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Estate Administration During COVID-19

Published on: April 2020 | What's Trending

Money bag, toy house, magnifying class and a wooden graph showing increase in a row

In an earlier blog, I wrote about the new challenges we are experiencing in Ontario, in probating Wills during the COVID-19 pandemic.

In addition to these initial challenges, executors may find other steps in the administration of an estate, more difficult to carry out than before.

It will be more difficult to obtain an accurate inventory and valuation of the estate assets, which is needed when executors declare the value of the estate on the probate application. For example, executors may be unable to access a deceased person’s safety deposit box while the bank branches are closed to the public, and will be unable to determine what assets are stored there. Many people keep stock certificates, share certificates, insurance policies, gold bars and valuable jewelry, among other valuables, in bank safety deposit boxes.

For items executors can get their hands on, it will be more difficult during this time of physical distancing, to have valuable personal effects, like jewelry, antiques and special collections independently appraised.

It may also be difficult to get an opinion about the fair market value of real estate, as agents are generally only prepared to give a drive-by valuation right now. With our markets in unprecedented upheaval, it may be difficult to determine what the fair market value of real estate is at the time of death.

We foresee more applications for probate being filed on the basis of an estimated value of the estate, with added paperwork being required once business returns to “normal”, when executors can carry out the due diligence needed to accurately assess the value of the estate.

Selling real estate during this pandemic will also be different from what it was before. Cleaning out the house and preparing it for sale is going to be more difficult. Some municipalities have indefinitely suspended waste pick-up of bulk items, and thrift shops are unable to accept donations as their doors are temporarily closed. Open houses are no longer encouraged and neither are in-person tours.  Prospective purchasers are more likely to tour the home virtually and this may impact the final sale price.

While executors carry out the usual estate administration steps, including the long wait for clearance certificates from Canada Revenue Agency (which in the days before COVID-19, was taking about 12 months), they are still expected to protect and invest the estate assets. With Canada’s unprecedented stock market collapse, and interest rates being slashed during these extraordinary times, a deceased person’s investments are not likely to have the same value as they had prior to death. This will most certainly impact how much beneficiaries can expect to receive when the estate has been wound up. Executors are encouraged to seek out professional advice during the administration of the estate.

Beneficiaries who are experiencing financial difficultly during this crisis, might also be asking for early distributions. Executors should be sure that they have satisfied all of the deceased’s debts, and consider timely accounting and requests for interim Releases.

If an estate is near completion and executors are ready to distribute assets, consider whether a passing of accounts is recommended or necessary. If beneficiaries are minors and therefore incapable of approving the activities of the executor, will the executor want to pass his or her accounts before a judge? Will the application be considered urgent, as only urgent or consent matters are currently being heard in the civil courts? What if an adult beneficiary is unhappy with the administration and won’t approve the accounts? Estates could be tied up while we wait for access to the courts. Lawyers have a responsibility to encourage parties to be reasonable, to compromise, and to reach out-of-court resolutions where possible.

Even if everyone is willing to discharge the executor, there may be new challenges in distributing funds to the beneficiaries. Some banks are not preparing bank drafts while branches are closed to the public. Electronic transfer of funds might be suitable for most, but where a trust is the beneficiary, consider how the funds can flow from the estate to the new trust account and still maintain its testamentary status.

While estate administration can still be carried out during the pandemic, it will certainly be a little harder, and take a little longer.