Taking on the role of estate trustee can involve many challenges, both legally and otherwise. Being an estate trustee where the deceased assets include real estate can carry with it additional challenges which must be carefully addressed.
As a trustee you must pay particular attention to the deceased real estate property if he or she lived in the home with their spouse as a "matrimonial home". If the home is a "matrimonial home" this can affect a number of things with the property. If there is a possibility that the home is a matrimonial home, the estate trustee should speak with a lawyer to see what it is that they can and cannot do with the property.
There are also special issues which can come up depending on how the deceased held the property. In a previous article we wrote about the many ways to take title to a property, and we stated that if the property is held as joint tenants with another person then the property will automatically vest with the other person upon the death of one of the tenants.
Leaving these and other issues aside it is also important for an estate trustee to know if they can actually sell the real estate of the deceased. Simply because in a will the deceased named the estate trustee as their trustee this does not mean that the estate trustee has right to sell their real estate.
Whether or not an estate trustee can sell the property will depend on whether or not the estate trustee was appointed as the trustee under the will or not.
Estate Trustee Under A Will
If an estate trustee is appointed under a will to be the trustee, they must still be authorized to sell the real estate of the deceased.
This authorization can come from one of three places:
- An Express Power of Sale: An express power of sale may be found in the will itself as one of the powers of the trustee. Before the trustee can sell the real estate, the will must be examined to determine if the real estate is to be gifted to particular beneficiary(s). If the real estate is to be gifted, then the trustee must get the consent of that beneficiary(s), before they can sell the real estate to a third party;
- An Implied Power of Sale: An implied power of sale will depend on whether or not the will can be read as giving the trustee the power to sell the property, even though the will does not explicitly state that a trustee can sell the property; and,
- A Statutory Power of Sale under the Estates Administration Act: This is an Ontario law which regulates some of the things an estate trustee can do. If this statute is being relied upon to give the estate trustee authorization to sell the property the trustee can only sell the property for a purpose listed under this Act.
If the will does not have an express or implied power of sale then it is possible that three years after the deceased has passed on, the property will "vest" in beneficiaries who are entitled to it under the will and then they can sell it as they see fit.
Estate Trustee Without a Will
If the deceased dies without a will an estate trustee can still be appointed by the Court. If this happens then there can be no express or implied power to sell the property under the will because there is no will. As a result, the only power of the trustee to sell the real estate comes from the Estates Administration Act.
Similar to the estate trustee without a will, the real estate can vest in the beneficiary three years after the passing of the deceased, provided that certain events happen.
Estate Administration Tax for a Sale by an Estate Trustee
In certain situations when a trustee wants to deal with the assets under a will they will need to obtain a certificate of appointment of an estate trustee and will have to pay an estate administration tax. This "tax" used to be known as "probate fees" and it is calculated based on the total value of the property. Certain property however is not counted when determining this tax.
When real estate is sold by the estate trustee some transactions require that this tax be paid while others do not.
In Ontario there are two systems for registering land: The Registry System; and, The Land Titles System. The Land Titles System is the newer system and certain real estate was converted from Registry System to the Land Titles System by the government.
If the real estate is still under the Registry System then the estate administration tax does not have to be paid.
If the real estate is under the Land Titles System and the estate trustee wants to sell the property they will need to obtain a certificate of appointment, which means that they will have to pay the estate administration tax. There are however two exceptions to this. First, if the value of the estate does not exceed $50,000 then no certificate is needed. Second, there is currently a one-time waiver of the requirement of a certificate of appointment of estate trustee if the conveyance is the first dealing with the real property of any value after its conversion from the Registry to the Land Titles System.
Whether or not an estate trustee can actually sell real estate can become complex. If you are an estate trustee it may be helpful for you speak with a lawyer to determine what you can and cannot do with the property. In addition, there are many documents that must be included in any transfer in order to make the transfer valid and you may have to pay estate administration tax. A lawyer can help with organizing and ensuring that the correct documents are used.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.