It happened so fast, and it may take a while yet to fully sink in, but the world changed for Appraisers on January 1st 2015. You could have easily missed it. In fact, most did.
A little background here might help explain. Over the past 20 years, the challenges of successful estate settlement became increasingly daunting as a result of the convergence of new technology, family dynamics, complexity of assets, and risk of personal litigation. It created a perfect storm for Canadian executors.
The risk became so great that by 2011 a new Canadian insurance product was introduced to protect them. Executor Insurance is offered by Kitchener-based ERAssure (www.erassure.com).
Two years later, the Canadian Institute of Certified Executor Advisors (CICEA) began offering the CEA designation program, a course designed to educate the 17 professions (including Appraisers of course) executors may turn to in the course of their duties, to be better equipped to help executors across Canada. As it turns out, the timing seems prescient.
We’ve seen an unprecedented convergence of changes in estate legislation: in Alberta in 2012, in British Columbia in 2014, in Ontario in 2015 and federally, affecting all Canadians, in 2016. The previous estimate, of 70% of Canadians without a current and valid will, suddenly went from pessimistic to optimistic.
On top of all of this, the timing of these events may be most extraordinary. Though the first year of the baby boomer cohort was 1947, the surge in Canadian births actually began ten years earlier, in 1937, and everyone born that year will turn 80… this year.
The testator era is not coming soon, it has arrived. This massive wave of people turning age 80, what the Conference Board of Canada called “a slow-motion demographic tsunami’ will surge for the next 24 years. It is, quite literally, the opportunity of a lifetime for Certified Executor Advisors.
But it was January 1st 2015 that changed the world for Appraisers specifically.
When Ontario changed its legislation, it moved responsibility for collecting the Estate Administration Tax (EAT, ‘probate fees’ in the rest of Canada) to the Department of Revenue and introduced the requirement for executors to file an Estate Information Return (EIR) within 90 days of appointment.
EAT tax revenue is now very serious business in Ontario, and any other jurisdictions in Canada running deficits are sure to take notice.
The EIR requires extensive and accurate information. The EIR Guide states that for property, this includes roll numbers along with addresses, and “The value of the real estate is to be determined as at the date of the death of the deceased” while noting “… it may be necessary to have the property evaluated”. ‘May’ indeed. Estimates are inadequate, Municipal Property Assessment Corporation (MPAC) values are inadequate and they specifically state that even a sale of the property within months of the death is not adequate for determining the fair market value (FMV).
At the CICEA, we recommend professional valuations be obtained in 100% of estate situations, because it’s the only way executors will, to use the government’s expression, “…be able to substantiate valuations.” Furthermore, making a mistake is too risky. Fines for misfiling are up to 3% of the value of the total estate, and /or incarceration of up to two years, or both. Appraiser fees now include a “Get-Out-of-Jail” free card.
The world changed for Appraisers that day, and the opportunities ahead, particularly for those who are also CEAs, are simply amazing.
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