How To Reduce Probate Fees

How To Reduce Probate Fees

Written by Bryan Daly
Fact-checked by Caitlin Wood
Last Updated June 13, 2022

While it’s definitely not easy, planning for your death is an important thing to do once you surpass a certain age. Creating your will is an essential step, especially if you have loved ones to leave behind. Not to mention, when it comes to the validation of your will, there’s the probate process to consider, as well as any potential fees involved.  

That’s right. Even when you’ve died, there are still expenses to be paid. Read this to learn how much probate can cost and how to reduce probate fees. 

Do All Wills Have To Go Through Probate In Canada? 

The vast majority of Canadian-made wills end up going through the probate process at some point or another. After all, it’s one of the only ways to truly validate someone’s last will and testament. However, there is one notable exception:

Joint Estates

In Canada, spouses and common-law partners are the most likely to hold joint estates, bank accounts and mortgages. If one spouse/partner dies, the estate automatically passes to the surviving spouse/partner. The same rules apply to anyone who shares a joint asset with another person, such as a sibling, child or another family member. 

If that’s the case, there’s no need for a legal meeting or Executor because the bank or lender will just transfer the joint assets to the survivor. As a result, the entire probate process, including any fees, can be averted, at least until the other joint-owner dies too. 

This is known as “the right of survivorship”. 

What Happens During The Probate Process? 

Once the Executor of someone’s estate is confirmed, one of their primary duties is to submit the deceased person’s will to probate court, during which it will be evaluated for mistakes, duplicate documents and other legitimacy issues. After the will has been reviewed and validated, the person’s official last will and testament is settled.

Here are some other things that could happen during the probate process:

  • Challenges – Before the deceased person’s last will and testament is confirmed, other people are allowed to challenge its terms. For example, if another party created the will because the deceased wasn’t capable at the time or if a family member is disinherited in place of someone else, like a caretaker.
  • Change of Executor – After the will is validated, the probate court will confirm if the current Executor is still right for the position. For instance, the court may deem an Executor unfit if they’re no longer physically or mentally able to assume the role, if they’re incarcerated or if they simply don’t want the responsibility. 
  • Grant of Administration – Also called a “Grant of Letters Probate” or “Certificate of Appointment of Estate Trust With or Without Will”, a Grant of Administration is an official document that confirms the Executor of an estate and terms of a will. Once they have this grant, the Executor becomes the administrator of the estate. 
  • Fulfillment of Will Conditions – Lastly, it is the Executor’s job to carry out any specificities listed within the deceased person’s last will and testament. This includes presenting the Grant of Administration at the designated financial institution to have the deceased’s assets transferred into their bank account.
epilogue wills banner

How Much Do Probate Fees Cost?

In Canada, probate fees vary depending on the value of a deceased person’s estate, as well as the province or territory that their last will and testament is officiated within. To give you an idea of how this works, let’s say you’re subject to probate fees in Ontario: 

Estate Value: In Ontario, probate courts generally charge 0.5% on the first $50,000 of a dead person’s estate and 1.5% on the value remaining.

Property Ownership: An estate includes properties that aren’t jointly owned (where the right of survivorship takes over) and doesn’t have other beneficiaries named. If “estate” is listed as the beneficiary, the Executor inherits these assets:

  • Bank Accounts
  • Life Insurance Proceeds 
  • Businesses (shares, properties, etc.)
  • Valuables (jewelry, art, etc.) 
  • Vehicles (cars, boats, etc.) 
  • Non-Registered Investment Accounts (cash, margin, etc.)  
  • Registered Financial Accounts (RRSP, TFSA, etc.)
  • Real Estate (homes, investment properties, etc.) 

Deductions From Inheritance: On the other hand, there are certain debts, expenses and benefits may be subtracted from the inheritance, such as:

  • Outstanding mortgage balances on real estate 
  • Properties/assets that are listed in a second will
  • Registered financial accounts that have named beneficiaries
  • Life insurance proceeds that have named beneficiaries     

Here’s an example:

  • A deceased person’s real estate properties are valued at $1,000,000
  • Their RRSP and TFSA are valued at $250,000 each 
  • The estate includes business shares valued at $500,000
  • However, there’s an unpaid mortgage balance of $100,000
  • There’s also a life insurance policy of $200,000 in someone else’s name
Inherited Properties Value
Real Estate $1,000,000
Registered Financial Accounts $500,000
Business Shares $500,000
Original Estate Value$2,000,000
Minus Mortgage Balance-$100,000
Minus Life Insurance Proceeds -$200,000
Final Estate Value$2,000,000 – $300,000 = $1,700,000
Probate Fees on First $50,000$50,000 x 0.5% = $250 
Probate Fees Remaining $1,700,000 – $50,000 x 1.5% = $24,750
Total Probate Fees $250 + $24,750 = $25,000 

How To Reduce Probate Fees In Canada

As you can see, probate fees can add up to a serious amount of money, even for a relatively small estate. Don’t worry, there are a few different ways to reduce them for the people you leave behind when you pass away, including but not limited to: 

