Small estates need better access to probate: law commission

The Law Commission of Ontario released a consultation paper today  calling for legal reform that would make probate more accessible for small estates, but the options on the table — such as shifting liability to executors — may leave some estate lawyers uneasy.

As Bruce Elman, chairman of the LCO’s board of governors, explained in a press release: “This project addresses the concern that Ontarians who find themselves administering small value estates may be practically precluded or discouraged from accessing the benefits of court-supervised probate.”

That’s particularly so for estates worth less than $100,000, where the cost and complexity of probate may drive administrators to bypass probate entirely by waiving protections.

The LCO consultation paper is broad in its approach, but recommendations fall under four main categories:

•    increased legal aid for small estate administrators;
•    relaxed evidentiary or procedural requirements for small estates;
•    a statutory declaration by the administrator limiting the liability of financial institutions; and
•    more discretion for the administrator in the role of “public trustee.”

The province might follow the lead of jurisdictions such as Saskatchewan, for instance, where an “assisted-grant procedure” provides a kind of legal aid for administrators by having court staff help to complete their probate application.

Another suggestion — one already implemented in Manitoba and in many U.S. states — involves specialized court procedures with relaxed requirements for documents listing assets, debts, beneficiaries, etc.

Numerous U.S. jurisdictions also make use of statutory declarations that would protect asset holders, such as financial institutions, and allow them to release assets to administrators registered with the court (or a government website).

Deb Stephens, an estate lawyer at Goddard Gamage Stephens LLP in Toronto, acknowledges that applying for probate in Ontario can be a time-consuming and paper-intensive process. But she doesn’t necessarily think fundamental legal reform is the answer.

Moreover, Stephens points out the size of the estate is not necessarily an indicator of its complexity:

“You can have a million-dollar estate with one GIC and that can be as difficult as a $50,000 estate where it’s spread over nine or 10 bank accounts,” she says.

Stephens thinks the system could instead benefit from a technological update that would streamline things.

“Should you be able to make your payments online through the government for taxes? That would help, rather than having to go to the bank and get a bank draft. Would it help if some of these documents could be submitted online? I think it could.”

Increased legal aid could also help a great deal, says Stephens, but the trick is you have to pay for it.

“Ideally you’d have a legal aid component for the really small estates, and it would be a segregated portion of the court system,” she says. “If they had half a day every week where there was a lawyer sitting there who’s going to help them swear the documents and explain the process to them, that would help a lot — but again, it comes back to resources, and that’s the problem.”

Statutory declarations that limit the liability of financial institutions, on the other hand, may only shift the liability and open up a can of worms.

“Who’s going to assume that liability then? Is it going to be the estate trustee who’s come forward and signed the declaration? And what if they abscond with all the money? Do you think someone’s not going to go back after the institution?”

Ultimately, Stephens believes any reform of the probate system must not abandon the protections granted by probate or leave executors without legal guidance.

“Some people actually need help understanding what passes through an estate,” she says, “They’re paying tax on it, and they have to write a cheque potentially to the government and there’s a penalty for filing a sworn declaration or affidavit that’s not accurate.”

The Law Commission of Ontario is encouraging feedback from members of the public, including estate representatives, beneficiaries, creditors, financial institutions, policy-makers, estates lawyers, and anyone else interested in Ontario’s probate system.

The deadline for submissions is Dec. 11, 2014. The LCO expects to release a final report and recommendations early next year.

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