When it comes to estate planning, you’ll often hear about how to set up an estate and create directions regarding who gets what – but what about the practical side of things, like how those assets are transferred to beneficiaries?
Take estate conveyancing, for example. When a loved one dies and leaves behind the property, that property might be handled in several different ways depending on the ownership and nature of the property. Below, we’ll explore estate conveyancing in greater detail to give you a sense of the transmission process.
Keep in mind that there is a multitude of factors that impact the process followed for estate conveyancing.
What is Estate Conveyancing?
Conveyancing refers to the preparation of documents necessary to transfer property from a seller to a buyer. So, like any real estate transaction, estate conveyancing is the process of transferring property – though it comes up specifically in cases where the owner of the property has passed away.
How Does Estate Conveyancing Work?
Depending on the circumstances, different steps might be followed in estate conveyancing.
Treatment of the Deceased’s Interest in the Property
When an individual dies and owns the property, their “interest” becomes part of their estate. However, exceptions apply where the deceased owned the property in joint tenancy with another person, like a spouse. Here, the other owner would have the “right of survivorship” and automatically receive their deceased joint tenant’s interest in the property.
Obtaining the Certificate of Appointment of Estate Trustee
In most situations, the estate trustee (or an interested party, where the deceased did not leave a will) must apply for probate and a Certificate of Appointment of Estate Trustee. This document is required to transfer ownership of the deceased’s property in Ontario’s Land Title system, where it does not transfer to another person by right of survivorship.
To apply for probate and obtain a Certificate of Appointment of Estate Trustee, the estate trustee (or whoever is applying for probate) will need to:
- Obtain certain evidence, such as the will and proof of death, and complete several court forms;
- Identify the value of estate assets and pay taxes;
- Serve their application to any interested parties;
- File the application; and
- File an estate administration bond.
When an estate has a value of $150,000 or less, the estate trustee may be able to apply for a Small Estate Certificate, which offers an expedited process.
For details regarding the steps involved in applying for probate, read the Ontario government’s resource: Apply for probate of an estate.
Completing a Transmission Application
Once the estate trustee or other interested party has obtained a Certificate of Appointment of Estate Trustee, they can begin the estate transfer process where the land is “transmitted” into the name of the estate trustee to hold in trust to administer the estate.
Transferring the Property to the Beneficiary
Once the property is transmitted to the estate trustee, they can distribute it according to the deceased’s will.
Estate Conveyancing: Exemptions to the Land Titles Rules
While we’ve outlined the general process for estate conveyancing above, there are a couple of notable exemptions that estate trustees and beneficiaries should know about.
Estates Under $50,000
If the total value of the deceased’s estate is $50,000 or less, the estate trustee is not required to obtain probate before applying for the transmission of the property. However, it’s hard to imagine a scenario where an estate that includes real estate would be worth $50,000 or less, given Ontario’s hot real estate market!
The First Dealings Exemption
In rare situations, estate trustees and beneficiaries may be able to avoid probate and transfer the property directly under the “first dealings exemption.” This exemption is available if the following requirements are met:
- the deceased took ownership of the property when it was registered under the former Registry Act;
- the property was converted to Land Titles Conversion Qualified and remains in this state;
- the deceased owned the property at the time of their death; and
- the deceased died with a valid will.
For further context, the former Registry Act governed land titles before the onset of digital land titles. In the 1980s, land titles began to move title registrations into the new Land Titles System. However, some properties – such as those owned by one person for decades without being sold or transferred – will remain registered under the former Registry Act. This is where the “first dealings” language comes from.
Estate Conveyancing and Beneficiary Costs
If a beneficiary inherits property, they will not personally be required to pay capital gains taxes on the property (though note that the estate may be required to pay capital gains on the property in some situations). However, suppose the beneficiary sells the property that has appreciated or chooses to rent out the property after inheriting it. In that case, they will likely need to pay capital gains tax even though they did not initially invest in the property. To that end, speaking with a skilled estate lawyer or accountant is critical to ensure you understand the tax implications of inheriting a property (or putting an inherited property to a particular use).
Additionally, as a beneficiary, it’s important not to lose sight of the expenses associated with a property. While “inheriting” the property, you must assume the costs of maintaining the property, including property and utility taxes and other recurring costs.
Final Thoughts on Estate Conveyancing
Estate conveyancing can become a complicated process for estates, as the process for transferring title largely depends on the context of the estate and property and can have tax implications for the estate. If you are concerned about the impact of these issues on your estate planning or require help with the administration of an estate or an estate conveyance, speak with a skilled estate lawyer today.
Contact the Estate Lawyers at Tierney Stauffer LLP in Ottawa for Comprehensive Estate Planning
At Tierney Stauffer LLP, we take a client-focused approach, providing innovative guidance through estate planning and administration. Whether you’re dealing with a deceased person’s estate or require estate planning assistance, our estate lawyers have extensive experience. They will work to secure the results you need to move forward. Call us at 1-888-799-8057 or contact us online to set up a consultation with an experienced wills and estates lawyer.