In-house counsel often ask us whether they should require a probated Will before releasing assets or cash to the executor of a deceased customer. The general answer is yes, they should require a probated Will. It is true that an executor's authority comes from the Will, not from any subsequent judicial grant of probate. However, there is a risk for a bank or brokerage that releases funds to an executor without probate. If the Will is invalid, the bank or brokerage may remain liable to pay the assets or cash out again to the real executor. This is why most banks and brokerages do require probate except for small estates, or customers whom they know well. In the recent BC case of Re Collins Estate [2016] B.C.J. No. 840 (QL), an executor argued that he was entitled to immediate access to the testator's assets at a bank even though he did not have a probated Will. The bank refused, and the B.C. Supreme Court decided that the bank was in the right - it was entitled to require a probated Will. We have little doubt an Ontario court would reach the same conclusion.
The lessons to take away are:
- It is prudent to exercise caution before releasing assets to an executor who has not probated a Will.
- It is good practice to obtain an indemnity when releasing assets without probate.
- Provincial governments should view probate as an essential public service not a source of tax revenue. The process should be made much easier and much less expensive so that there is no good reason for executors to avoid seeking probate.
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.
