Thursday, September 15, 2016
Things don't happen automatically. That's why we have executors.
Posted by Lynne Butler
I hear similar things relating to the land titles registry. When a husband or wife dies, nobody changes the title at the land registry into the name of the surviving spouse, and then when the second parent passes away, the kids get mad at the land registry for not having up to date records. Again, I've been asked "doesn't it happen automatically?"
Is this common misconception a result of wishful thinking or misinformation from advisors? Perhaps a bit of both. I myself have been guilty of explaining joint ownership with right of survivorship by saying that when one owner dies, the surviving owner automatically gets the property. Perhaps that does sound as if everything happens on its own without anyone having to actually initiate the process. I'm sure similar explanations are offered by lawyers, accountants and bankers everywhere. The gist of the legal arrangement is communicated, but the logistics of bringing it about are not.
In reality, it does require involvement by either a beneficiary or an executor to bring about these "automatic" arrangements. This is because while a right might arise automatically, the paperwork to document that right doesn't do itself. When a spouse dies without a will and his wife automatically "gets" his estate, that means that she has the right to own the assets. It doesn't mean that the assets will find their way to her like a magnet to a fridge. Someone has to actually notify the holder of the assets, prove the death of the owner, and arrange for the asset to change hands.
When a joint owner of property dies, the surviving owner has the right to own the whole property. But that survivor also has the responsibility to prove that the other owner died and to document the change using the proper paperwork. The land titles registry, the courts, the corporate registry, the life insurance company and Canada Revenue Agency are all relying on you or your legal representative to do your part and let them know that someone has passed away.
There is some element of wishful thinking, too. These days people seem to want things to happen very quickly, if not instantly, preferably with a click or two on the internet. There is very little tolerance for paperwork, which unfortunately is a part of estate administration.
Nothing happens automatically. That's why an essential element of your will is the naming of an executor to carry out the paperwork and the legwork involved in giving everyone the property they have the right to inherit. We have executors for a reason.