Unfortunately, just having a regular will does not eliminate the need for probate. The Province wants to collect as much as they can in the way of the Estate Administration Tax. They will do this based on all ‘probatable’ assets of the estate regardless of whether or not there is a will. Depending on the circumstances, a “secondary” Will could be used to avoid probate. This is a complex process requiring legal expertise.
Any and all jointly held assets with right of survivorship will pass to the survivor/other joint owner(s) instead of forming part of the estate. Only assets in the estate need to be probated. Though it is possible to avoid probate on the principal residence by adding someone to the title, it is a ‘solution’ that often creates more problems than it solves and therefore should only be done after careful consideration and proper legal advice. Joint ownership is rife with potential negative outcomes. For one, it may jeopardize the principal residence exemption which allows for the home to be sold tax free. Of course, every situation is unique. Contact us for more information and/or to speak with a lawyer.
Those are examples of “registered accounts” – accounts with restrictions on them in one way or another (i.e., contribution limits). Registered accounts allow for named beneficiaries at the account level and so if/when there is a named beneficiary, upon death those funds pass directly to that beneficiary and thus do not form part of the estate. Since only assets of the estate need to be probated, probate on these accounts can be avoided if a beneficiary has been named, which is not always the case. Anyone holding these accounts should check to make sure that a beneficiary has been named if that is their desire. There can be advantages to having the funds pay into the estate (and require probate) instead of directly to a named beneficiary. Professional advice may be needed as every situation is unique.
The probate ‘rate’ in Ontario is 1.5% of the value of the estate, at the time of death. Recently, the Province waived the probate fee on the first $50,000 of an estate. Using rough math, the probate fee on an estate worth $1 million would be approximately $15,000. But that’s not all. Most people who need to deal with probate are going to enlist the services of a lawyer. Now there are legal fees to factor into the calculation. How much? It depends on the complexity of the estate and whether or not there are needs for other professional services such as accountants or professional valuators. The $15,000 could be the least of your worries in terms of expenses associated with the estate settlement. Not to mention the fact that most of the assets held at the bank are going to be frozen until the probate process is completed. This could take 3 months or 3 years.
Yes and no… but mainly ‘no’. The bank cannot add a beneficiary to any non-registered account you have there. Therefore, upon death, these non-registered accounts/investments form part of your estate and get frozen until the probate process is completed. The bank’s solution to this problem is often to recommend joint ownership on those accounts. Upon death, the assets in the joint account would transfer directly to the surviving joint owner(s) and no probate would be needed. However, joint ownership is rife with potential negative outcomes and often leads to ownership ‘issues’ and tax issues. Some cases, where ownership has been challenged, have gone all the way to the Supreme Court (Pecore v. Pecore). These cases had estate assets tied up for a decade and cost hundreds of thousands of dollars to litigate, in addition to the damage to the family. Our solution is better. No messy joint accounts: no ownership challenges; no tax issues.
A Uniquely Qualified Advisor
Jason Laidler is the owner and president of AvoidProbate.ca and a 20+ year veteran of the financial planning industry. Jason is licensed by the Financial Services Regulatory Authority of Ontario (FSRA). In 2001 he became a Certified Financial Advisor (CFP) and has served as a member of the Board for the Canadian Institute of Financial Planners (CIFPs). He is also a Certified Seniors Advisor (CSA) and a Certified Executor Advisor (CEA). These unique accreditations give him both the expertise and the ability to deal in a variety of investment products that other financial advisors cannot.
Specifically, Jason is licensed to deal in insurance-based investment vehicles that can offer guaranteed rates of return are not subject to probate. At death, these investments are not frozen. Instead, they are delivered promptly to loved ones or other beneficiaries without being subject to probate. Jason combines his knowledge of insurance products with deep expertise in estate planning to help clients maximize their estates and avoid probate.