Estate settlement process

The Civil Code of Québec requires successors to dispose of the deceased's body properly. If close relatives do not know the deceased's wishes with regard to the disposal of his body, they must, to the extent possible, look through the deceased's personal effects to see if they can find anything that expresses his wishes. It is also important to check to see if the deceased has made pre-arrangements for his funeral. Because such arrangements are made by written contract, you should be able to find the pre-arranged funeral services contract in the deceased's personal papers.

To the extent possible, whether or not the deceased has clearly expressed his last wishes with regards the disposal of his body, it is important to try to respect these wishes or, at least, to dispose of his body in accordance with his values.

Generally, funeral expenses are covered by the succession (legal term for estate in Quebec). If the estate is solvent, expenses are paid directly from the deceased's assets. However, if the estate is insolvent, the person who signs the contract with the funeral director is held personally liable for paying the funeral expenses.

Considering the obligation of close relatives to dispose of the deceased's body properly, the Government of Quebec, through the Régie des Rentes du Québec (Quebec Pension Plan), offers under certain conditions a death benefit payable in the form of a lump-sum amount to the estate or person responsible for paying the expenses.

You may be reimbursed for a few thousand dollars on presentation of the invoice to the Régie des Rentes du Québec. The amount is, however, taxable.

Attestation of death

Upon death, be it at home, a healthcare institution or elsewhere, an attestation of death must be produced Most often, it is drawn up by a physician and given to a close relation of the deceased and the funeral director who takes charge of the deceased's body.

Declaration of death

This is a document completed by the funeral director together with the person declaring the death (usually a close relative).The funeral director completes and signs the part of the declaration concerning disposal of the body and sends the attestation of death and his declaration of death to the Directeur de l'état civil. The declaration of death allows the Directeur de l'état civil to prepare the act of death and enter it in the register of civil status. It is therefore important to fill this declaration out accurately.

Certificate of death

Only the certificate or act of death, issued by the Directeur de l'état civil, are legally recognized as official proof of death. The documents are usually required to terminate programs or request benefits from the government, financial institutions and other organizations. The liquidator, or interested person with grounds for the request, may request the certificate of death by filling out an application form. Don't hesitate to ask for 2 copies of the document.

Note that there are fees for issuing a certificate or act of death. Requests are usually processed within 12 business days.

Until the certificate or copy of the act of death is issued, many institutions and service providers such as Bell Canada and Hydro-Québec will accept the attestation of death signed by the funeral director as proof of death.

Other documents may also be necessary or useful, such as the deceased's birth certificate, decree of separation, decree of divorce, dissolution of civil union, or life insurance policy.

Before you can start liquidating the decease's estate, it is important to check to see if the deceased left a document expressing his last wishes with regard to the liquidation of his estate.

Only the most recent will has any legal value. You may be able to find it in the deceased's personal belongings, safety deposit box or at the Chambre des notaires du Québec's Régistres des testaments et mandats (site in French only) or Barreau du Québec's Registers of wills and mandates.

The deceased may have included a testamentary disposition in his marriage or civil union contract. If he was divorced or the civil union dissolved, it is preferable to verify, with a legal advisor, the consequences this will bear on the deceased's wishes.

To prove research was done, a will search request must be made with the Chambre des notaires du Québec and Barreau du Québec.

Attach the following to the duly completed search request:

• The original and a photocopy of the copy of the act of death issued by the Directeur de l'état civil. By providing a photocopy, you are ensured that your original copy is returned to you. No other proof of death will be accepted.
• The search fees payable by postal money order, certified cheque or credit card.

Searches are carried out upon receipt of complete search requests, and search certificates issued by the Chambre des notaires and Barreau du Québec identifying the last will recorded, if any, along with the contact information of the notary or the lawyer who received it. Otherwise, "aucune inscription" will appear on the search certificate. Requests are usually processed within 2 to 3 weeks.

If the deceased did not leave testamentary dispositions or if they are incomplete, the dispositions set out in the Civil Code of Quebec apply.

