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Relying on your will

August 08, 2013

This is part 3 of a three-part series (read parts 1 and 2) profiling pre-retirement survivor benefit recipients. The series explores scenarios based on the types of circumstances we see.

In part 2 of our series, we met "June", a 53-year old single mother of three grown children with 26 years of credit in the pension plan.

When June passed away suddenly of a brain aneurysm, before she had the chance to retire, her children were each able to collect their respective portions of her pre-retirement survivor benefit by completing a form and sending us copies of their birth certificates. The process took about one month to complete, with no additional costs. This is because June had taken the time to designate each of her children as beneficiaries with the pension plan.

Let's re-explore this scenario, but instead of designating her children with the pension plan, let's assume that June relied upon her will to pass along all of her assets, including her Teachers' survivor benefit, to her three children.

When Christopher, her eldest son and executor of her estate, contacts us he's greeted by a Pension Benefits Specialist (PBS).  Since June had no eligible spouse, no dependent children, and no designated pension plan beneficiaries at the time of her death, the PBS explains that a lump sum, worth the commuted value of her pension, will be payable to her estate.

The PBS tells Christopher that we will need a copy of her death certificate and her probated will to proceed.

A probate legally confirms Christopher's authority to execute the terms of the will. This is required when a person passes away and has assets, like a pension plan benefit, that does not have any beneficiaries designated.

Christopher needs to apply for probate with the Superior Court of Justice where June had her permanent residence. The process can take roughly six months, and has costs associated with it, usually about 1.5% of the entitlement.

Once we receive the court document for the probated will (Certificate of Appointment of Estate Trustee with a Will), we can now pay out the survivor benefit.  We mail a cheque payable to her estate, less taxes, including estate taxes.  Christopher will use an estate bank account to have the payment cashed, and pay off any debts or expenses her estate may have before distributing the remaining balance amongst his siblings.