Understanding Important Facts About Probate in Canada”
What is probate

Probate is term that raises eyebrows; we often have many people ask us questions about probate. What is probate, for instance? It sounds like a confusing legal term, but Probate is the process whereby a court reviews a Will to ensure it’s authenticity. Other people are allowed to challenge the authenticity of the Will.

Does probate differ across Canada? Does each province have a different process? What does the process of probate mean in Ontario, Alberta, and British Columbia? How much does the process cost in each province? These are some of the questions we hope to answer in this article.

Probate, in essence, is the legal process of validating and executing a deceased’s Last Will and Testament once they pass away. This involves confirming the authenticity of the document, which includes ensuring that the deceased’s wishes are respected, and distributing their assets and property as outlined in the Will. To provide you with a clear understanding of probate in Canada, we’ll delve into the key aspects of this process, including its meaning, fees, and strategies for avoiding it.

What is Probate?

Probate is a legal procedure that takes place after an individual passes away. It serves to officially recognize and authenticate their will, granting authority to the executor named in the will to carry out the deceased’s wishes and distribute their assets among beneficiaries. This process ensures that the deceased’s debts are settled, taxes are paid, and the estate is distributed in accordance with the law and the will’s instructions.

Probate serves multiple crucial functions:

  1. Authentication of the Will: Probate confirms that the will is legally valid, eliminating disputes or challenges to its legitimacy.
  2. Executor’s Authority: The court grants legal authority to the executor, who is responsible for managing the deceased’s estate.
  3. Debt Settlement: Outstanding debts and taxes are settled from the estate before distributing assets to beneficiaries.
  4. Asset Distribution: The will’s instructions are followed to distribute assets and property among heirs and beneficiaries.

What Does Probate Mean in Canada?

Probate in Canada follows a similar process across all provinces and territories but may have variations in terms of fees, regulations, and specific procedures. It’s important to understand that probate laws are subject to change, so it’s advisable to consult with a legal professional or the relevant government authority for the most up-to-date information in your region.

Probate in Ontario

In Ontario, probate involves submitting the deceased’s will, along with an application for a Certificate of Appointment of Estate Trustee with a Will, to the Ontario Superior Court of Justice. This certificate grants the executor the legal authority to administer the estate.

Probate in Alberta

Probate in Alberta is governed by the Surrogate Rules, and the process typically involves the submission of an application and the will to the Surrogate Court. Once approved, the court will issue a Grant of Probate, allowing the executor to administer the estate.

Probate in British Columbia (BC)

BC, like other provinces, has its own probate process. Executors in BC need to apply for a Grant of Probate through the BC Supreme Court. The court examines the will and ensures that it meets all legal requirements before granting the executor the authority to manage the estate.

How Much Does an Estate Have to Be Worth to Go to Probate in Ontario?

The threshold for requiring probate in Ontario depends on the value of the estate. An estate valued at $50,000 or more is generally subject to probate. However, this threshold is subject to change, so it’s crucial to check the most recent guidelines from the Ontario government or consult a legal expert for the current rules.

Probate Fees in Canada

Probate fees, also known as estate administration taxes, are typically based on the total value of the estate. The rates and exemptions may vary from one province to another. Here’s a general idea of how probate fees are calculated:

  1. Ontario: The fee is calculated on a sliding scale based on the estate’s value, with a maximum fee for estates valued at $1 million or more. As of 2023, the fee for the first $50,000 is 0.5%, and for amounts over $50,000, the fee is 1.5%.
  2. Alberta: Probate fees in Alberta are not calculated as a percentage but are based on a flat fee structure, with different rates for estates of varying values. Fees start at $35 for estates valued up to $10,000 and increase with the estate’s value.
  3. British Columbia: BC’s probate fees are also based on a sliding scale, with fees ranging from 0.6% to 1.4% of the estate’s value, depending on the size of the estate.

It’s essential to be aware that probate fees can significantly impact the value of the estate that beneficiaries receive. Therefore, many individuals explore strategies to minimize or avoid probate.

How Do You Avoid Probate in Canada?

