Settling an Estate

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This article explains the main steps in settling someone's affairs after death.

A few notes on vocabulary: in Quebec law, the legal term for the estate of the person who died is succession. The legal term for settling an estate is liquidation. The person responsible for settling an estate is called a liquidator. The person who died is sometimes called the deceased.

 

What are the steps in liquidating a succession?

There are quite a few. It's important to follow them to avoid nasty surprises. And liquidators need patience, because liquidating a succession is a lot of work.

  

Does a liquidator have to follow all the steps in liquidating a succession? 

Yes. The purpose of this rule is to protect the liquidator and the heirs: if they properly take all the steps, they will not be held personally responsible for the debts of the deceased. Debts means money owed.

However, the heirs can all agree together to let the liquidator can skip some steps, for example, making a list of the property of the deceased. An heir is someone who accepts, or is legally obliged to accept, a succession or part of a succession.

But if the heirs agree to let the liquidator skip steps, they will be personally responsible for the debts of the succession, even those they don't know about, for example, money borrowed by a grandfather who was a big spender!

 

Who do have to contact if I'm liquidating a succession?

You have to identify and contact all possible heirs. They are named in the will or, if there is no will, the law says who can inherit.

To find out who inherits from someone who did not leave a will, read our article Dying Without a Will. Also, you can always get help from a lawyer or a notary.

Once the heirs are identified, you have to call them in, even if they are already aware of the situation. The law does not specify any particular way of doing this. If you want to be able to prove that they were properly notified, you can create a written notice, deliver it yourself, and get a signature showing the notice was received. You can also send a written notice by registered mail.

 

What if the heirs are children under 18? 

In the liquidation of a succession, a minor child (child under 18) is represented by a tutor.

When a minor child inherits a succession, an inventory of the deceased's property must be made to ensure that the succession is solvent. Solvent means having more assets (property, money, etc.) than debts.

A minor child can never say that the liquidator can skip making an inventory. This rule protects the minor, even though a minor can never be held responsible for the deceased's debts beyond the value of the minor's inheritance.

Once the liquidation is completed, the minor's share must be given to the minor's tutor.

If the minor's share is $25,000 or more, the liquidator must file a special form with a government agency called the Curateur public.

 

As liquidator, who do I have to notify of the death?

You have to notify any organization that paid benefits to the deceased. For example, this could include the deceased's employer, the Retraite Québec (Quebec pension plan) or the Régie de l'assurance-maladie du Québec (medicare).

You also have to notify any companies that provided services to the deceased (e.g., phone, electricity, insurance, investments, credit cards).

Sometimes you have to supply documents to these organizations, government bodies or companies. For example, you will have to return the deceased's passport, if still valid, to Passport Canada, along with a copy of the death certificate.

Find out from each organization what procedures you must follow and what documents you must provide.

Here are a  few tips:

  • Send a change of address to Canada Post so that mail addressed to the deceased will now be sent directly to you.
  • Destroy all the deceased's credit cards or return them to the issuing company, depending on their policies. This helps prevent fraud and identity theft.
  • When notifying government bodies or companies of the death, take the opportunity to ask for written confirmation of all money owed by the deceased. This will make your job easier when the time comes to make an inventory of the deceased's assets and debts, and you will have documentation about any money owed.

 

Does the liquidator have to make an inventory (list) of the deceased's property?

Yes, the liquidator is legally required to make an inventory.  Otherwise, the liquidator might be responsible for the deceased's debts.

Making an inventory is an important step because it gives a picture of the following:

  • an accurate description of the deceased's assets (money, property, etc.) and debts
  • a realistic picture of the succession

With an inventory, the heirs are able to accept or refuse the succession with full knowledge of the facts. For example, if the succession has more debts than assets, the heirs can refuse the succession and avoid having to pay the deceased's debts out of their own pockets.

 

Can the liquidator ever skip making an inventory?

The liquidator can be excused from making an inventory if allthe people entitled to inherit agree.

Important! Without an inventory, the heirs will be responsible for the deceased's debts. It is important for them to know this before they make a decision.

