Estate Settlement
Notwitsdanting what could be found on research on Internet, Serge Tanguay is not a notary neither a lawyer. We do not provide any legal advice.
Estate settlements can be simple but, more often, they become complex, difficult. It could be complex because of the relations between the heirs, the Liquidators. It could become complex and difficult also because of the administrative procedures the Liquidator need to comply to the Civil code and the Income Tax Laws.
Until we started our firm, only Trust Companies were offering a complete Estate Settlement services. Trust Companies deal mostly with large Estates and tend to charge heavy fees. Our firm offers same professional services as Trust Companies but we deal with Estates of all sizes at a lesser price and with the same expertise..
We assist all Estate Liquidators who would like to be discharged in dealing with the settlement. These Liquidators could be involved in matters such as:
2- If the deceased had assets abroad.
3- If the Income Tax returns could present a problem
4- If some or all the beneficiaries (heirs) are living abroad
5- If you are not totally aware of the affairs of the deceased
And many other situations that would be too long to enumerate.
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We often hear that an Estate has been settled within two months but in effect it takes much longer.
In order to determine if the Will is really the last one, the Liquidator needs to get the research certificate to be issued by Chamber of Notaries and Québec Bar Association.
It is also necessary to prepare a precise and complete inventory to be remitted to Revenue Québec in order to receive a partial distribution certificate.
Once the notice of inventory is filed with RDPRM, a notice of inventory must be published in a local newspaper. You should also wait 60 days after this publication in order to let the creditors contact you.
In 2009, Mr Tanguay while working for a Trust Company, met a woman whom just lost her spouse. In the deceased Will, the woman was the sole Liquidator and sole beneficiary.
She already has transferred the house in her name, had sold it, and had transferred all the GIC and bank accounts into her name without following the rule of inventory.
But there still remain a term deposit of a value of more then $500,000 with a foreign bank. Discussing with the widow and verifying the Income tax returns for many years, it appears that the interest of this term deposit had never been declared to the Taxation Authorities. If they ever discover this fault it would be possible that the total Income Tax due, alone with interest and penalty would higher then the value of the said Estate. The Trust Company accepted this mandate, negotiated with the Taxation Authorities and then remedied the situation.
As we can see, a simple situation can easily become very complex.
In order to determine if the Will is really the last one, the Liquidator needs to get the research certificate to be issued by Chamber of Notaries and Québec Bar Association.
It is also necessary to prepare a precise and complete inventory to be remitted to Revenue Québec in order to receive a partial distribution certificate.
Once the notice of inventory is filed with RDPRM, a notice of inventory must be published in a local newspaper. You should also wait 60 days after this publication in order to let the creditors contact you.
In 2009, Mr Tanguay while working for a Trust Company, met a woman whom just lost her spouse. In the deceased Will, the woman was the sole Liquidator and sole beneficiary.
She already has transferred the house in her name, had sold it, and had transferred all the GIC and bank accounts into her name without following the rule of inventory.
But there still remain a term deposit of a value of more then $500,000 with a foreign bank. Discussing with the widow and verifying the Income tax returns for many years, it appears that the interest of this term deposit had never been declared to the Taxation Authorities. If they ever discover this fault it would be possible that the total Income Tax due, alone with interest and penalty would higher then the value of the said Estate. The Trust Company accepted this mandate, negotiated with the Taxation Authorities and then remedied the situation.
As we can see, a simple situation can easily become very complex.
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Part of the services we rendered include::
1- We take charge the whole settlement of the Estate and, therefore, free the Liquidator of all necessary procedures.
2- We help the Liquidator to open an Estate account with a financial institution of his choice. We manage the transactions (deposits and withdrawals) but the Liquidator is the sole person authorize to draw cheques from the account. Our firm does not get involved in the decision about withdrawals from the account.
3- We request the official death certificate to be issued by the Québec government..
4- We request the Chamber of Notaries and the Québec Bar Association to issue Research certificates.
5- We communicate with all financial institutions that the deceased deal with in order to determine the assets and liabilities.
6- We prepare the Estate inventory and the notice to RDPRM. We also publish the notice in local newspaper.
7- We communicate with the heirs, the beneficiaries by way of letters, meetings, e-mails.
8- We prepare and file the Income Tax returns as of date of death (final T1 and TP1) and the Estate Income Tax returns (T3 and TP646)
9- We remit to the Liquidator a list oo invoices to pay and prepare the cheques for his signature. We will also give him cheques to be deposited to the account with a full description of the entries.
10- We prepare a rendering of account for the Liquidator and the heirs (beneficiaries).
11- We prepare the final distribution for the Liquidator perusal.
12- We obtain the partial and final distribution certificate to be issued by Revenue Québec and the discharge certificate to be issued by CRA.
The Liquidator
People tend to believe that Liquidators have all rights and can do as they wishe: for example, they can sell all assets without obtaining the authorization from the beneficiaries.
In fact, Liquidators should dispose of the Estate assets only to pay the debts of the deceased and the liabilities of the Estate. The assets belong to the beneficiaries from the time of death but their rights are suspended until the Estate is settled.
The distribution
The distribution to the heirs or beneficiaries is authorized but Revenue Québec and CRA, as follows: All information could be found on Revenue Québec and CRA web site. The following resume the pertinent information provided.
