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How to settle a Succession, When there is a will, Montreal Successions


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Successions


Following the death of a family member, it is natural to wonder if you are going to inherit something. Or perhaps a relative has asked you to act as the liquidator of the succession after he or she dies. What is the role of the liquidator? What duties are involved in liquidating a succession? What is a legal succession?
This document answers these questions and many others.

A few definitions


In order to clearly understand the information contained in this brochure, it is important to know from the start the meaning of the terms and expressions that are used.
Successor
A successor is a person who, under the Civil Code, is entitled to inherit.
Heir
An heir is a successor who accepts the inheritance to which he or she is entitled.
Legatee by particular title
A legatee by particular title is a person who receives a specific legacy (bequest) from the testator but who is not considered an heir. A legatee does not have the same obligations towards the succession as an heir, for example, with respect to the deceased’s debts.
Legal succession
A legal succession is a succession that is not liquidated according to the deceased’s wishes as expressed in a will but according to the rules of the Civil Code.
Testamentary succession
A testamentary succession is a succession that is liquidated according to the deceased’s wishes as stated in a legally valid will.

What needs to be done if a close relative or friend dies

- the
Registres des dispositions testamentaires et des mandats de la Chambre des notaires du Québec and

- the
Registers of wills and mandates of the Barreau du Québec.

The death of a close relative or friend makes a number of actions necessary, one of the most important of which is searching for a will. This involves looking through the deceased’s personal effects, finding out whether he or she had a safety deposit box and contacting persons or organizations likely to have the will in their possession.
A search will also have to be made in two registries of wills:


*Important*

If the deceased was married or in a civil union, the family patrimony must be partitioned and the matrimonial or civil union regime liquidated before settling the succession (see the section Partition of the family patrimony and liquidation of the matrimonial or civil union regime).


When there is a will

If the deceased left a will, the succession is a testamentary succession, or testate succession. Québec law recognizes three types of wills: a notarial will, which is executed before a notary and signed by a witness; a holograph will, which is entirely hand-written by and signed by the testator and requires no witness; and a will made before witnesses, which may be written by hand or by mechanical means, or dictated to someone, and which must be authenticated by two witnesses.
The holograph will and the will made before witnesses must be probated by the Superior Court in the 
judicial district in which the testator resided, in the district where the testator died, or in the district in which the willed property is located. These two types of wills can also be probated by a notary, on the condition that the will to be probated was not filed with a member of the notary’s firm.
The application to have a will probated may be made after the testator’s death by any interested person – usually the liquidator of the succession – or by a legal professional acting on behalf of a person interested in the succession.
The persons entitled to inherit, namely, the successors, must be notified of the probate proceeding. However, the court may exempt the person filing the proceeding from notifying all the successors where to do so would be impractical or too expensive, or where it appears unnecessary.
An application for the probate of a will must be accompanied by the following documents:
  • the original will;
  • the copy of the act (certificate) of death issued by the Directeur de l'état civil ;
  • a statement under oath (affidavit) by one of the witnesses (for a will made in the presence of witnesses) or by a person who is familiar with the testator’s signature or handwriting (for a holograph will); and
  • proof of delivery of the notice to the successors.
It also has to be ascertained whether the testator named a liquidator (formerly known as a testamentary executor) to administer the succession. If the testator has not designated a liquidator, the heirs act together to perform the liquidator’s duties. They may assign themselves specific duties, decide that one or more heirs will act as liquidator, or designate a person who is not an heir.
If the heirs are unable to agree on whom to designate as the liquidator, the matter may be decided by the court. The liquidator chosen by the heirs may be appointed by means of a declaration or an agreement signed by the heirs (a sheet of paper on which the choice of the heirs is indicated) or by notarial act or instrument.
The name of the chosen liquidator must be entered in the Registre des droits personnels et réels mobiliers , using the General Application for Registration form, and must be entered as well in the Registre foncier  if the succession involves an immovable.


When there is no will


If the deceased did not leave a will, the succession is liquidated as provided in the Civil Code and this is called a legal succession, or intestate succession. In this case, the heirs jointly perform the liquidator’s duties, unless they designate a liquidator.
In a legal succession, the successors are the spouse to whom the deceased was married or joined by civil union and the deceased’s blood relatives and relatives by adoption (thus excluding a de facto spouse and 
in-laws1).
In order to determine which rules apply in a legal succession, a certain number of questions must first be answered.
  • Was the deceased married or in a civil union, and did he or she leave a surviving spousefi If so, is there a marriage contract or a notarial civil union contract?

  • Does the marriage contract or civil union contract executed before a notary contain a testamentary clause whereby the surviving spouse receives all the property of the spouse who dies first? If it does, the only successor is the surviving spouse.

