 percent). On a year-over-year basis, consumer prices have risen to 2.2 percent, quite a bit shy of the surveyed 2.6 percent for May. Two significant factors in the lower inflation reading were lower prices in the phone, and travel categories. The largest upward contributor to the reading was the recreation and education categories (0.27 percent).

It will be a relatively quiet week for Canadian economic releases this week. The major release to look forward to is the April GDP figures. Consensus expectations are for zero growth month-over-month, and a 2.6 percent growth rate on an annual basis. Other releases include industrial product prices, and the raw material price index. The Bank of Canada will also release their second quarter business outlook future sales, senior loan officer survey, and overall business outlook survey. US data releases include numerous housing figures, sentiment gauges, various manufacturing numbers, and the final print of first quarter GDP.

The Canadian dollar is trading flat to slightly down against the US dollar from Friday’s market close. Today’s expected trading range is 1.3241 – 1.3341.

Source: Bloomberg

Weekly Economic Update

For the week of June 18 – 22.

Foreigners bought a net $9.13 billion of Canadian securities in April compared to $6.40 billion in March. $8.79 billion were bonds, and $2.41 billion were Canadian stocks and investment shares. Foreigners divested $2.07 billion of Canadian money market paper, while Canadians sold $0.65 billion of foreign securities in April.

Canadian manufacturing sales unexpectedly declined by 1.3 percent month-over-month to $56.2 billion in April after increasing 1.4 percent in March. Excluding autos, sales decreased to 1.7 percent, while motor vehicle manufacturing increased to 3.5 percent.  The partial maintenance shutdowns at Canadian refineries were one of the main contributing factors of the decline. 10 out of the 21 industries decreased in sales. On a year-over-year basis, manufacturing sales were up 3.6 percent.

Canadian existing home sales declined 0.1 percent month-over-month, versus expectations of 1.7 percent. Existing home sales in Toronto increased by 1.6 percent month-over-month, but decreased in Vancouver by 0.2 percent month-over-month. The average home price in Canada rose 0.9 percent month-over-month to $476,424.

Data releases in Canada this week include retail sales and CPI. Data releases in the US this week include housing figures, sentiment gauges, and manufacturing indices.

Canada and US government yields are trading 1 to 2bps lower with S&P futures lower (-19.1). WTI crude oil is currently trading at $65.04 per barrel. The Canadian dollar is currently trading at 1.3183 against the US dollar. Today’s expected range is 1.3133 – 1.3233.

Source: Bloomberg