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Reduce Probate Fees in Canada

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You might have already heard about the probate process to verify the deceased’s will. But do you know the probate process costs a lot of money too? That’s right, there are still expenses to be made even after someone dies, especially if the deceased has left the property for his loved ones.

Read Getting a Loan While Waiting for a Probate

Do All the Wills Go Through Probate?

You might already be wondering whether all the wills have to go through the probate process? If yes, then know that nearly all Canadian-made will end up going through the probate process at some point or another. That is because probate is the only way to validate someone’s last will and testament. But there is one exception to that.

Joint Estates

A joint estate is any property, bank account or mortgage that is held by spouses or common-law partners. If one spouse or partner dies, the estate automatically passes to the surviving spouse or partner. The same applies to any person who shares a joint asset with another person. The partner can also be a sibling, child or another family member.

If you are in the joint estate, there is no need for any legal meeting or executor. This is because a bank or lender will transfer the joint assets to the survivor if one partner dies. Resultantly, the entire probate process can be averted, and the fees too. However, the probate will apply when the second partner dies too. This is also known as the right of survivorship.

What Happens During the Probate Process?

The probate process starts when the executor of someone’s estate is confirmed. The primary job of this executor is to submit the deceased person’s will to the probate court. Once submitted, the will is evaluated for mistakes, any duplicate documents and other legitimate issues. Once all is cleared, the will is submitted for review and final validation. After this, the person’s official last will and testament is settled.

Below are some of the things which can happen during the probate process. So, read them carefully.

Challenges: Before the probate process is complete, other people can put their claims and challenge the will in court. Say for instance if a party has created the will because the deceased was not able to create it and a family member is disinherited in place of someone else, the will can be challenged.

Change of Executor: After the will is validated, the probate court confirms if the current Executor is still fit for the position. For instance, the court may consider an executor unfit if they are no longer physically or mentally able to take the role. If they don’t want the responsibility, the change of executor happens.

Read More: Getting Mortgage And Applying for Probate Canada

Grant of Administration: A grant administration is an official document that is a confirmation of executor of an estate and terms of a will. Once the executor has this grant, he becomes the administrator of the estate. It is also called a ‘Grant of Letters Probate” or “certificate of Appointment of Estate Trust with or without Will”.

Fulfilment of Will Conditions: It is the Executor’s job to carry out any specificities listed within the deceased person’s last will and testament. This is presenting the Grant of Administration at the designated financial institution to have the deceased’s assets transferred into their bank account.

Once you know how the probate process proceeds and what challenges can come your way, let’s move on to our main topic which is how much is the probate fee and how to reduce the probate fee in Canada.

How Much Do Probate Fees Cost?

Probate fees depend mainly on the value of a deceased person’s estate. The fees can differ in the province and territory as well. However, to give you an idea of how this works, here is a rough estimation:

If you live in Ontario, the probate courts will charge 0.5% on the first $50,000 of a dead person’s estate and 1.5% on the value remaining. The estate will include properties that are not jointly owned and does not have any other beneficiary.
If the estate is named as beneficiary, the executor inherits these assets:

  • Bank Accounts
  • Life Insurance Proceeds
  • Businesses (shares, properties, etc.)
  • Valuables (jewellery, art, etc.)
  • Vehicles (cars, boats, etc.)
  • Registered Financial Accounts (RRSP, TFSA, etc.)
  • Non-Registered Investment Accounts (cash, margin, etc.)
  • Real Estate (homes, investment properties, etc.)

Deductions from Inheritance: Certain debts, expenses, and advantages, on the other hand, maybe deducted from the inheritance, such as:

  • Outstanding real estate mortgage balances
  • In a split second, properties/assets will be listed.
  • Beneficiaries have been specified in financial accounts that have been registered.
  • Beneficiaries specified on life insurance profits

Reduce Probate Fees in Canada

Once you are in a probate process, you quickly know that the fees are a lot of money, even if you have a small estate. This high fee can sometimes put the benefactor in a conundrum of whether to continue it or not. But keep your worries calm as there are ways by which you can reduce the fee for the people you leave behind when you pass. Here are a few steps you can take to reduce the probate fees for your loved ones.

Joint Ownership: As previously stated, accounts and assets owned jointly are not subject to the probate process. Homes and RRSPs are common examples of assets that are passed down to the surviving owner.

Make Multiple Wills: If you own a business, such as a corporation, it’s a good idea to make a second will so that it doesn’t go to your estate automatically when you die. The terms of the secondary will, on the other hand, should be respected.

Send Gifts to Friends and Family: Your estate should have less worth when it gets to probate if you give away your assets before you die. Keep in mind that giving assets that have increased in value may result in future taxed capital gains.

Name Your Beneficiaries: If you have loved ones or a charity you’d like to name as inheritors, make sure to include their names in your will so that your accounts, assets, and other belongings go to them instead of the estate.
Hold Cash or Bearer Bonds – Cash assets and bearer certificates, such as stocks or checks payable in “cash,” may be excluded from the probate procedure. This actively lowers the amount of taxes and fees that must be paid.

Creating Trusts: Keeping assets in trust accounts ensures that they will not be distributed to the estate. Before death, “inter-vivos” trusts are established, and after death, “testamentary” trusts are established according to your Primary or Secondary will.

Convert Lines of Credit: “Unsecured” lines of credit can be changed to “secured” lines of credit with collateral, lowering the value of an estate. Home equity lines of credit, for example, can help you save money on probate fees and interest rates.

The Bottom Line

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