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Tuesday, October 18, 2016

Do I need probate when the bank issued cheques to "the estate of..."?

Legal procedures are not familiar to most people, and can be really confusing if you aren't working with a lawyer. Recently a reader sent me this question asking about whether he needed to get probate to access the deceased's bank accounts. I think this situation is one that several readers will find interesting, because it describes a useful alternative to going through probate. Read on:

"My brother recently passed away. He left a will naming my sister and me. My sister is named as the executor and I'm the 2nd executor. He only had money in 2 bank accounts which upon proof of death, notarized will, notarized I.D., notarized indemnity and notarized letter of direction they released the cheques in the estate of. Do we need to probate this account as we are both the beneficiaries and the executors?"

The process you have described is one that many banks use in some instances instead of requiring you to go through the probate process. They offer this when the deceased didn't have other assets outside the bank and where the accounts are small enough that paying probate and legal fees would pretty much wipe them out. The process essentially replaces probate for the bank's purposes.

Depending on the facts of the case, a bank might offer to do this in order to help the beneficiaries avoid losing the entire estate to fees. The fact that the two of you are the only beneficiaries and the only executors would make the bank's decision easier, because there is not much risk that there is anyone else out there expecting to inherit the money.

If you had applied for probate, the probate order would have required the bank to release the accounts to the executor. Since they have already released them, applying for probate is not going to be of any help to you with respect to these accounts.

Your next step should be to open up an executor's bank account. This account is in the name of the estate, so you will be able to deposit the funds you described above. The notarized will should be enough for you to prove that you are authorized to operate such an account, especially if you open it in the bank where they have all of your paperwork already on file. Because you and your sister are the executors, you will have full access to the funds and the legal right to spend them.

Remember that as executors, you are legally bound to ensure that any debts owed by your brother or by his estate are paid in full before you take out any of the money for yourselves. If you skip that step and simply take the funds without paying bills, you shouldn't be surprised if a creditor decides to sue you in the future for an unpaid bill. You will be personally liable for any such unpaid bills or liabilities.


7 comments:

  1. Lynne
    Please clarify. Are we to assume that the Estate's value was under $50K and therefore it need not be probated?

    ReplyDelete
    Replies
    1. No. I have never heard of 50K as any kind of cut-off point.

      Lynne

      Delete
    2. So Lynn;
      Since there is no will and no one named on life insurance policy, can the remaining siblings just dived the estate up? Oh and my sister who died had no husband or kids

      Delete
  2. Can a bank require you to probate a will ? I wouldn't have gone to probate if I didn't have real property to dispose of. Probate IS expensive...you need to pay probate taxes, you most likely will need a lawyer.

    Another unrelated question: You've mentioned that the executor should not use estate assets...what if using that asset saves the estate money ? My late mom lived approx 100 kms away and I don't have a car. I had to make at least a dozen trips to where she lived dealing with the estate. She had a car and I used that before selling it (I added myself to the insurance) to commute back and forth. Otherwise I would have had to rent a car each time which would have cost the estate more.

    ReplyDelete
  3. Can you answer some questions for me?

    ReplyDelete
    Replies
    1. If they are questions about inheritance law, I probably can. I no longer accept questions emailed directly to me, as people were taking advantage of that situation inappropriately. So, post your questions on any thread that has less than 200 comments and I'll do my best. I usually start at the top of the day's incoming list and do as many as I can.

      Lynne

      Delete
  4. I am a Manitoban whose brother has passed in April 2016. My father was a beneficiary but died in 1998. MY brother's will included my father as a beneficiary in other words he was not
    removed from the will.
    The will was approved by a lawyer as iron clad, there was a witness.
    According to my understanding of the Wills Act, specifically #25, 25(1) and 25 (2) my sister and I should inherit my father's share equally.
    The will showed my mother, my other brother (both still alive) and my father (dead) as beneficiaries.

    The testator also had a daughter and forgot to update his will to include her. She lives in the U.S. but just turned 18 in March. She is attending college. Her mother's employer has a benefit for their daughter's education. The ex common law partner has been out of the picture a long time.
    Am I entitled to my father's share?

    I think the Intestate Succession Act 5 (1) also supports my line of reasoning.
    Am I incorrect in believing I am entitled to something ?

    ReplyDelete

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