There are several possible scenarios.

1. When there's no will or testamentary clause

In the absence of a written record of the deceased's final wishes with regards to his estate, it is the Civil Code of Québec that determines the successors. The law stipulates the terms and conditions of the distribution of the deceased's estate by prioritizing people based on their degree of relationship to the deceased. Only persons related to the deceased by blood, adoption, marriage or civil union may be considered successors.

The following table shows how an inheritance is distributed to the various successors in most legal estates (when there is no will).

Once identified, the status of successor and their ranking in the estate must be recognized by a declaration of heredity.

The declaration of heredity must be drawn up by a notary. The notarial act is used to identify the deceased person, his civil status and matrimonial regime, if applicable, and his successors. It may also be used to designate the liquidator of the succession. You must obtain a declaration of heredity to work with the various parties involved in liquidating the deceased's estate, such as banks, Desjardins caisses, insurance companies and government bodies.

2. When there's a notarial will

Notarial wills do not require probate and are automatically valid. The only successors are the people designated in the will.

3. When there's a will made in the presence of witnesses or holograph will

Once the validity of the will has been legally recognized, only the persons designated in the will are recognized as successors.

This type of will must go through probate to validate it and establish its full legal standing.

The probate procedure may be conducted in 2 ways: through a notary or by the Superior Court. The Government of Quebec has published a document explaining how to go about applying for the probate of a will.

Warning: if you are not sure the will is valid or believe the application for the probate may be contested, we suggest you consult a lawyer to avoid initiating needless procedures.

To support your application for probate, the following documents will be required by the Superior Court or notary:

• The original holograph will or will made in the presence of witnesses
• The copy of the testator's act of death issued by the Directeur de l'état civil
• The sworn statements (affidavits) of one of the witnesses (will made in the presence of witnesses) or a person who declares recognizing the deceased's handwriting or signature (holograph will)
• Proof of service or notice to the successors regarding the application for probate, accompanied by the documents listed above.

4. When there's a testamentary clause and no subsequent will

Testamentary clauses included in marriage or civil union contracts make the spouse the sole heir of the deceased's property. The clause has the same legal force as a notarial will. In this case, the only successor is the married or civil union spouse.

An inventory of the deceased's property is made to determine if the deceased's total debts exceed his total assets. To do so, the liquidator must first trace the deceased's assets and debts. He then lists and calculate the deceased's total assets (e.g., RRSPs, RRIFs, URCs, LIFs, pension fund), personal property and real estate. If applicable, he must obtain the deceased's company financial statements, partnership agreements and any other related document.

The liquidator cannot be exempt from making the inventory UNLESS all the heirs and successors agree to it. In this case, the heirs are liable for the estate's debts in excess of the value of the property they inherit.

Once the liquidator had made the inventory, he must take all reasonable means to ensure that the successors receive a copy of it, by mail or in person at a meeting, for example. The document can then be used by the successors to exercise their right of option.

The right of option is a right offered to successors to accept or refuse the estate. Usually, a successor will renounce the estate if it's insolvent. Conversely, the successor may accept the estate if the inventory shows that it is solvent. Nevertheless, a person may, for personal or emotional reasons, accept an insolvent estate or renounce a solvent estate.

The successor usually has 6 months after the death to exercise his right of option. In order to keep his right of option, a successor must make sure not to do anything that may imply his intention to accept the estate. For example, he should not:

• Transfer, sell, transfer or otherwise dispose of property belonging to the deceased
• Pay any debts other than the funeral expenses
• Begin estate liquidation procedures

Some conservative acts do not in themselves imply the acceptance of the estate, such as:

• Organizing the disposal of the body and making the funeral arrangements
• Requesting the death benefit from the Régie des rentes du Québec
• Disposing of and distributing everyday clothing and souvenirs with little or no monetary value
• Disposing of perishable property
• Draw up an inventory of the estate

The estate may be accepted in 2 ways:

• It is expressed when the successor clearly shows in writing or by verbal declaration his intention to accept the estate
• It is tacit when the successor carries out an act that necessarily implies his intention to accept

Acceptance is irrevocable. The successor must, therefore, understand the consequences of accepting the estate. By accepting the estate, the successor becomes the heir and, consequently, personally liable for the debts of the estate up to the value of the property he receives.