 

How do you make an inventory?

The inventory must be made before a notary or in the presence of two witnesses who must sign the document the same time as the liquidator signs it. It is important to properly date the document.

The inventory must have this information:

  • the official designation of any land and buildings (street address, lot and cadastral numbers) and the values of this land and buildings

There are two ways to calculate the value of land and buildings: according to the municipal evaluation or according to the market value (what the building or land would sell for now).

Generally, people opt for market value. If you can't establish it yourself, it can be a good idea to get help from a chartered appraiser (website in French only) or a local real estate broker.

  • a description of the deceased's property (cars, furniture, etc.) and the value of this property

Don't hesitate to use specialists to find out the value the property (e.g., a specialist called a numismatist will give you a good idea of the value of your mother's huge coin collection, a car dealer will tell you the value of your father's Toyota Camry, an antique dealer will appraise your grandmother's Louis-XVI armoire, etc.).

You don't have to list property worth less than $100 (clothing, personal items, jewelry, etc.).

  • a description of all cash on hand, bank accounts, stocks, bonds and other similar investments

Accurately state their values as at the date of death.

  • a list of documents or objects of value

For example, the deceased's business records, client file records, jewelry, paintings by famous artists, etc. Again, you must accurately state the value.

  • a list of debts

Accurately state their values as at the date of death. You must include this information:

  • expenses paid by the liquidator (they must be reimbursed, for example, travel expenses, parking fees, etc.)
  • the liquidator's remuneration (salary), if the will provides for this
  • fees of a notary or lawyer who helps the liquidator
  • a balance sheet presenting all the assets and debts

 

I've heard that liquidator has to publish a notice confirming that the inventory was made. What is that all about?

The liquidator must publish a "closure of the inventory" notice in the Registre des droits personnels et réels mobiliers (Website in french only).  

The actual inventory is not made public, only a notice stating that an inventory was made in liquidating the succession of a deceased person.

People with a legitimate interest (mainly heirs and creditors) are invited to consult the inventory at a specific location (for example, at the offices of a particular notary or lawyer).

The "closure of the inventory" notice must also be published in a newspaper distributed in the area of the deceased's last known address. This notice can be published in a mass-circulation daily (La Presse, the Journal de Montréal, The Gazette, etc.) or in a small local newspaper.

 

If I am a liquidator, what do I do with the deceased's property during the liquidation process?

You must take care of it and manage it until it is given to given to the heirs.

For example, you will have to keep an eye on the deceased's home, ensure that it is properly insured, renew the home insurance policy when it expires, maintain the property (e.g., mow the lawn, arrange for snow removal) and if necessary, see to urgent and necessary repairs to ensure that the property does not lose value. So, if the roof of the house is in bad shape and is leaking, you'll probably need to get it fixed.

Property that can perish must be sold before it perishes (spoils or disappears).

In other words, you must make sure that the succession does not lose value until it is liquidated.

Tip:  No one been living in the house since the death? It would be wise to change the locks. Also, the insurance company might require that someone stay or visit the house. To avoid  unpleasant surprises, check if the insurer has any specific requirements.

 

Can a liquidator give an item to an heir before the end of the liquidation process?

As a general rule, no. If someone gets something before the liquidation process is over, this amounts to accepting the succession with all its debts! Therefore, if property is distributed before making sure that there are enough assets to pay all debts and all the legacies by particular title, the heirs will be responsible for paying the debts out of their own pockets! A legacy by particular title means leaving a particular thing to a particular person who is not an heir.

However, items of sentimental value (clothes, personal papers, medals and diplomas) can be distributed to the heirs before the succession is fully liquidated.

Important! Your aunt's mink coat might have sentimental value, but it also has a monetary value. Therefore, the liquidator will have to wait until the liquidation process is over before giving it to an heir. The liquidator might even have to sell it if there isn't enough money to pay all the debts.

 

As a liquidator, how do I sell or give the deceased person's car to an heir?

Whether you sell it, or give it to an heir, you have to fill out a form called "Declaration of Transfer of Ownership following Death". You can find this form on the website of the Société de l'assurance automobile du Québec (SAAQ).