  • Name Your Beneficiaries – If you have loved ones or charities that you wish to list as inheritors, make sure to name them in your will so that your accounts, assets and other possessions go to them, rather than the estate.
  • Hold Your Assets in Cash or Bearer Bonds – During the probate process, cash assets and bearer certificates, like stocks or cheques that are payable in “cash” may be excluded. This actively reduces the amount of taxes and fees involved.
  • Have a Joint Ownership – As mentioned, accounts and assets that are owned jointly don’t get included in the probate process either. Common examples include homes and RRSPs, which are transferred to the surviving owner.
  • Create Multiple Wills – If you own a business, such as a corporation, it’s a good idea to draw up a second will so that it doesn’t automatically go to your estate when you die. Instead, the terms of the secondary will should be honored.
  • Send Gifts to Loved Ones – By giving your assets away before you die, your estate should have less value when it goes to probate. Watch out, gifting assets that have appreciated in value may lead to taxable capital gains in the future. 
  • Establishing Trusts – Keeping assets in trust accounts also means they won’t go to the estate. “Inter-vivos” trusts are created before death and “testamentary” trusts are drawn up according to your Primary or Secondary will after you die. 
  • Convert Lines of Credit – “Unsecured” lines of credit can be converted to “secured” with collateral, which decreases an estate’s value. For example, home equity lines of credit can reduce probate fees and lead to lower interest rates. 

Probate Fees FAQs

Are probate fees considered income tax?

In areas like Ontario, probate fees are known as an “Estate Administration Tax”. Then again, they aren’t actually considered as income tax. Depending on which province or territory the estate is being settled in, probate fees are charged as a percentage of the deceased’s assets or as a flat rate and won’t count as income.  As such, probate fees cannot be deducted by the estate during income tax season but the estate might have to pay income tax on properties that don’t qualify for probate.    

Are cash gifts safe from taxes?

Remember, one of the main ways to avoid probate fees is by offering your assets as gifts before you die. This way, that can’t be included in a probated will and won’t lead to tax penalties for any beneficiary who’s over 18 and isn’t your spouse.  Prior to giving up your assets, keep in mind that there are rare incidents that could invalidate a beneficiary’s right to your gift. A prime example would be if you give away cash but owe a substantial debt to the Canada Revenue Agency (CRA). In this case, the CRA may contact the recipient or seize the money as compensation.   
 

Can I avoid the probate process by using a trust or a private company?

Another way to reduce or even avoid probate fees is by holding your assets in an inter-vivos trust account or with a private company before you die.  That said, it’s essential to know the probate laws of your particular region, as any fees involved may end up being less expensive than those of a trust or private company. Some provinces and territories have much lower probate fees than others.   

How long is the probate process?

Probate judgement periods can also vary based on a deceased person’s home province or territory. For instance, Ontario has a law that requires Executors to complete an “Estate Information Return” within 90 days of being named. The document must feature a detailed calculation of the estate’s total value and a list of the deceased’s assets. Overall, the probate process takes about 1 year to complete in most regions. This includes a 3 month waiting period for the court to review the probate request and set up a hearing, plus 7 months to go through the case and reach an official verdict.    

Do I need a lawyer for probate court?

Hiring an attorney can be useful but expensive during a probate hearing, even if you’re only paying for advice. In fact, many lawyers charge $3,000 – $3,500 for the Grant of Administration alone. Thankfully, while some wills offer it as an option to the Executor, legal representation isn’t mandatory and fees are normally covered by the estate   Although there’s lots of research to do, as well as documents to submit before a judge, it’s possible to represent yourself in probate court without formal training.

Check out our comparison of Willful and Epilogue, two popular online will platforms.

Trying To Reduce Probate Fees For Your Beneficiaries?

Don’t forget, probate laws and costs fluctuate in every province or territory. If you don’t understand the rules in your area but want to avoid as many probate fees as possible when you die, consulting a legal or financial professional could be a good idea after all. By preparing yourself now, you could help your loved ones save money in the future.     


Rating of 4/5 based on 6 votes.

Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and travelling the world in search of the coolest sights our planet has to offer.

Click on the star to rate it!

How useful was this post?

Research & Compare

Canada's Loan Comparison Platform

Largest Lender Network In Canada

Save time and money with Loans Canada. Research and compare lenders before you apply. Share your experiences with Canada's top lenders.

Save With Loans Canada

Special Offers

Red American Express® Card

Red American Express® Card
Ends April 30, 2023

Earn up to 12,000 bonus Scene+™ points in your first year (that’s up to $120 towards travel).

View Offer
Cashback & Bonus Offer

Cashback & Bonus Offer
Ends March 1st, 2023

New Offer! Get up to $2,000 cashback + a $50 bonus on signing up. Conditions apply.

View Offer
Earn 5% Cash Back With Neo

Earn 5% Cash Back With Neo
No annual fee!

Earn an average 5%¹ cash back at thousands of partners and at least 0.5%² cashback guaranteed.

View Offer
Best Personal Loan Provider by Greedy Rates
Icon

Confidential & risk-free

All consultations and conversations with Loans Canada and its partners are confidential and risk-free. Speak with a trusted specialist today and see how we can help you achieve your financial goals faster. Loans Canada and its partners will never ask you for an upfront fee, deposit or insurance payments on a loan. Loans Canada is not a mortgage broker and does not arrange mortgage loans or any other type of financial service.

When you apply for a Loans Canada service, our website simply refers your request to qualified third party providers who can assist you with your search. Loans Canada may receive compensation from the offers shown on its website.

Only provide your information to trusted sources and be aware of online phishing scams and the risks associated with them, including identity theft and financial loss. Nothing on this website constitutes professional and/or financial advice.

Your data is protected and your connection is encrypted.

Loans Canada Services Are 100% Free. Disclaimer

Build Credit For Just $10/Month

With KOHO's prepaid card you can build a better credit score for just $10/month.