The act of renunciation, however, must be expressed and drawn up by a notary. The renouncing person renounces the entire estate, or both liabilities and assets. The act of renunciation discharges the successor from all obligations, in particular all debts, towards the deceased's estate and revokes all rights that the successor could have claimed, including the right to information about the estate and its liquidation.

The notice informs the heirs, creditors and debtors to the estate that a liquidator exists and who he is. It is published in the Register of Personal and Movable Real Rights (RPMRR) and the Land Register when the estate includes real estate (land, buildings, etc.) .) Go to Registre des droits personnels et réels mobiliers (RDPRM) (PDF, in French only, 123 KB).

The request is made by filling out a Réquisition générale d'inscription form. It can be sent in by mail or submitted in person at the RPMRR office, along with required fees. Anyone replacing a liquidator must also be registered with the RPMRR. To order paper forms, go to Commande de formulaires papiers (site in French only).

The notice identifies the deceased and indicates where interested parties (heirs, successors, legatees by particular title, and debtors) can look up the estate inventory. The liquidator must inform interested parties of the registration and where the inventory can be consulted.

The request is made by filling out a Réquisition générale d'inscription form. It can be sent in by mail or submitted in person at the RPMRR office, along with required fees. Anyone replacing a liquidator must also be registered with the RPMRR. To order paper forms, go to Commande de formulaires papiers (site in French only).

The notice must also be published in a newspaper distributed in the community of the deceased's last known address.

The liquidator may be exempted from publishing his designation and the notice of closure of inventory if all the heirs agree to it. Such exemptions are only recommended if the estate is clearly solvent and if all creditors of the estate are known. In this case, a written exemption is preferable to a verbally formulated one. By authorizing the exemption, the heirs and successors who have become heirs become personally liable for the estate's debts beyond the value of the property they collect.

To help manage the estate, it is advisable to open an estate account. Once the assets distributed, the liquidator must close the estate account.

The following documents are required by most financial institutions:

• A copy of the act of death issued by the Directeur de l'état civil
• The notarial will or testamentary clause, probated holograph or will made in the presence of witnesses, or the declaration of heredity
• The will search certificates

The liquidator must inform all service providers (telephone, electricity, cable, Internet, various subscriptions, etc.), financial institutions, government services (e.g., Canada Revenue Agency, Revenu Québec) and the deceased's debtors of the date of the person's death.

The following is a non-exhaustive checklist to help you with the task.

• Social insurance card
• Health insurance card
• Social security
• Professional associations
• Employer
• Insurers
• Mortgage lenders
• Hydro-Quebec
• Gaz Métro
• Cable, Internet, telephone service providers
• Financial institutions
• Driver's licence
• Handicapped parking stickers
• Hunting and fishing permits
• Firearm permit
• Passport
• Old-age security pension, QPP (Quebec Pension Plan) and private pension plans
• Residential lease
• Housing allowance
• QST and GST credits
• Canada Child Tax Benefit
• Child support
• ATM cards
• Credit cards
• Hospital cards
• Revenu Québec, Canada Revenue Agency
• Attending physicians
• Dentists and other professionals
• Library and club membership cards
• Newspaper and magazine subscriptions
• Other

It is also suggested that the liquidator have the deceased's mail forwarded to his own personal address.

Following a death, a variety allowances and benefits can be claimed from governments, employers and creditors.

The liquidator can inform the surviving spouse, guardian of minor children, disabled children of the deceased or any other designated beneficiary (of life insurance, RRSPs, group pension plan, pension fund) of the opportunity to apply for and obtain related death benefits.

The first federal and provincial tax returns include all taxable earnings paid to the deceased between January 1 of the current year and the date of death.

