We talk about the importance of having your Estate documents in place, but not very often do we talk about what happens when the Estate documents need to be invoked.
Our firm will not release to an appointed attorney the Powers of Attorney without being provided with a doctors note that the grantor no longer as the mental capacity to make their own decisions regarding their health or property. Does this mean that their assets transfer over to the appointed attorney? No, the property remains that of the grantor and the attorney only has the right to make decisions with assets, such as bank accounts, for reasons that are in the normal course of the grantor, such as paying the mortgage, bills etc. Assets remain in the name of the grantor.
When a person passes away, Powers of Attorney are null and void, and the governing document becomes the Last Will and Testament. However, in order for asset to become available for the Estate Trustee, a Certificate of Appointment of Estate Trustee With a Will is required to be obtained (formally called “Probating a Will”).
There are certain instances when a Certificate of Appointment of Estate Trustee is not required, such as all assets being jointly owned with a spouse, in which case, assets transfer over to them.
Once that Certificate is obtained, the Estate Trustee will then need open a bank account in the name of the Estate and then can distribute or dispose of assets as set out in the Will, and if real estate is owned by the deceased, they can then transfer that property to their name as Estate Trustee for the Estate and deal with it accordingly. Any proceeds from the sale of assets with then run through the bank account, and similarly, any liabilities will be paid from the Estate’s account.
It’s important to note that before assets, or proceeds from disposed assets, are distributed, all outstanding debts, taxes are liabilities must be dealt with and paid. If the assets of the Estate do not cover the liabilities, then there will be no assets to distribute at the end of the day.
Distributing an Estate can be a stressful time. For this reason, it’s always a good to ensure you select an Estate Trustee that you trust and you know will take great care of your assets.
Christine Allan, Sr. Law Clerk