The Wills Estates and Succession Act (“WESA”) prohibits the executor or administrator of an estate (known generally as the “personal representative” of an estate) from making a distribution from the estate to any beneficiaries until after 210 days have expired from the date the Grant of Probate or Administration is issued. A distribution may be made before 210 days only if all beneficiaries and those entitled to make an application to vary the Will consent in writing or the Court authorizes it. If a rectification, variation, or other proceeding that may affect the distribution of the estate is started, this period is extended beyond 210 days.
WESA creates a possibility that an order rectifying the Will might be made after the Grant has been issued. Even if all the known beneficiaries consent to distribution before 210 days at the time, a rectification order might later change the beneficiaries. This leaves a risk that not all the beneficiaries will have consented.
WESA also permits a spouse or child of a deceased person to apply to vary that person’s Will. An entitlement to a share of the estate may be created, increased, or reduced by court order. Again, this leaves a risk that all the beneficiaries may not have consented if a distribution has been made before the 210-day period has passed (e.g. if a disinherited child or spouse is granted a share of the estate by the Court).
If a new beneficiary arises or a beneficiary’s share of an estate is increased as a result of a court order, and that beneficiary cannot receive their full entitlement from the estate because the assets of the estate have already been distributed before 210 days have passed, the personal representative can be held personally liable by that new beneficiary for the loss. The risk this presents for a personal representative is limited by WESA which provides that a personal representative is not liable for a loss to an unsatisfied beneficiary due to a distribution that takes place more than 180 days after the Grant is issued and before getting notice of a proceeding that may affect the distribution of the estate.
An application for a rectification or variation order must be made within 180 days of the issuance of the Grant unless the Court grants leave for an application after this date. The personal representative must be served with the notice of such a claim within 30 days of the limitation period expiring unless granted an extension by the court. Because of this, it is generally safest for an Executor to wait 210 days from the issuance of the Grant before making a distribution, even if the beneficiaries and all persons entitled to make an application to vary the Will consent to a distribution before the 210-day period has passed.
The 210-day prohibition on distributions to beneficiaries does not prevent a personal representative from paying liabilities of the deceased and the estate. It also does not prevent a personal representative from consolidating estate assets or selling them.
Note that while selling real property to an arm’s length third party before 210 days is allowed, attempting to do so comes with risks. If someone begins legal proceedings in relation to the estate and registers a Certificate of Pending Litigation on title before the sale, that person’s consent or a court order will be necessary before the property can be sold.
The proceeds of a consolidation or sale of estate assets should be held in trust on behalf of the estate until the 210-day limitation period has expired. It is the personal representative’s duty to ensure that estate funds are invested and receiving a reasonable rate of return during the time the representative is holding them in trust. Normally, personal representatives are limited in the types of investments they can make to investments that a reasonably prudent Canadian investing their own money would make, but this can depend on the terms of the Will.
Join us again next month when we will discuss distribution of estate assets and passing accounts. See you then!
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