For tax purposes, the deceased is deemed to have disposed of his property at fair market value as of the date of death. Any resulting capital gains or losses must also be included in the tax returns.

The liquidator has a minimum six-month period to file the deceased's federal and provincial income tax returns. The deadlines for filing the final income tax return and paying any outstanding amount are as follows:

Tax returns must be accompanied by a photocopy of the copy of the act of death issued by the Directeur de l'état civil and a document attesting the designation of the liquidator.

Subsequent returns are returns pertaining to income generated after the date of death (trust income tax return). For terms and conditions pertaining to the filing of these returns, it is highly recommended that you consult your accountant.

The liquidator must notify Revenue Québec and the Canada Revenue Agency of his intention to distribute the estate to obtain the certificates authorizing him to do so.

To obtain the certificates, the liquidator must fill out and send the appropriate forms to the competent tax authorities:

• MR-14.A - Notice Before Distribution of the Property of a Succession (provincial)
• TX19 - Asking for a Clearance Certificate (federal)

These forms can only be sent once tax returns have been submitted, notices of assessment received and any amounts owing paid. The forms must be accompanied by the following documents:

• Photocopy of the act of death issued by the Directeur de l'état civil
• Will search certificates
• Notarial will, probated holograph or will made in the presence of witnesses, testamentary clause or declaration of heredity

If the liquidator distributes the estate assets without first having obtained authorization from the tax authorities, he is held personally liable for the deceased's debts up to the value of the property distributed.

Once the inventory of property completed, the notice of closure of inventory published and the clearances obtained, if total debts do not exceed total assets, the liquidator must pay the estate's debts. Since the Civil Code of Quebec came into force in 1994, funeral expenses are no longer considered prior claims.

The liquidator pays standard bills from service contracts such as Hydro-Québec, Bell Canada and Videotron (electricity, gas, telephone and Internet service providers) and personal debts such as credit card balances, liabilities and loans, as they become payable. He then pays the legatees, or persons designated to receive a gift under the terms of the will. Examples: I bequeath the sum of $5,000 to my godson, Mark. I bequeath my car to my granddaughter, Florence.

The family patrimony and matrimonial or civil union regime are there for married spouses or spouses in a civil union. When one of the spouses dies, the net value of the patrimony is divided between the surviving spouse and the heirs. After the partition of the family patrimony, the liquidator must settle the matrimonial or civil union regime. Because specific rules apply to each situation, it may be wise to consult a legal advisor.

Depending on the circumstances, the liquidator may have to make support payments, pursuant to the survival of the obligation to provide support. It is, therefore, important to consult the judgments of divorce or separation from bed and board, as well as the child support orders.

The liquidator's final account determines the estate's net assets or deficit. If stipulated in the will or requested by a majority of the heirs, the liquidator must include a proposal for partition in the final account. The proposal for partition determines the share of the inheritance that each heir will receive. If the proposal is accepted by the heirs, the liquidator can then render an amicable account without any judicial formalities. If the proposal is not accepted, the account is rendered in court.

The liquidator then delivers the property and assets to the heirs in accordance with the proposal for partition, either by cheque, by physically handing over the property, or by act of transfer or declaration of transmission and heirs.

After the final account and proposal for partition have been accepted, the liquidator is discharged of his administration. The closure of the liquidator's account must then be registered in the RDPRM in order to notify interested persons of the place where the final account can be consulted. The request is made by filling out a Réquisition générale d'inscription form. It can be sent in by mail or submitted in person at the RPMRR office, along with required fees. To order paper forms, go to Commande de formulaires papiers (site in French only).

While the liquidator's responsibilities may seem heavy and even insurmountable at times, it's possible to successfully liquidate an estate by following the steps and the rules without sacrificing one's health or wallet. Simply respect the deceased's wishes, act transparently and in the best interest of the heirs, seek help when you need it, and don't rush things or give in to pressure from anyone who might be interested in liquidating the estate quickly.