When applying for a Certificate of Appointment of Estate Trustee (also known as probate and hereafter referred to as a “Certificate”), it is necessary to pay estate administration tax on the value of assets passing through the estate. In order to calculate the amount of tax payable, a valuation of the estate’s assets as of the date of death must be performed.
The estate assets are either personal property or real property (i.e. real estate). Personal property includes any property that is not real estate and that is not transferred to anyone on the death of a joint owner by right of survivorship. This can include bank accounts, jewellery, clothing, art, furniture, computer, vehicles and appliances, to name a few. Valuing personal property can be a difficult task for the estate trustee as they often know little about the deceased’s assets.
The process can be even more complicated when there is no will, and therefore, no estate trustee appointed. For example, a bank will readily provide information to a duly appointed estate trustee regarding a deceased’s account. However, if there is no estate trustee, a financial institution may be unwilling to provide any information. At this point, lawyers would have to try to persuade the bank to be forthcoming with the requested information. This adds a lot of time and additional legal fees, although this situation could have been avoided with the proper estate planning.
On the other hand, valuation of real property is only necessary if it was owned solely by the deceased or by the deceased with one or more parties as tenants in common. Usually, the estate trustee would obtain the opinion of a qualified real estate appraiser who must have access to the premises. Alternatively, the estate trustee could obtain a letter of opinion from a real estate broker, agent or sales representative, which usually costs much less than a formal appraisal and does not require access to the structures on the property. In this case, it is often appropriate to obtain two or three letters of opinion and use the average of them as the value. However, if a dispute about the value is foreseeable, such as the case where a friend or relative is buying the property rather than an independent third party, it is more prudent to get a formal appraisal. One should note that the value of the real property relevant for an Application for a Certificate is reduced by the amount outstanding on a mortgage, if one exists.
Assets with special issues for estate administration purposes include business assets, loans payable to the deceased and other debts owed to the deceased, such as a deposit paid to a landlord for the last month’s rent and unpaid wages and benefits from an employer.
If you wish to discuss how the nature and value of your assets should influence your estate plan or have a question about administering an estate, please contact Andrea Kelly.
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Andrea Kelly, Lawyer, has extensive experience in wills, trusts, powers of attorney and estate administration matters. She provides clients with a high standard of timely professionalism and expertise, incorporating a very thorough fact finding process. This is quite often enlightening for her clients and facilitates individually tailored services. If you would like to know more, feel free to use the easy contact form or read Andrea’s bio.