When you have filled out and signed this form, you and the future owner must go to an SAAQ office to pay the fees connected with the sale. At the same time, the buyer will pay you the price you agreed on.

Here are a few tips:

  • Ask for a bank draft made out in the name of the succession. Remember that you are the custodian of the property of the succession, that the car is not yours, and that you will need the money to liquidate the succession.
  • Remember to ask the purchaser to sign a document confirming that the sale took place and indicating his or her contact numbers and address, and the price. Keep that document with the succession files.

 

As a liquidator, how do I sell or give any of the deceased's buildings or land to an heir?

Before you can transfer this kind of property of the deceased to a new owner, you first have to sign a Declaration of Transfer prepared by a notary. This declaration becomes a kind of deed of ownership of the succession.

Once the declaration of transfer is signed, you can sell or give the property on behalf of the succession.

If no liquidator was named, the heirs can sell the deceased's property. In these cases, all the heirs must sign the deed of sale.

 

What happens to the deceased person's debts?

The heirs cannot be responsible for the deceased's debts beyond the value of what they inherit. This is the rule except in these situations:

  • The legal liquidation rules were not followed (for example, an inventory was not made or the notice of the closing of the inventory was not published).
  • The heirs take succession property before the inventory is finished.

In some situations, a court might reduce the responsibility of the heirs if they acted with good intentions.

 

As liquidator, do I have to collect money owed to the deceased person?

Yes. As liquidator, your task is to recover anything owed to the deceased at the time of death. You have to deposit whatever you recover in the account you opened in the name of the succession.

The main amounts to be recovered for the succession are:

  • life insurance (only if the beneficiaries of the insurance are mentioned in the policy as  "my heirs", "my assigns" or "my succession").

NB: you will have to continue paying life insurance premiums until you file the claim for payment with the insurance company.

  • work-related earnings: salary owed, vacation pay, reimbursement of expenses, life insurance payable to the succession under a group plan, etc.
  • private pension plan benefits: If the deceased has a right to pension benefits under a private pension plan provided by an employer (even a former employer), including a federal or provincial plan for government employees, you will have to contact the plan's manager to mention the death and get information on how the deceased's relatives can collect any benefits.
  • other amounts owed: You have to take steps (reminders, letters, legal proceedings, etc.) to recover other amounts owed to the deceased. It can be a good idea to consult a legal professional.
  •  

What happens if the person who died was married or in a civil union?

The liquidator has to take into account the rights of the surviving husband or wife.

  1. Death ends marriage or civil union. The liquidator therefore has to give the surviving spouse the money to which he or she is entitled under the rules on family patrimony and on matrimonial regimes.
  2. The surviving spouse is also entitled to claim financial support for his or her needs
  3. The will might also say that the surviving spouse has a right to other amounts or property.

 

As  liquidator, do I  have to file tax returns?

Tax Returns for Previous Years

If taxes were not filed for some years prior to the death, you have to file them (provincial and federal). Expect to pay penalties and interest on any amounts owed.

Deadlines

  • within six months of death for deaths between January 1 and April 30
  • as soon as possible if the death was after April 30

Tax Returns for the Year of Death

You must file tax returns (provincial and federal) for the deceased for the year of death, namely January 1 of the year of death up to the actual date of the death.

Example: Marcel died March 7. You will have to file tax returns with both levels of government and declare all income for the period of January 1 to March 7.

Deadlines:

The deadline for filing the returns varies depending on the date of death and whether the deceased (or his or her spouse) operated a business in the year of the death.

If the deceased (or the deceased's spouse) did not operate a business in the year of death, here is the deadline:

  • death between January 1 and October 31: April 30 of the following year
  • death between November 1 and December 31: six months from the date of death

If the deceased (or the deceased's spouse) operated a business in the year of death:

  • death between January 1 and December 16: June 15 of the following year
  • death between December 16 and December 31: six months from the date of the death
  • provincial, death between November 1 and December 31: June 15 of the following year

Important! Whether or not the deceased (or the spouse) operated a business, the deadline for paying any taxes wed will depend on the date of the death:

  • death between January 1 and October 31: April 30 of the following year
  • death between November 1 and December 31: six months from the date of the death

Consult the Revenu Québec and Canada Revenue Agency websites to find out how to proceed in your situation.

