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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.
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:
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”.
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:
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:
Deductions From Inheritance: On the other hand, there are certain debts, expenses and benefits may be subtracted from the inheritance, such as:
Here’s an example:
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 |
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:
Check out our comparison of Willful and Epilogue, two popular online will platforms.
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.
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