Administration of Small Estates: Part 1

In British Columbia, when someone dies leaving an estate, his or her executor may need to apply to court for a grant of probate of the will. If the deceased person did not leave a will, usually the spouse or next of kin will apply to court to be appointed administrator to manage the estate and distribute it to the deceased's heirs. This is called a grant of letters of administration. Without probate, or letters of administration, it may be difficult to deal with the deceased's assets.

In the case of small estates, the probate process can be cumbersome and expensive relative to the value of the assets involved. Although there are no probate fees payable for estates with a gross value of less than $25,000, the process for applying for a grant of probate or to be appointed an administrator is very similar for small estates as for large estates.

I am not saying that you must always obtain a grant of probate or be appointed administrator to look after an estate. If you are an executor--or if there is no will, you are the deceased's spouse or next of kin--you may be able to deal with the assets in some circumstances without probate or letters of administration. For examples:

1. Section 18 of the Motor Vehicle Act, RSBC 1996, c. 318, allows the executor to transfer the deceased's motor vehicle without probate if the total value of the estate is less than $25,000, the executor produces a copy of the will, and the beneficiary under the will consents. If there is no will, and the total value of the estate is less than $25,000, you can transfer a motor vehicle with the consent of all of those entitled to a share of the estate.

2. When someone dies with a will, and the total value of the estate is less than $25,000, the Manufactured Home Registry may allow the executor to transfer a manufactured home without probate.

3. Banks and other financial institutions sometimes allow an executor to deal with the deceased's accounts without probate, particularly if the estate and bank accounts are small. Usually, the financial institution will require a copy of the will, an affidavit of the executor, consents from all of the beneficiaries, and an agreement that the executor and beneficiaries will indemnify the financial institution against any claims as a consequence of the financial institution allowing funds to be released without probate. If there is no will, some financial institutions will also release funds to a spouse or next of kin entitled to inherit the deceased's assets. Each financial institution has its own policies, and requirements, which may vary from branch to branch.

Because a financial institution could be sued for the funds in an account if that institution allows an executor to take out the funds on the basis of a will that has not been probated, and the will is later shown to be invalid or revoked by a subsequent will, most financial institutions are cautious about allowing anyone to deal with an account without probate or letters of administration.

In Part 2, I will discuss a recent proposal to reform British Columbia's legislation to facilitate a less expensive and simpler process for administering small estates.