 

What documents do I need to get before I can distribute the deceased's property?

As liquidator, you must get a certificate from Revenu Québec authorizing the distribution of the property and a clearance certificate from the Canada Revenue Agency.

Important! If you don't get those certificates, you can be held personally responsible for unpaid taxes as well as interest and penalties.

You have no option: before you can distribute property (cash, cars, furniture, share certificates, real estate, etc.), you must get the certificates. The heirs will just have to be patient, because it can take weeks, sometimes months, before you receive the certificates.

 

Is there any special order in which debts have to be paid and inheritances distributed?

It depends on whether the succession is solvent or insolvent, which means whether it has enough assets (money, etc.) to pay all the deceased's debts. 

If the succession is solvent, this is the order of payment:

  1. debts of the deceased (money owed)
  2. money owed to the spouse in the marriage or civil union because the end of the marriage or union (death ends a marriage and a civil union)
  3. legacies by particular title (For example, if the will says "I leave $10,000 to Paul and $5,000 to Mary", each legacy is a legacy by particular title. But "I leave all my property to my four children" is not a legacy by particular title.
  4. other heirs

If the succession is insolvent, don't pay anything. Read the detailed answer to the next question.

 

If succession does not have enough to pay all the debts, what can I do?

If the succession does not have enough money available to pay all the debts, a specific legal procedure must be followed. It is highly recommended that you consult a lawyer or a notary.

To summarize briefly, once the inventory is done, you have to do the following:

  1. Make an offer to the creditors (people owed money).
  2. Get permission from the court to start paying the creditors. Note that the law says the order in which creditors must be paid.

Obviously, the deceased's property will often have to be sold to pay the creditors:

If the will gives the liquidator the power to  "sell", the liquidator can then sell all the succession's assets (real estate, car, boat, furniture in the house or apartment, jewelry, etc.).

Nothing prevents an heir from buying any of the property if that heir wants to keep particular items in the family. For example, the heir can buy the piano, but it must be for a price equal to the value stated in the inventory (market value).

If the will does not give the liquidator the power to "sell", the liquidator will need the agreement of the heirs to sell anything. Failing that, the liquidator has to be permission from a court.

Remember that even if the succession is insolvent, you can still give sentimental items of little value (photos, clothes, diplomas, family souvenirs) to the heirs.

 

What is the liquidator's final account?

The liquidator's final account is a "report" on the liquidation. It is a document telling the heirs what is left in the succession after all debts were paid and legacies given out. It also documents how the liquidation was done.

There is no special form for the final report, and you don't have to do it before a notary or witnesses. But remember that you must date and sign it.

However, the report must have this information:

  • the net assets or deficit of the succession, which means the value of what is left over or the amount needed to pay the debts in full
  • the legacies and debts that were paid, specifying the method of payment
  • the legacies and debts that remain unpaid
  • the legacies and debts that are guaranteed by a hypothec or other security interest
  • the legacies and debts that were taken on by any legatees or heirs
  • a statement that the liquidator has been discharged, which means the liquidator has no more obligations

For the liquidator to be discharged, the heirs must accept the final account. They are therefore asked to sign an acceptance of the final account and discharge the liquidator. If the heirs refuse to sign it, you will have to apply to the court, and it will be a judge who decides the contents of the final account.

A final note: you will have to publish a notice of closure of the account in the Registre des droits personnels et reels mobiliers (Website in french only). The notice must have the name of the deceased and the place where the final account can be consulted by any interested person (a creditor, for example).

View a printer-friendly version of this article in pamphlet format: Estate Executors: Role and Responsibilities (PDF) (2 mb).

Important !
This article explains in a general way the law that applies in Quebec. This article is not a legal opinion or legal advice. To find out the specific rules for your situation, consult a lawyer or notary.