  • If the marriage contract or notarial civil union contract does not contain a testamentary clause, or if there is no such contract, did the deceased have any children?
    • If so, the succession must be partitioned between the spouse and the children.
    • If not, the succession must be partitioned between the spouse and other relatives of the deceased
How to settle a succession


After settling the family patrimony and the matrimonial or civil union regime, the succession is partitioned according to the testator's wishes if a will exists or according to the rules of legal succession if no will exists.
A succession is settled by a liquidator. Once appointed, the liquidator must settle the succession as soon as possible. There is no specific time limit, but if the liquidation takes more than 1 year, the liquidator must, at the end of the year, report on the administration of the succession to the heirs, creditors and legatees by particular title that have not been paid.
A liquidator who is not an heir is entitled to receive remuneration, the amount of which is set by the heirs if not provided for in the will. A liquidator who is an heir is not automatically entitled to remuneration, although the will may provide for remuneration or, if all the heirs agree, they may decide to offer remuneration. All costs incurred in settling the estate are borne by the succession.
Finally, it should be noted that:
  • no person is obliged to accept the task of liquidating the succession, unless that person is the only heir;
  • a person who accepts the task has the option of resigning from it for a serious reason;
  • a liquidator who resigns must notify the heirs in writing;
  • the liquidator is liable for harm caused to the heirs.
Inventory of property and notice of closure
One of the liquidator's duties is to make an inventory of the property of the succession. This step may be omitted with the consent of all the heirs and successors, although it is not in their interest to do so since an inventory will let them know if the deceased's total debts exceed the total assets (liquid assets).
The heirs are liable for the deceased's debts only up to the value of the property they receive from the succession, but if they exempt the liquidator from making an inventory, they are considered to have accepted the succession and are personally liable for all of the succession's debts, even if the debts exceed the value of the property they receive.
However, an heir who has paid or is required to pay the succession's debts may, if acting in good faith, apply to the court to have the obligation reduced or to have the liability limited to the value of the property received if, for example, new information or the appearance of a creditor whose existence could not have previously been known substantially broadens the obligation.
The liquidator must register a notice of closure of inventory in the Registre des droits personnels et réels mobiliers using the
General Application for Registration form. The liquidator must inform the heirs, the successors who have not yet accepted or refused the succession, the legatees by particular title and the creditors of the registration of the notice of closure of inventory in the register of personal and movable real rights and of the place where the inventory may be consulted. In many cases, they may consult the inventory at the domicile of the liquidator, although this is not obligatory.
The liquidator must also have a notice of closure of inventory published in a daily or weekly newspaper distributed in the locality where the deceased's last principal residence was located. The notice must contain the main particulars in the application for registration. There is no need to publish all of the information provided on the form sent to the register of personal and movable real rights.
Once the inventory has been completed and the notice of closure of inventory has been published, a cautious liquidator will wait a few days before going on with the liquidation in the event that unknown property or creditors are discovered which may affect the inventory. The liquidator then pays the succession's debts. Three situations may occur.
  • The succession is solvent

    If the succession is solvent, the liquidator pays the creditors and legatees by particular title without further delay, and also pays any electricity, telephone and heating bills, funeral expenses, other current expenses, and, if the deceased was married or in a civil union, the claims resulting from partition of the family patrimony and liquidation of the matrimonial or civil union regime. The liquidator pays the compensatory allowance, if any, to the surviving spouse (for having enriched the deceased's family patrimony) and, generally, all the other debts of the succession.

  • It is unclear whether the succession is solvent

    If it is unclear whether the succession is solvent and it is not certain that the value of the property is sufficient to cover all the succession's debts and the legacies by particular title, no debts or legacies (bequests) are paid until 60 days have elapsed following registration of the notice of closure of inventory in the register of personal and movable real rights. The liquidator may, however, before the 60 days have elapsed, pay public utility bills (telephone, electricity, gas) and any pressing debts.

    The 60-day period gives the liquidator time to sell any property that must be sold to pay all the succession's debts and the legacies by particular title. To sell the property, the liquidator must obtain the consent of the heirs or, failing their consent, the permission of the court.

  • The succession is not solvent

    If the property is insufficient to cover all the debts and the legacies by particular title, the liquidator must act with prudence: the liquidator must draw up a complete statement of the debts and the legacies by particular title and then make a payment proposal, which must be sent to the interested parties and be approved by the court. Before making a payment proposal, the liquidator should seek legal advice to avoid mistakes.

    The payment proposal must be drafted according to certain rules: the preferred creditors (those whose claims relate to legal costs, movable property, tax laws, or property taxes) and the hypothecary creditors, according to their rank, are paid first; then the other creditors are paid, on a pro rata basis if they cannot be paid in full; next, the support creditors are paid, on a pro rata basis if they cannot be paid in full; and any legatees by particular title are paid last.

    If the property is insufficient to pay all the legatees by particular title, the liquidator must follow other rules.

    A liquidator may negotiate with the creditors to have them voluntarily reduce their claim in order to satisfy as many of them as possible. In doing so, the liquidator must explain the situation fully to the creditors, disclose all relevant facts to them and obtain their written consent.

Delivery and partition of property
Notice of Distribution of the Property of an Estate and obtain a clearance certificate from the Canada Revenue Agency by completing and submitting the form Asking for a Clearance Certificate .
The heirs receive their inheritance once they have accepted the liquidator's final account. The closure of the liquidator's account must be entered in the
Registre des droits personnels et réels mobiliers by means of a notice identifying the deceased and indicating the place where the account may be consulted. 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. If the proposal for partition is accepted, the liquidator proceeds with the partition and turns the property over to the heirs. If the proposal for partition is not accepted, the property is partitioned as provided in the Civil Code


The liquidator must submit a final account showing the succession's net assets or deficit. The liquidator must then complete the deceased's federal and provincial income tax returns and, before distributing the deceased's property, obtain authorization from Revenu Québec by completing and submitting the form