It’s often said that nothing in life is certain but death and taxes. Probate fees on an estate can be added to this common saying. Probate fees are paid on the fair market value of the assets held in the deceased’s estate. While obtaining a grant of probate is not mandatory, in order for certain assets (land, financial accounts, publically traded securities) to be transferred to beneficiaries and to protect the Executor and others from liability, most estates are probated.
Probate is a process where the deceased’s will is legally approved by the courts, the assets are disclosed and the appointed Executor is confirmed. Once approved, the grant of probate gives the Executor legal authority to deal with the assets in that estate. If someone dies intestate (without a will), the probate process becomes more complicated; the court will appoint an Executor and the estate will be distributed by the provincial rules governing intestacy – which may not be in the manner the deceased intended. It is therefore very important for clients to have a will and at a minimum, review the will when there are changes in their lives.
Most provinces have some form of probate fees. Since rates and calculation of the value of the estate vary, provincial legislation should be reviewed carefully to ensure the correct assets are included and proper rates are applied. Ontario and British Columbia have the highest rates at 1.5% and 1.4% respectively, while Québec does not levy probate fees at all, only requiring that non-notarized wills be authenticated by the Supreme Court of Québec.
It is important to note that not all assets are subject to probate, only those administered through the estate. Assets that transfer by right of survivorship to a joint tenant and assets that have named beneficiary designations (apart from the estate) such as RRSPs, RRIFs, TFSAs and life insurance, are not subject to probate.
With advanced planning, probate fees can be minimized. For example, where there are shares of private corporations, multiple wills are often used, since these assets do not need a probated will to be transferred. Assets can be transferred while a client is alive to certain types of trusts, which removes the assets from the client’s estate on death. Joint ownership with a spouse on bank accounts, property and non-registered accounts is also an effective way to decrease those assets subject to probate fees.
As a financial advisor, you are uniquely positioned to help clients with their estate planning and ensure the smooth transition of their assets!