Tax Question:
What is Probate?
Facts:
Probate is a legal document that resolves all claims and distributes the deceased person’s property under a will. It is the first step in the legal process of administering the estate of a deceased person. A probated will is a will that has been reviewed by the courts and deemed to be a valid will. It confirms the executor and acknowledges their authority to carry out the terms of the will.
Discussion:
In all provinces except Quebec, when an executor applies to the court for probate, a fee must be paid to the provincial government. The fee is based on the value of the estate’s assets. Certain assets do not form part of a deceased’s estate at death. These generally include assets held with right of survivorship and life insurance policies, RRSP’s, RIF’s and similar investments that have a beneficiary other than the deceased’s estate designated on the plan.
There are situations such as jointly held assets by husband and wife in which probate is not needed. So when one of them dies, the assets are automatically transferred to the surviving spouse.
The probate fees for British Columbia are as follows.
• No fee is payable if the gross value of the estate is less than $25,000.
• If the gross value of the estate is over $25,000 – the fee payable is $200, plus $6 for each $1,000 or part of $1,000 of estate value in excess of $25,000, up to $50,000, plus
• $14 for each $1,000 or part of $1,000 of estate value in excess of $50,000.
For example, on an estate valued at $500,000, the probate filing fees would be $6,650.
Although probate is not compulsory except in very specific cases, most financial institutions require probate before they will release a deceased person’s assets because it assures the institution that it is handing over the deceased’s assets to the person who is lawfully entitled to receive them. Without probate, the institution cannot be assured that the will they have been given is in fact the deceased’s last will. If probate is required for the purposes of dealing with one estate asset, it will be required for all estate assets.
It is advisable to consult a lawyer or notary concerning probate of the will.
Recommendation:
If you would like to discuss probate or estate planning further, please contact Gilmour Knotts Chartered Accountants.
