Probate Planning to Minimize Estate Costs
A Grant of Probate is proof to financial institutions, financial advisors and the Land Title Office that your Last Will and Testament has been certified by the Court and that your Executor is authorized to represent your Estate. The process of certification is known as Probate.
The government charges a fee, known as a Probate Fee, for issuing a Grant of Probate. It is calculated based on the present market value of assets that comprise your Estate at the time of your death. Probate fees are taxed on the gross value of the Estate, which means debts, other than secured loans and mortgages, are not deducted for the purpose of calculating Probate fees.
Currently in British Columbia, Estates with a value of less than $25,000 are not assessed a Probate Fee. Assets in an Estate between $25,000 and $50,000 are assessed at .6% and Estate assets over $50,000 are assessed at $150 for the first $50,000 and 1.4% on the remainder.
Consider a $250,000 property held in the name of the husband only – the Probate Fees would be $2,950 and the property would pass to the wife through the husband’s Will. When the wife passes away, the same property is again charged a Probate Fee and passes to the person named in the wife’s Will.
Through Estate Planning, you can minimize the amount of assets that flow through your Estate and still place the assets in the hands of the people who you intend to receive them. Assets that are excluded from Probate and do not form part of your Estate include:
- Property and bank accounts held jointly with another person
- Property owned outside of British Columbia
- Life Insurance, RRSPs and other investments for which you have named a beneficiary
Jointly held assets automatically pass to the surviving joint owner, do not form part of the Estate and are not subject to Probate fees.
However, you must carefully consider the effect of joint ownership if you intend the property to be divided among more than the person or persons on title after you pass away. Without proper planning, you may unintentionally exclude a beneficiary from their intended inheritance. A lawyer or accountant can advise you with respect to these considerations.
When you name a beneficiary for your investment or insurance policy, upon your death the beneficiary is paid those funds directly. They do not form part of your Estate. This becomes particularly important when your beneficiary financially relies on you and requires funds on an ongoing basis, as often the Probate process ties up many of the Estate assets for a prolonged period of time.
A lawyer can help you to understand the wide range of issues that arise with the preparation of estate planning documents. If you would like advice or for more information regarding such matters please contact Chahal Priddle LLP at 250-372-3233 to set up an appointment today.