Please wait…..how long does it take to administer an estate?
This is a question we receive on a daily basis both from Executors and Beneficiaries. Executors are often surprised by how long their newly accepted “job” will be. Beneficiaries are equally surprised to hear how long it might take before they start seeing estate funds come their way.
Depending on who you ask, you may receive a conflicting answer. However, in my experience you should anticipate an estate to take on average anywhere from 12 months to three years to wrap up. Depending on the complexities of the estate, it can take much longer. I once worked on estate that was reaching its 17th birthday and is still not wrapped up!
There are many factors that come into play in determining the lifespan of the estate’s administration, for the sake of reading pleasure, I have narrowed it down to the three biggest influences for an estate.
Probate Wait Times: When an Executor applies for their Certificate of Appointment of Estate Trustee (also known as Probate), the application is submitted to the Superior Court of Justice in the jurisdiction in which the deceased resided in. Gathering the information for the probate application can take some time, especially the estate’s asset inventory listing. If an Executor had been privy to the details of the deceased’s financials, then this part usually is smoother. However, if an Executor has no idea what assets were held, or where they were held, then this may add quite a bit of time to the application process. Once the application is submitted to the appropriate Superior Court for processing, this is where the wait times can vary. Depending on the court, the application could take from 4 weeks to 8 months! And that is not taking into consideration any errors on the application or questions from the court, that can add quite a bit of waiting to your application process.
What the will says: The Last Will & Testament is the testators set of directions pertaining to how they would like the assets of their estate distributed. As long as the instructions are legal, a testator can pretty much set up distributions however they would like. This includes setting up trusts that could last several years before the distributions are sent out to the beneficiaries. If there are minors, or Henson Trusts set up, then you are also adding on a much longer administration lifespan for the Executor to be managing. The will sets the tone for the length of time that an Executor will be “working” for the estate, along with possible distribution timelines for the beneficiaries.
Taxes: As they say, nothing in life is certain except for death and taxes. When a person passes away, the Executor must ensure that all the tax returns have been filed and taxes are paid. Depending on the assets of the estate, there may be some income earned in the waiting period between date of death and liquidation date of the assets. If there is income earned after the date of death (i.e. interest, dividends, capital gains, rental income, etc.) then the estate is also required to file tax returns as it has become it’s own entity. Depending on when all of these items occur, tax returns can trickle into subsequent years, therefore prolonging the timeline of the estate. Another tax consideration is the application for a clearance certificate, this is a request by the Executor to the Canada Revenue Agency to “audit” the estate to ensure there are no additional taxes owing. Once the Canada Revenue Agency is satisfied, they issue a Clearance Certificate which offers the Executor protection and clearance to distribute the residue that is left in the estate. At the time of writing this blog, the wait time with the CRA for a clearance certificate is 6 months.
As you can see, these are only some examples of factors that can play with the length of time it takes to wrap up an estate. I didn’t even cover any complications such as; foreign property, family dynamics, estate litigation, etc. The best thing to remember when dealing with an estate whether you are the Executor or Beneficiary, is from this Greek Proverb: “One minute of patience, ten years of peace.”