Saturday, February 25, 2006

Administration of Small Estates: Part 2.

I wrote in Part 1 that the procedure for probating a will or being appointed an administrator in British Columbia is similar for small estates as for larger estates, but that sometimes it is possible to administer an estate without making application to the court.

Today I am writing about a proposal to streamline the process for estates with assets of $50,000 or less, and that do not include real estate. It is based on a model used in a number of states in the United States.

The Small Estates Subcommittee, of the Succession Law Reform Project, under the auspices of the British Columbia Law Institute, has published its interim report, which is available here.

Under this proposal, the executor of a will may administer an estate without letters probate on the filing of an affidavit in court. If there is no will, or if the named executor and any alternate executors are unable or unwilling to act, a near relative or nominee could file. The affidavit must set out the names of the beneficiaries, and an inventory of assets and liabilities. If there is a will, the will would be filed with the affidavit.

The person who intends to administer the estate must first give notice to the beneficiaries, and anyone entitled to make a claim under the Wills Variation Act (see my post on who is entitled to apply here.) If there were a minor or incapacitated beneficiary, notice would also have to be given to the Public Guardian and Trustee of British Columbia.

Once the affidavit is filed, financial institutions and other third parties would be released from liability for any payments made to the person who swore the affidavit, or for allowing that person to take custody of estate assets. This should provide reassurance to financial institutions.

The executor or administrator would have to keep records of the estate assets, expenses and payments, but would not have to pass his or her accounts before the court unless a beneficiary requests a formal passing of accounts.

We will see where this proposal goes, but I think it is a good compromise between the formal probate process now, and the informal ways people often administer estates, without any court record.

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