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Wills and Estates -> Minimizing probate fees
How can you minimize probate fees?Probate fees or estate taxes (if any, depending on the province) are charged by the province in which the deceased resided, if the estate goes through the probate process. The following items are excluded in determining the value of the estate for purposes of probate:
Thus, probate fees can be minimized if registered assets (including vehicles) are held in joint names with right of survival , and if insurance policies and RRSPs are left to named beneficiaries, not to the estate. It is necessary to use caution when naming beneficiaries to your RRSPs, because income tax will be payable by the estate on the market value of the RRSP at the time of death, unless the beneficiary is the spouse or common-law partner, financially dependent child or grandchild under 18 years of age, or financially dependent mentally or physically infirm child or grandchild of any age. See How are RRSPs and RRIFs taxed at death for more information. Joint ownership of vehicles not only avoids probate fees, but may also make the transfer of the vehicle much less complicated. See the caveats below regarding holding assets in joint ownership with someone other than a spouse. In BC, only the death certificate is required to transfer the vehicle to the surviving joint owner. The Insurance Corporation of BC (ICBC) has a helpful Checklist for Estate Transfers (pdf). In some provinces, having multiple wills can reduce probate fees. Probate is required for some assets, such as bank accounts, real estate, and shares or debt obligations of publicly traded corporations. It may not be required for assets such as personal effects, RRSPs, pension plans, and shares or debt obligations of private corporations. One will can be prepared for the assets requiring probate, and a separate will can be prepared for the assets not requiring probate. Talk to a lawyer or notary in your province for advice on preparing multiple wills. Any assets that are held in joint names with right of survival are usually not affected by any instructions in the will. Normally, if the will has instructions to divide estate assets equally between two or more beneficiaries, but an asset such as a savings account is held in joint names with only one of the beneficiaries, then the other beneficiaries will not receive any part of the savings account. The remaining assets which are not in joint names with right of survival will be divided among all the beneficiaries. This varies from province to province, so legal advice is advisable to determine the exact rules in your province. Transferring an asset, in particular real estate, into joint tenancy with someone other than a spouse has many potential pitfalls:
Tip: Get professional advice before transferring assets into joint tenancy with someone other than your spouse.
Revised: April 25, 2011
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