Clients often ask whether an estate can be “sorted out” or “distributed early” while the testator is still alive, especially where a Power of Attorney (POA) or Guardian is already managing finances. Generally, a person may deal with their own assets freely during life as long as they have capacity, but no attorney or guardian has authority to pre-distribute an estate or settle testamentary gifts before death.

Typically, estate distribution only legally occurs after death, through probate or small-estate pathways. While attorneys and guardians can manage property, sell assets, and spend funds for the incapable person’s benefit, they cannot make a will, amend a will, or wind up the estate during the person’s lifetime. However, there may be limited circumstances where a POA or Guardian can facilitate dispositions prior to a testator’s death.

Can An Estate Be Pre-Settled Before The Testator’s Death?

Under the Succession Law Reform Act (“SLRA”), a testator can revoke or alter a will while capable, provided revocation involves both intention and a physical act (e.g., destruction of the original document). Alterations require proper execution with signatures and two independent witnesses. This means that a capable testator can change their will to reorganize assets, make gifts, or sell property at any time, until they become incapable, signaling the end of testamentary autonomy. It’s important to note that while testators enjoy flexibility in distributing their assets , they cannot delegate the act of making or revoking a will to someone else.

Can a Power of Attorney or Guardian Pre-Settle Before a Testator’s Death?

Power of Attorney vs. Court-Appointed Guardian vs. Statutory Guardian (for Property)

When considering substitute decision-making, it is essential to distinguish between a Continuing Power of Attorney for Property (“CPOA”), a Statutory Guardian, and a Court-Appointed Guardian, all governed by the Substitute Decisions Act, 1992 (“SDA”).

A CPOA is a private, pre-incapacity instrument executed while capable and generally becomes effective during incapacity. Once in effect, the CPOA may do anything the incapable person could do regarding their property, with certain exceptions. If incapacity arises, the CPOA’s powers engage guardian-style fiduciary obligations, requiring property to be managed in the incapable person’s best interests.

A Statutory Guardian arises automatically when incapacity is formally confirmed, either through a Mental Health Act certificate or through a capacity assessment leading to a certificate. Initially, the Public Guardian and Trustee (“PGT”) becomes guardian, but spouses, relatives, prior CPOAs or trust corporations may apply to replace the PGT with an appropriate management plan.

A Court-Appointed Guardian, in contrast, requires a judicial finding of incapacity and necessity. Courts will refuse appointment where a less-restrictive alternative exists and may impose conditions, security requirements, or time limits on guardianship. Court appointments also carry the highest level of oversight and variation authority.

Guardian’s Powers

A CPOA or Guardian must exercise their powers diligently, honestly, and in good faith. This includes selling or charging property, severing joint tenancy, handling bank accounts, pensions, benefits, investments, collecting debts, paying bills, buying goods and services, starting or defending lawsuits, if there are financial implications, lending, selling, storing or disposing of personal property and maintaining or selling a house or vehicle.

These powers come with limits; Guardians cannot make a will, and they cannot dispose of property that they know is subject to a specific testamentary gift in the incapable person’s will, unless it’s a specific gift of money (testamentary disposition).

A Guardian’s authority ends if and when the person under guardianship passes.

Guardian’s Distribution of the Estate Prior to Testator’s Death

The SDA provides guidance for Guardians who choose to dispose of property that is given in a will.

As previously mentioned, a Guardian of property cannot dispose of property they know is subject to a specific testamentary gift in the incapable person’s will, excluding gifts of money.

However, where a Guardian disposes of property because it’s necessary to comply with their duties OR where the disposition is made to the entitled beneficiary in accordance with SDA s. 37, the SDA will permit the disposition, and the gift will be subject to abatement.

To comply with SDA s. 37, a Guardian may only transfer assets to an entitled beneficiary where the expense is reasonably necessary for the incapable person’s care; for the care of their dependants; or to meet the person’s legal obligations. The expenses follow a clear priority. The incapable person and their dependants must be provided for first, before legal obligations are addressed.

This effectively means that a Guardian is able to distribute money, or property, if the considerations in SDA s. 37 are met, to settle an estate prior to the testator’s death and administration of the estate.

Legal Considerations Regarding Settlement

There are additional legal considerations when these settlements are made.  Under Rule 7.08 of the Rules of Civil Procedure, any settlement involving a party under disability requires court approval to become enforceable, regardless of whether a legal proceeding has commenced.

The settlement may be valid when reached, but cannot be enforced until approval is granted. This means that even if the parties agree to a settlement, it will not be legally binding and enforced by the law unless it has been approved by the courts. If the person under disability dies before approval is sought, court approval may no longer be required where the settled contractual right survives to the estate.

Bottom Line

An estate cannot be pre-settled. However, there may be limited circumstances where distributions to beneficiaries can be made by POAs and Guardians. If you are navigating estate planning, incapacity, or a dispute involving a Power of Attorney or guardianship, obtaining early legal advice can help avoid costly missteps and ensure that legal and practical considerations are met to guarantee that any settlements you agree to are legally binding and enforceable.  Our estate and litigation lawyers can assist. Contact us by calling 416-449-1400 or by emailing info@devrylaw.ca to discuss your situation.

This blog was co-authored by articling student Mariem Naem.

“This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique, and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situations and needs.”