Avoiding probate can be a goal for many individuals, as it can help reduce costs, maintain privacy, and expedite the distribution of assets to beneficiaries. Here are some strategies commonly used to avoid or minimize probate in Canada:

  1. Joint Ownership: Owning assets jointly with someone who has the right of survivorship, such as a spouse or child, allows the asset to pass directly to the survivor outside of the probate process.
  2. Designation of Beneficiaries: Certain assets, such as life insurance policies, RRSPs, and TFSAs, allow you to designate beneficiaries. Upon your passing, these assets are transferred directly to the named beneficiaries, bypassing probate.
  3. Using a Trust: Establishing a trust can help manage and distribute assets while avoiding probate. Assets held in a trust are typically not considered part of the probate estate.
  4. Gifts: Gifting assets during your lifetime can reduce the overall value of your estate subject to probate. However, gift-giving should be done carefully to consider potential tax implications.
  5. Simplified Procedures: In some provinces, estates below a certain value may qualify for simplified probate procedures or exemptions.
  6. Joint Bank Accounts: Creating joint bank accounts with right of survivorship can allow funds to pass directly to the co-owner upon your passing.
  7. Use of Multiple Wills: In certain provinces, like Ontario, it’s possible to use multiple wills—one for assets subject to probate and another for those not subject to probate. This can help reduce probate fees.
  8. Seek Legal Advice: Consult with a legal professional who specializes in estate planning to explore the best strategies for your specific situation.

Your Guide For How To Make A Will In Canada

Probate Meaning and Conclusion

In Canada, probate is the legal process of validating and executing a person’s will after their death. It serves to ensure that the deceased’s wishes are respected, debts are settled, and assets are distributed according to the law and the instructions outlined in the will.

The meaning of probate in Canada is consistent across provinces but may involve different procedures, fees, and rules. In Ontario, Alberta, and British Columbia, the probate process typically includes submitting the will to the respective provincial court for validation and obtaining the legal authority for the executor to manage the estate.

The threshold for probate varies by province, and the associated fees are based on the estate’s total value. These fees can be substantial, prompting individuals to explore strategies to avoid or minimize probate. Some common methods include joint ownership, beneficiary designations, the use of trusts, gifting, and the use of multiple Wills.

Probate doesn’t have to be a confusing process; seek out advice if you need it or start writing your will online today in just few steps.

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Estate planning in Canada: What is it and why is it important?
Estate Planning in Canada

We all have something in our estates that we can pass on to our loved ones: our estates are comprised of our assets, items and the things that we all own. This can include anything and everything from investments, our homes, car, savings account, personal possessions, furniture, life insurance, etc. All of these things add up to create our personal estate. It’s very important to plan on how you manage all these assets, and how they’ll be distributed when you pass away. That’s where estate planning comes into play.

Whether you live in Ontario, Quebec, British Columbia, Manitoba, Alberta, New Brunswick, Saskatchewan, or Newfoundland, estate planning is incredibly important. You can use it as a way to not only manage your assets but also to ensure that if you do pass away, these will go to the right people.  

What is Estate Planning?

How Important is Estate Planning?

Key Components of Estate Planning 

Steps to Create an Effective Estate Plan

Common Mistakes in Estate Planning 

Estate Planning in the Digital Age

FAQs

What is Estate Planning? 

If you’re wondering what estate planning is, this is a process to prepare to manage your financial assets before you pass away. If you die or become incapacitated, the estate planning professional (if you are working with one) will have all the necessary directions and guidelines on what to do and how to complete the process.

Estate planning consists of more than simply preparing a Last Will because aside from choosing how your wealth is distributed, you will also settle debts and estate taxes. Estate planning also covers other things like guardianship of pets and minors. Following an estate planning checklist will help streamline the process while also helping you save time and ensure everything is managed appropriately.

How Important is Estate Planning?

Having an estate plan is of the utmost importance! If you’re looking to safeguard the future of your family, you will want to that your wealth is distributed properly. An estate plan offers control over asset distribution. It also protects your heirs by ensuring that their future is taken care of.

Without proper estate planning, it can be hard to reduce the financial burdens incurred on your family when you pass away. It can also be hard to ensure that your money and wealth are distributed as per your final wishes. Thankfully, estate planning helps you do that; it gives you complete control over how you allocate your wealth in the event you pass away.



Key Components of Estate Planning 

Every estate plan is unique; however, some components tend to be a part of each plan, and here are the main ones.

Wills and trusts

A Will is a legal document that allows you to distribute your assets once you pass away. Wills are also important if you want any specific funeral arrangements, a certain guardian for your kids, and so on. You can also opt for a trust, which is a written document that ensures that the property be held by one (the “trustee”) for the benefit of another (the “beneficiary.”)

Power of attorney

A Power of Attorney document allows you someone else the authority the authority over your financial affairs and property. This document allows you to specify the details of what powers and duties your Attorney (the person whom you have appointed to look over your financial affairs), can or can not engage in. You can read more, here, about Powers of Attorney You may also want to think about completing a Power of Attorney for Personal Care. That will help round out your entire estate plan.

Healthcare directives

The Power of Attorney for Personal Care (otherwise known as a “Living Will”) is a document that allows you to specify what actions someone can take on your behalf. In the event that you are incapacitated ((unable to make decisions for yourself), the Living Will is going to kick in. Normally, healthcare directives are very common in the event of illness, coma, or any other situation where an individual is unable to speak on his/her behalf.

