How to Avoid Probate Delays and Executor Inaction with Segregated Funds

When Silence Follows Loss

The silence that follows the loss of a loved one can be emotionally difficult. But when that silence includes a non-responsive executor, it can also be financially stressful and legally frustrating. A recent article in the Financial Post captured the experience of beneficiaries left in the dark while waiting for an executor to act. Unfortunately, these situations are more common than many Canadians realize.

The Slow Grind of Probate and CRA Clearance

When someone passes away, their estate often must go through probate, a legal process that validates the will and grants the executor authority to act. Even in straightforward cases, this process can take several months. More complex estates or court backlogs can cause longer delays. Then, before the executor can complete the final distribution of estate assets, they must obtain a Clearance Certificate from the Canada Revenue Agency (CRA). This certificate confirms all taxes have been paid and can take an additional six months or more to secure.

The Cost of Waiting

During this time, beneficiaries are left waiting. Assets are tied up. Legal and accounting fees continue to accumulate. The longer the delays, the more likely it is that family tension, confusion, and stress will increase. It’s not uncommon for relationships to become strained or for beneficiaries to feel uncertain or suspicious, especially if the executor is not communicating clearly.

Segregated Funds: A Streamlined Alternative

This is where Segregated Funds can provide a useful solution. Segregated Funds are insurance-based investment products that offer many of the same growth opportunities as mutual funds, but with additional features tailored for estate planning. When a beneficiary is named directly on a Segregated Fund contract, the proceeds bypass the estate entirely. That means the funds do not get held up in probate and do not require a CRA Clearance Certificate before being paid out.

Faster Access, Less Stress

In practice, this means that instead of waiting months—or even years—for the courts and CRA to approve distributions, beneficiaries can often receive their inheritance from a Segregated Fund within a few short weeks. The insurance company processes the claim directly and pays the beneficiary without relying on the executor or the courts. This provides clarity, privacy, and speed at a time when it matters most.

Additional Estate Planning Advantages

Beyond speed and simplicity, Segregated Funds also come with additional estate planning benefits. They offer a death benefit guarantee, typically ranging from 75% to 100% of the original investment or its highest market value if a reset feature is used. This can provide peace of mind, especially for those concerned about market downturns late in life. There is also potential for creditor protection in many cases, particularly when a family-class beneficiary is named. This feature can be valuable for business owners or professionals who may be exposed to personal liability.

Cost vs. Value

While Segregated Funds generally carry higher management fees than comparable mutual funds, those costs need to be weighed against the potential savings in probate fees, executor compensation, legal costs, and the emotional toll of a delayed estate settlement. In provinces with high probate fees, the financial advantage of Segregated Funds can be even more significant.

A Thoughtful Estate Planning Tool

They are not a one-size-fits-all solution, but Segregated Funds can be an effective tool for anyone looking to simplify their estate, reduce delays, and provide a more seamless experience for their beneficiaries. They are especially worth considering for individuals with non-registered investments, blended families, or a desire for privacy and speed in estate distribution.

Take the Next Step

If you’re reviewing your estate plan or want to understand how Segregated Funds might fit into your broader financial strategy, we invite you to start a conversation with our team. Visit garrett.ca to connect with us. We’re here to help ensure your legacy is passed on clearly, efficiently, and with care.