What Do You Mean by The Process of Probate in Simple Language?
The probate process starts in a probate court at the time of the death of an individual. During this process, the probate court.
- Establishes whether the “will” of the deceased is genuine and authentic
- Appoints the person named in the will as “estate trustee.”
- Prepares an index where all the assets owned by the departed will get listed along with their respective values.
- The estate trustee will distribute the assets in the manner prescribed and mentioned in the will.
If any will absent, then the probate court usually appoints an estate trustee to manage and deal with the assets/ estate of the deceased.
To gain a deeper insight into the concept of probation–This is a ruling by the Supreme Court of Canada with Re Eurig Estate (1998) S.C.J. No. 72. It has defined the purpose of “Probate” in the following manner:
”The purpose of probate is to certify that a will and the court have duly proved and registered codicils in the court. And that the property administration has been committed to the person named in the will as executor.”
What Is Probate Fee? How Is It Calculated in Canada?
A probate fee is a tax you pay to the provincial government on probation. You need to pay a probate fee when you receive a certificate from the government to appoint an estate trustee.
The calculation of the probate fees varies from province to province. In the Ontario province, the authority calculates in the following manner:
|Total Value of Estate
|Up to $50,000
|$5 for every $1000
|$15 for every $1000
What Are the Different Ways Using Which You Can Avoid Probate Fees?
Hefty probate fees can burn a hole in your pocket and hurt you financially. However, the good news is you can still save a lot of your probate fees by reducing your overall probate value or estate value.
Let us read and understand some of the best techniques to do this:
|You Can Designate Your Beneficiaries
|• If you are owning a Life Insurance policy, then you can name the beneficiaries
• By doing so, the insurance company will directly credit the benefits to the bank accounts of your beneficiary
• In such a case, this amount will not be included in your Estate value, and you will never pay any probate fees on it
• Further, you should always add the name of a second beneficiary as well
• This helps, in case the first beneficiary passes away even before you
|You Can Hold Your Assets in Cash or Bearer Certificates
|• If you hold assets in the form of cash or bearer certificates, then:
a) These assets will not form a part of your estate value and
b) You can avoid probate fees
• You can hand over the bearer certificates to your legal heirs and they can cash them directly into their account
|You Can Accumulate Funds in Registered Savings Plan
|• The funds accumulated or contributions made in the registered savings plans, such as RRSP, RRIF, and TFSA are not required to be probated.
• Any income remaining in these accounts upon your demise is not included while calculating the value of your estate
|You Can Hold the Assets Jointly
|• Instead of holding the assets in single ownership, you can always hold the assets jointly with a right of survivorship
• By doing so, such joint assets will pass to your living joint owner and will never be included in the estate value
|You Can Gift Your Property While You Are Alive
|• Ultimately, your estate will pass on or will be inherited by your legal heirs
• So, to avoid probate fees you can also gift your property while you are alive
• This happens because the value of such a gifted property will not be added to your estate value
|You Can Create A Trust Fund
|• You can set up a “Trust Fund” and can transfer the assets to it
• You can appoint yourself as the “trustee” of this fund till you are alive
• After your demise:
a) This trust will become the sole owner of the assets held by it and
b) Will distribute them to the rightful owners
• Such assets will not become a part of your estate value and can avoid probate fees
|You Can Create Dual Wills
|• To avoid probate fees, you can always set up two different wills in the following manner:
a) Primary Will: You can include all the assets in this will that needs to be probated
b) Secondary Will: You can mention all the assets in this will that are not required to be probated
• This will help you to reduce your probate fees, as this will lead to a lesser calculation of estate value