Necessity for Grant

Where, as in most deceased estates, it is necessary to arrange for the transmission or change of ownership of assets, the particular institution concerned may, and in some cases is obliged to require production of the official Grant of Probate or Letters of Administration. Thus, Banks, building societies, companies and the Land Titles Office may refuse to recognise any person claiming ownership of the particular account, fund, shares or property unless the Grant document is shown to them.

If there are assets then it is likely that a formal application for Probate will have to be made.

Before the probate application can be made it is necessary to have valuations or valuation estimates, and letters supporting the schedule of assets and liabilities which is part of the documentation.

Real Estate: It is desirable to obtain a letter outlining the market value of the property as at the date of the death.

Banks: Your solicitor will to write to them

Application and Grant

When the valuations and letters are all on the file and the application documents prepared, after they are executed they are then filed at the Probate Office and a Grant should be made shortly thereafter.

Transmission of assets - winding up and distribution

Once the document of grant is issued from the Probate Office it will then be possible to make the necessary arrangements for transmission of the real estate.

Estate Bank Account

All moneys should be deposited in the estate banking account and after payment of debts and expenses should be disbursed in accordance with the terms of the Will. The distribution must obviously take into account the value of property already distributed to the beneficiaries or which requires a valuation.

General Administration

There are a number of matters with which you may be concerned which are commonly encountered in connection with the administration and management of the estate's affairs:

Funeral account

If you have already paid this, then account will be shown as a debit on the estate and you should be reimbursed in due course.

Joint accounts

In relation to joint banking accounts the rule of survivorship applies in the case of cheque accounts to allow the survivor to draw on the balance of account. In the case of savings accounts, however, the survivor will only be able to withdraw half of the funds.

Income Tax Returns

It may be necessary to arrange for an income tax return to be prepared in respect of the deceased's income to date of death.

Additionally, if more than the minimum taxable income is received from assets of the estate during its administration, a return may have to be lodged on behalf of the estate.

Capital Gains Tax

Exemption for dwellings

For a CGT exemption to apply a dwelling must have been the sole or principal residence throughout the subject period during which a taxpayer was the owner.

If the dwelling was acquired by the deceased after 19 September 1985 the dwelling must have been the person's sole or principal residence during the period of ownership.

For the time when the dwelling is owned by the legal personal representative (such as Executor or Administrator) then throughout the period of that person's ownership that dwelling must be used as the sole or principal residence of the spouse of the deceased.

If these conditions are satisfied a Capital Gain shall not be deemed to have accrued and a Capital Loss shall not be deemed to have been incurred in respect of disposal of the dwelling.

Where a person acquires a dwelling as a beneficiary of a deceased estate and disposes of it within 12 months after date of death then exemption may be available even though that person did not use it as sole or principal residence. However, if the house was acquired by the deceased person only after September 1985, a total exemption is only available if the dwelling was used by the deceased as that person's sole or principal residence throughout the period during which he or she owned it.

Where a dwelling is not disposed of within 12 months after date of death or is not used by the spouse of the deceased as his or her sole or principal residence from date of death to date of disposal or was acquired by the deceased after 19 September 1985 and not used throughout the period of the deceased's ownership as sole or principal residence, only partial exemption from CGT will then be available.

Death does not constitute disposal for CGT

Whether an asset belonging to a deceased person passes to the Executor/administrator and then subsequently passes to a beneficiary in an estate, the asset is not taken to have been disposed of by the executor/administrator nor by the deceased person. However, if the asset is subsequently disposed of by the beneficiary, the cost base or the indexed cost base to the beneficiary includes any amount that would have been included if the executor/administrator had disposed of it at the time the ownership of the asset passed to the beneficiary. In other words, the beneficiary takes the asset, in a sense, subject to the same CGT liability as the executor/administrator would have been liable for had the asset been sold and the proceeds passed on, instead of the ownership passing to the beneficiary.