Why do most inheritances take longer than expected?
Having a will does not mean that your loved ones will receive your money quickly. In Quebec, the time to settle an estate often exceeds 12 months. If you have already acted as an executor, you will not be surprised. But for the majority of people, it is a shock.
We tell ourselves that if there is a will it shouldn’t be too complicated. On the contrary, the to-do list is too long to include in this article, but I have included the link to the Chambres des notaires du Québec website at the bottom of the text.
Between each step there are bureaucratic delays such as :
- L’obtention de la preuve de décès (8-20 business days)
- Recherche testamentaire (7-14 business days)
- Confection de l’inventaire (ideally completed within 6 months after death)
One of the most pivotal steps is opening an estate account with a financial institution for the distribution of investments. It is crucial to understand that the funds are blocked there. Once the person has died, their accounts are thought to be sold at their fair market value. When all accounts are closed, it is time to open the estate accounts and file the final taxes. When all debts and taxes are paid, then you can divide the assets.
The estate on average takes 6 to 18 months or more depending on the complexity of the case. This estate account mentioned above will be limited in its investment options depending on the financial institution. This means that in most cases you will generate very little interest for 6 to 18 months and will not have access to that money to pay the deceased’s bills and will have to endorse it yourself as the estate before being repaid.
Some bills will not wait to be paid. :
- Funeral costs
- Hydro bill
- Final taxes
- Maintenance costs of a property
There are several ways to reduce this burden for the estate, such as life insurance to access capital more quickly, but the one I prefer is investments in segregated funds. I will explain the differences between each type of investment (mutual funds, ETFs, segregated funds) in my next article.
In the meantime, I invite you to visit my other articles to learn more about finances in Quebec.