Long-term financial planning is the key to a prosperous future.
This planning usually focuses on setting up a secure lifestyle. However, it’s important to also consider what will happen to your finances after death.
Family will turn to your Last Will and Testament to determine your final wishes for your estate. An “estate” refers to assets you owned at the time of death. This might include a home, car, bank accounts, or jewellery.
It does not include joint accounts in which the other party is still alive. It also excludes financial accounts that already have a beneficiary designated.
Probate is the process in which the will and the estate’s executor are verified. The more preparation done during life, the easier the process will be for your loved ones after death.
This is how the government verifies which assets should be distributed to which people—and who is legally allowed to facilitate this transfer.
There are various steps you can take now to make the probate process easier on your family in the long-run. Keep reading to learn more about the probate process, and what you can do to get ahead.
What Is Probate in Canada?
The probate meaning is the process of verifying and approving the validity of a will, and the appointment of the executor.
The probate process serves to protect all parties involved. After you die, there is no other way to verify your last wishes without a formal, legal document. This is where the Last Will and Testament comes into play.
As such, there must be a centralized system to ensure there is no foul play in the process of administering a will.
It is not realistic for individual financial institutions to validate wills on their own. They do not have the capacity to verify the information or to discover if it has been altered or nullified in a later document.
They would not be willing to take the huge risk of simply granting account access to an executor who walks through the door with a will in hand. Instead, wills are verified throughout the process of probate, prior to distributing assets.
After the probate process is completed, wills become public record. This information can be searched online, or by contacting the applicable probate court.
They are one of the most effective ways to source genealogical information and evidence. Probate records can help find an obituary for a specific person in Canada, if other means fall short.
What Is an Executor?
All wills name an executor. This designated role is someone you trust to secure and distribute all of your assets after your death. They do so according to the directives given in the will.
It’s important to pick an executor that you trust.
This person is responsible for gathering and protecting your assets after your death. They must secure these possessions until they are distributed to the appropriate beneficiaries. This is no small task.
Therefore, the earlier you start planning, the better. Wills can always be adjusted or re-written if needed. But to be sure the best possible person is appointed to sort out the affairs of your estate, it's best to develop the document early.
What Happens During the Probate Process?
After your death, the will’s executor would submit the document to probate court. This is where the court steps in to validate both the content of the will, and the appointment of the executor.
The court would establish the true Last Will and Testament of the deceased. This includes resolving any confusion or discrepancies—especially between multiple documents.
If there are any questions on the legitimacy of the document, the court will handle this as well.
After the court accepts your will and executor, the executor is given a “Grant of Administration.” This is a court-issued form that confirms the appointment of executor of the will. Therefore, the executor has the authority to administer the estate.
Other names for this document include a “Grant of Letters Probate” or a “Certificate of Appointment of Estate Trust With or Without a Will.”
From there, the executor can begin the process of appropriating assets based on the terms of the will.
Can a Will Be Challenged?
Yes, a will can be challenged through the probate process. There are a few reasons this may occur.
On one hand, the legitimacy of a will may be called into question if there is more than one document. After writing an initial will, it’s possible the deceased may have revised or re-written the document altogether.
This may leave those who were written out of the will confused and dejected. For those looking to challenge the validity of the Last Will and Testament, probate court is the appropriate venue.
Others may challenge a will if the deceased was not in a sound state of mind when documenting their final wishes. This is especially true for those suffering terminal illnesses, or who suffer a brain injury.
If the deceased did not have the capacity to write the will in the final days before their death, it may be challenged in probate. If there is evidence of fraud on the document, this will be investigated by the court as well.
Once the will has been accepted, the court will then analyze your choice of executor. The court will validate their role in the process, and verify that they are still willing and able to serve in this capacity.
The court may also decide the given executor is no longer able to serve in this role. Examples of reasonings why this may be the case include that the executor:
- No longer wants to perform this duty
- Has since died
- Has since gone to prison
- Has since suffered an incapacitating injury
In these situations, the court may deem them unable to serve in this role. If the executor is no longer fit, the court would look for alternative options to appoint an executor of your will.
Do All Wills Go Through Probate?
Almost all wills in Canada go through the probate process.
One example of a will that would not be probated is those where the entire estate is held jointly. In this case, the assets are simply taken over by the other joint asset holder.
