Have you heard the term probate? Do you know when probate happens? Is it free?
When a person passes away in Canada, their estate will typically go through a process known as probate.
Learning more about the probate process may help you minimize its potentially lengthy and costly impact on your inheritance.
What is Will & Probate?
A will is a legal document that sets forth your wishes regarding the distribution of your property and the care of any minor children.
Probate in simpler terms, is a legal process of proving to the court that a will is legally valid, and once approved, your property and belongings are distributed to the beneficiaries as per your wishes. So, it is very important to understand why having a will makes probate process easier on your family.
What is Probate process?
During probate, a court will first authenticate your Will, and then authorize your Executor to pay all debts and taxes and distribute your remaining property accordingly, per the instructions you leave. An Executor is the person charged with overseeing your final wishes.
For example, assets that must be probated typically include:
- Bank accounts and investments.
- Real estate.
- Vehicles, like cars or boats.
Probate process with a Will?
Having a Will doesn’t mean you skip Probate process, your Will still goes through probate (with some exceptions), however having a Will makes the probate process so much simpler for your living families, if you have a solid Estate Plan in place.
Probate process without a Will?
This process obviously becomes more complicated. Because there is no documentation stating your final wishes, it is up to the courts to handle proceedings and make all decisions for you. Everything you own (money, car, house etc) will go through probate court.
Without the presence of a Will, probate can take a long time (sometimes years).
If you do not have a Will and you own property at the time of your passing, the court will control the bidding and sale of your home.
Where Does Probate Happen?
Typically, your executor will apply for a grant of probate in the province where you lived at the time of death. If you don’t have a will, the court will appoint an “administrator,” who acts in the same role as an executor.
What Are Probate Fees and other costs?
If your estate requires probate, there is a fee based on the size of your estate.
Cost can vary depending on your estate and provincial law.
In Ontario, if the estate is over $50,000 there is a $250 fee plus 1.5% per additional $1,000. For example an estate of $800,000 costs probate fee of $11,250. An estate valued at $1,000,000.00, the amount of estate administration tax payable will be: $14,250.00
In B.C for estate over $50,000 there is a $358 fee plus 1.4% per $1,000. An estate valued at $800,000.00, the amount of estate administration tax payable will be: $10,650.00
In Alberta, Flat fee starting at $25 based on the size of the estate; the most you pay is $400 if the estate is over $250,000.
Saskatchewan’s probate fees are a percentage of the total size of your estate, regardless of the size. As a result, the larger your estate, the higher your probate fees. No flat fees; just a 0.7% fee on every $1,000 of assets
In Manitoba, estate over $10,000 there is a $70 flat fee plus 0.7% per $1,000.
Benefits of having Life Insurance?
Life insurance can offer you a great sense of peace of mind, knowing that you’ve set up your loved ones with something that’ll protect and financially care for them even after you’re no longer here.
If you hold an active life insurance policy and you pass away, the Beneficiary you named on the policy will receive the policy’s death benefit.
Life insurance does not go through probate.
Your beneficiary can use the life insurance benefit to pay probate and other associated costs, liability and fulfil any wishes you may have that costs money such as burying or cremating abroad.
Need a Will, Estate Planning or a Life Insurance? I’m here to help.
-Compiled from various sources. Information current as of Feb 03, 2023