Revenue Québec
The following text comes from Internet site of Revenue Québec
http://www.revenuquebec.ca/en/citoyen/situation/deces/role_liquidateur.aspx
"Role of the Liquidator of a Succession and Required Documents
If you are designated as the liquidator of a succession, you must notify us as quickly as possible of the death by filing the death certificate by filing form LM-14-V, Information About a Representative, along with the will search certificates and the document(s) listed on formLM-14-V that apply to your situation:
Succession with a Will
A certified copy of the notarial will, and any related codicil (a document that changes certain points of an existing will)
A certified copy of the holograph will (a will written by hand) or the will made in the presence of witnesses, issued by a court clerk or a notary, and a certified copy of the judgment probating the will or the minutes of the probate
Succession without a Will
Form BD-81.7-V, Designation of a Liquidator, or any other original document designating you as the liquidator
Provide us with either the original documents or certified copies. Please note that only the person having custody of an authentic document can certify a copy.If the will of the person who designated you as liquidator was homologated (officially approved) by a court judgment, you do not have to submit a search certificate issued by the Chambre des notaires du Québec and the Barreau du Québec."
Revenue Canada (CRA)
The following text comes from Guide Preparing returns for deceased person
"Clearance certificate
As the legal representative, you may want to get a clearance certificate before you distribute any property under your control. A clearance certificate certifies that all amounts for which the deceased is liable to us have been paid, or that we have accepted security for the payment. If you do not get a clearance certificate, you can be liable for any amount the deceased owes. A clearance certificate covers all tax years to the date of death. It is not a clearance for any amounts a trust owes. If there is a trust, a separate clearance certificate is needed for the trust To request a certificate, complete Form TX19, Asking for a Clearance Certificate, and send it to the assistant director, Audit, at your tax services office. Do not include Form TX19 with a return. Send it only after you have received the notices of assessment for all the returns filed, and paid or secured all amounts owing. You can find the address of your tax services office at www.cra.gc.ca/tso. "
___________________________In fact, Liquidators should dispose of the Estate assets only to pay the debts of the deceased and the liabilities of the Estate. The assets belong to the beneficiaries from the time of death but their rights are suspended until the Estate is settled.
The distribution
The distribution to the heirs or beneficiaries is authorized but Revenue Québec and CRA, as follows: All information could be found on Revenue Québec and CRA web site. The following resume the pertinent information provided.
Revenue Québec
The following text comes from Internet site of Revenue Québec
http://www.revenuquebec.ca/en/citoyen/situation/deces/role_liquidateur.aspx
"Role of the Liquidator of a Succession and Required Documents
If you are designated as the liquidator of a succession, you must notify us as quickly as possible of the death by filing the death certificate by filing form LM-14-V, Information About a Representative, along with the will search certificates and the document(s) listed on formLM-14-V that apply to your situation:
Succession with a Will
A certified copy of the notarial will, and any related codicil (a document that changes certain points of an existing will)
A certified copy of the holograph will (a will written by hand) or the will made in the presence of witnesses, issued by a court clerk or a notary, and a certified copy of the judgment probating the will or the minutes of the probate
Succession without a Will
Form BD-81.7-V, Designation of a Liquidator, or any other original document designating you as the liquidator
Provide us with either the original documents or certified copies. Please note that only the person having custody of an authentic document can certify a copy.If the will of the person who designated you as liquidator was homologated (officially approved) by a court judgment, you do not have to submit a search certificate issued by the Chambre des notaires du Québec and the Barreau du Québec."
Revenue Canada (CRA)
The following text comes from Guide Preparing returns for deceased person
"Clearance certificate
As the legal representative, you may want to get a clearance certificate before you distribute any property under your control. A clearance certificate certifies that all amounts for which the deceased is liable to us have been paid, or that we have accepted security for the payment. If you do not get a clearance certificate, you can be liable for any amount the deceased owes. A clearance certificate covers all tax years to the date of death. It is not a clearance for any amounts a trust owes. If there is a trust, a separate clearance certificate is needed for the trust To request a certificate, complete Form TX19, Asking for a Clearance Certificate, and send it to the assistant director, Audit, at your tax services office. Do not include Form TX19 with a return. Send it only after you have received the notices of assessment for all the returns filed, and paid or secured all amounts owing. You can find the address of your tax services office at www.cra.gc.ca/tso. "
An Estate settlement is not always an easy matter. It can become quite complicated. We strongly suggest that you contact us to know if we could be of assistance to you.
Fees
Estate Settlement and distribution fee
The fee for the general settlement of an Estate is based on the gross value of the Estate as mentioned in the Assets and Liabilities Statement:
2% on the first $400,000
1.5% on the next $300 000
1% on the next $300 000
0.75% on balance
The fee calculated as mentioned above is subject to a minimum of $5,000.
This fee in non recurring and is payable at same time as distribution is made to the beneficiaries or when the discharge certificate is obtained.
I could also work on hourly rate. The said rate should be discussed with the Liquidator.
The fee for the general settlement of an Estate is based on the gross value of the Estate as mentioned in the Assets and Liabilities Statement:
2% on the first $400,000
1.5% on the next $300 000
1% on the next $300 000
0.75% on balance
The fee calculated as mentioned above is subject to a minimum of $5,000.
This fee in non recurring and is payable at same time as distribution is made to the beneficiaries or when the discharge certificate is obtained.
I could also work on hourly rate. The said rate should be discussed with the Liquidator.
Miscellaneous fees
On top of the above mentioned fee schedule, the firm is entitled to a remuneration if the Estate is sued or for exceptional services required for selling a real estate property, if assets are kept abroad, if the deceased was involved in a operating company or any other type of unconventional assets.
The remuneration payable to the firm for these services is proportional to the time, efforts and responsibilities involved. The said remuneration will have to be approved by the beneficiaries major and capable or any funds held in trust under the Will. If not approved, the firm will charged and amount actually approved by a competent juridiction that would be considered reasonable and equitable.
GST and QST is charged on top of the fee.
GST and QST is charged on top of the fee.