This removes the risk of the bank or other financial institution in handing over assets, as the beneficiary’s name was already jointly held on the account.
When No Will Is Present
If individuals pass away and do not leave behind a will, their estate must go through probate to determine the division of assets. This process can become quite complicated, especially in cases where the estate is of a high value.
A good example of this can be seen in the case of the singer Prince, who passed away suddenly in 2016 without leaving behind a will.
He left behind six siblings, who have grown increasingly frustrated with the proceedings—especially as attorney fees have reached the tens of millions.
The estate is still being battled out to this day. This case has been one of the largest and most complicated probate cases seen in Minnesota state history.
Recently, the American Internal Revenue Service (IRS) determined that the executors of his estate undervalued it by 50 percent—a sum adding up to nearly $80 million USD.
While this is a notable exception to a typical probate case, it shows how important it is to develop a will during life to protect your assets in the event of untimely death.
However, a no-will estate situation occurs when there are family or friends to initiate the process.
If the individual passes and does not leave behind a will, but there is no next of kin to take charge of probate, then the estate will not always reach the probate court. Instead, the distribution plan will depend on the individual province.
To avoid such issues, we recommend using Epilogue Wills to easily create a legally-binding Will online. The whole process takes about 20 minutes, and costs under $150, considerably less than hiring a lawyer.
How Long Does Probate Take?
The probate process timeline can vary.
It usually takes around three months for a probate application to be heard by the courts. From there, the duration really depends on the individual circumstances of the will and estate.
Once in the court, the process can take up to a year or longer.
Some provinces attempt to speed up this process. In Ontario for example, the executor must submit an “Estate Information Return” within 90 days of their appointment as executor.
On this form, the administrator must itemize everything owned by the deceased, including a complete breakdown of the estate’s value.
How Much Does Probate Cost?
Generally, the fees are assessed on a sliding scale. Some provinces charge based on the value of the estate itself. Others use a sliding percentage.
The cost of probate in Canada will vary by province. In some cases, they can vary greatly.
For example, take the example of a $250,000 estate. In this case, the Province of Yukon would charge a $140 probate fee. For the same estate, the Province of Nova Scotia would charge more than $3,545.
Probate fees are also sometimes called an “estate administration tax.” This can be confusing, as there are otherwise no taxes on inheritance in Canada. However, this is more of an administrative fee to cover the court costs associated with the process.
Otherwise, the estate is not taxed, and beneficiaries receive their inheritance tax-free.
It’s important to note that the aforementioned information does not apply to the Province of Quebec. Quebec does not charge probate fees for some cases. If a will is notarized, they do not require probate approval.
Only handwritten wills or those made in front of witnesses have to be verified by a probate court. These situations would then incur probate fees, which usually reach over $1,000.
How Can I Reduce Probate Fees?
Probate fees are charged based on the value of the estate. Therefore, the most effective means to reduce probate fees is to reduce the size of the estate.
There are a few ways to achieve this goal. One way is to put assets into registered accounts that are held jointly with a “right to survivorship.” This means that when one owner dies, the other owner automatically absorbs the deceased’s share of the account.
Otherwise, simply gifting assets to beneficiaries while you are still alive takes the assets out of the estate to be probated.
It’s also important to name beneficiaries on those accounts that are eligible. For example, life insurance. On this policy, the insurer will ask for a beneficiary. Those that are unsure or do not want to name a beneficiary for any reason sometimes simply list their estate.
This would then add the life insurance claim to the estate that will eventually be probated, and thus raises the fees. To reduce this, the policyholder should carefully evaluate their life insurance policy. They should name a beneficiary directly on their policy prior to death.
Other actions including “Transfer on Death” or “Pay on Death” for bank accounts are commonly thrown around in the probate world. Unfortunately, these options are only available in the United States.
Getting Ahead of Probate in Canada
The probate process in Canada can vary greatly between provinces and individual cases. It's important to educate yourself on the procedures that apply to your province.
The more you prepare, the better off your loved ones will be after your death. Plus, the less will come out of the estate in probate fees. Therefore, you increase the value of what is left behind to your beneficiaries.
One of the easiest ways to reduce probate fees is to set money up into registered accounts and policies. Contact an advisor today to review your options and ensure your family will be well-protected after you pass on.