The main stages of an estate liquidation - Legel questions and answers
When a person dies, all the property they own goes to their estate. We must then proceed to the "liquidation" of this succession, so that its assets are distributed according to its wishes.
The liquidator is the person in charge of the liquidation of the succession. He must ensure that he manages the assets of the estate in the interest of the heirs. To achieve this, he must follow a number of steps.
Step 1: Obtain proof of death
A death can be proven by a copy of an act of death or a death certificate. These documents are issued by the Registrar of Civil Status; The liquidator will need one or the other of these documents, or even both, depending on the information desired by the various organizations with which he will do business.
Warning! The death certificate made by the doctor and the death certificate provided by the funeral home are not valid documents for the liquidation.
Step 2: Find the last will
The liquidator must search for the last will made by the deceased.
The liquidator must then search through the papers of the deceased to try to find a will made by hand or in the presence of witnesses. If the deceased made several wills, the liquidator is required to use the most recent of them to liquidate the estate. This verification is therefore necessary, even if a will is registered in the registers of wills.
The liquidator must finally check.
If the deceased had a marriage or civil union contract.
If this contract contains the clause "To the last living the goods". This clause may provide for a gift upon death.
If the liquidator finds no valid will and gift, the law determines who can inherit from the deceased. For more information on this situation, see the article Dying without a will.
Step 3: Have the will probated (when it is not notarized)
The liquidator must have the will verified if it is a will made by hand, made before witnesses or made before a lawyer. Probate of a will is a procedure before a notary or in court. The purpose of this procedure is to ensure.
Step 4: Register a Notice of Appointment of Liquidator
A person who agrees to be liquidator of a succession must register a notice of designation in the Register of Movable Real and Personal Rights (RDPRM). If there is an immovable in the estate (house, condos, commercial building, etc.), this person also registers a notice in the Land Registry.
These notices serve to make the identity of the liquidator public. They eliminate possible confusion about the identity of the person who manages the assets of the estate.
Step 5: Identify and contact heirs
The liquidator must contact all persons who can inherit and who have not yet accepted the succession (these are called “successors”). He then informs them of the opening of the succession.
Step 6: Close the deceased's accounts and open an account in the name of the estate
After the death, the financial institutions (banks and credit unions) freeze the accounts of the deceased. It is therefore preferable to close the accounts and open a new one in the name of the estate.
This account will be used, among other things:
to transfer the money of the deceased;
to deposit the money received since the death;
to pay the debts of the deceased.
To open an estate account, the liquidator must present certain documents, for example:
the death certificate or act issued by the Directeur de l'état civil du Québec;
will searches carried out in the registers of the Chambre des notaires and the Barreau du Québec;
a copy of the will.
Step 7: Identify the assets and debts of the deceased, produce an inventory and publish certain notices.
The liquidator makes an inventory of the property (house, car, bank account, RRSP, etc.) and debts (mortgage, loans, bills, etc.) of the deceased. He must sign this inventory before two witnesses or a notary.
Subsequently, the liquidator must register a notice of closure of inventory in the Register of personal and movable real rights, to confirm that the inventory has been made. A notice must then be published in a newspaper distributed in the locality of the deceased.
Attention! Some people can claim amounts from the estate, even if the will makes no provision for them. For example, the spouse married to the deceased could be entitled to a compensatory allowance. The children may be entitled to child support.
These amounts are part of the debts of the estate. The liquidator must therefore make sure to take them into account when drawing up the inventory of the estate.
In order to best determine these amounts, the liquidator should consult a notary or a lawyer.
Step 8: File tax returns and obtain tax certificates
Following death, the deceased AND his estate are taxed. The liquidator must therefore file the following tax returns:
the declarations of the deceased for the calendar year of death;
previous statements of the deceased that have not yet been filed;
statements of the estate for sums received and paid after death.
These declarations must be sent to the federal and provincial governments with the necessary documents, for example, the proof of death, the will and the will searches in the registers of the Bar and the Chamber of notaries. If there are amounts to be paid, it is up to the liquidator to take care of them.
Subsequently, the liquidator must ensure that he obtains the certificates authorizing him to distribute the property to the heirs. These tax certificates are proof that the deceased no longer owes the two levels of government.
At the federal level, this certificate is called a Clearance Certificate. At the provincial level, it is the Certificate authorizing the distribution of property.
Attention! If the liquidator distributes the assets to the heirs without having obtained the tax certificates, he could be obliged to pay from his own pocket the amounts that are due.
Step 9: Pay debts
When it is time to pay the debts, three situations can arise:
There are enough assets and money in the estate to settle all debts.
In this case, the liquidator must pay:
The debts of the deceased (e.g. electricity bills, mortgages, taxes, etc.);
Estate debts (e.g. funeral expenses, notary fees, taxes, etc.);
Bequests by particular title, that is to say the property that the deceased has clearly identified and left to A specific person (e.g. “I leave $5,000 to my friend Pierre”).
There is not enough money in the estate to pay all the debts, but there is enough property.
In this case, the liquidator can sell the assets of the estate to pay the debts. However, he must have the necessary authorizations.
There is not enough property or money in the estate to settle all the debts.
In this case, the liquidator must wait before paying the debts. It is therefore strongly recommended to consult a notary or a lawyer.
Step 10: Provide an account of the liquidation and proceed with the division of assets
At this stage, the liquidator gives the heirs a report of the liquidation, called the “final account”.
The final account is a document that informs the heirs of what remains in the estate once all legacies and debts have been paid.
When delivering the final account to the heirs, the liquidator may attach a proposal for partition. It is a plan of distribution of property to heirs. The heirs can accept or refuse this proposal.
If they accept it, the liquidator proceeds with the distribution of the assets according to what is provided for in the proposal. The liquidator is then relieved of his duties.
If the heirs refuse the final account and the partition proposal, the intervention of the court is then necessary.
Step 11: Register a notice confirming the end of the liquidation of the estate
Once all the assets have been distributed, the liquidator publishes a notice of closure of the liquidator's account in the Register of Personal and Movable Real Rights.