Steps to Create an Effective Estate Plan 

Establishing a proper estate plan can be very difficult and time-consuming. With that in mind, here are the main ways to create an efficient estate plan.

Identifying key roles: executors, guardians, beneficiaries

When you start the estate planning process in Ontario, the most important thing is to identify the individuals who are going to be an integral part of your estate plan. The Executor is the individual who administers your estate and follow your wishes (in the Last Will and Testament.) The guardian is the individual who takes care of minors and raises them after you pass away.

Beneficiaries inherit various items/assets. You need to have witnesses when the estate planning process is just starting. For your PoA, you also need to have someone appointed as the Power of Attorney if you can’t make financial and health decisions. 

Determining estate distribution

Another major aspect of estate planning comes in the form of asset distribution. You may want to create a list of each person in your life that you want to leave something for. It’s also possible to offer a legacy gift or even donate to charity.

Outlining additional wishes

Aside from the asset distribution, you might also have other special wishes to take into consideration. In that case, you may wish to create a separate document with any specific wishes you might have. That includes anything related to burial/funeral arrangements, how you distribute your valuables, or other things that were not a part of the initial process of asset distribution.


Formalizing the estate plan

After finalizing all the aforementioned tasks, your focus has to be on preparing the legal documents, ensuring that they are properly witnessed, signed and (if necessary, notarized.) It’s not a major part of the process, but it is important and something to keep in mind. 

Common Mistakes in Estate Planning 

Estate planning in Ontario doesn’t have to be a difficult process. It’s extremely important to know the most common estate planning mistakes and how to avoid them when you’re planning for your own estate.

  • A very common mistake is to forget about digital assets. Sometimes, the person passing away may not include their digital assets into their estate plan, and that can lead to some challenges.
  • It’s also common for people not to include any final arrangement preferences in their estate plans, which can become an issue for bereaved loved ones.
  • Not discussing issues beforehand with family and friends is also a challenging, because it might be difficult to figure out if the people whom you have appointed for certain roles (i.e. executor) will be accepted by the other members of your family.
  • Some people also forget about setting up a healthcare representative or a financial Power of Attorney.
  • It may be beneficial to have multiple beneficiaries.
  • If you already have an estate plan in place, it makes sense to review it periodically. You should update your plan whenever required.



Estate Planning in the Digital Age 

As we mentioned earlier, it’s very common for people to forget about digital assets when they create an estate plan. Things like Bitcoin, digital investments, etc., are physical assets. They do, however, hold a lot of value and should be included in your estate plan. Update your estate documents accordingly and integrate any digital assets you may have.

Adequate estate planning can safeguard the future of your family, and it also ensures your wealth is distributed according to your wishes. In addition, estate planning ensures safety and is a great way to focus on the well-being of everyone, even if you’re not among them anymore.

FAQs 

Is estate planning necessary?

Ideally, everyone should have an estate plan. It makes it very easy to manage your assets and also ensures someone can make the right health-related decisions in the event you are unable to speak on your behalf. In addition, an estate plan gives you more flexibility and control over managing and handling your assets.

Do you need an estate plan if you have a living trust?

Yes, because you want to ensure everything is handled the way you want. A Living Trust may allow you to distribute your possessions during your lifetime. An estate plan is there to manage everything once you pass away.

Can you modify your estate plan?

Yes, the estate plan can be modified as many times as you want during your lifetime. The focus is on keeping it accurate and updating it with your wishes.

When is it a good idea to start an estate plan?

Now! Now is it’s the perfect time to get started with an estate plan. There are certain times during your life when an estate plan can become a priority. That can be when you are acquiring new assets when you get married or have a child when your kids turn 18, or when you retire.

Do you need a lawyer for estate planning?

If you feel as though you need legal advice, an estate planning lawyer may work for you. Be sure to seek out legal advice whenever necessary!

Remember you can always set up your wills and estate planning online in Canada with just a few clicks!

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How rich families are passing on their fortunes to their heirs
Rich person enjoy money

A supposed “wealth transfer” is occurring. How do rich people pass on their fortunes to their heirs? What can you learn from them?

A whopping $84 trillion in assets will trickle down to Millennials and Generation X. Families should (hopefully) put a lot of thought and planning into how that wealth will be passed down.

This is even more true for uber-wealthy families.

It’s no secret that Millennials and Generation Z are two generations that have been beset with financial and economic struggles: student loans, high inflation, housing, and low job prospects all paint a bleak economic future for both generations. This is why many members of the younger generations are scrambling to make money through “side hustles,” living with roommates for a lot longer, live longer at home, and scrimp and save as much as possible.

The Importance of Estate Planning

The most common challenges

Family Dynamics

Wealth Succession

Other Things

Family Relationships

Philanthropic Giving

Financial Education

Life Insurance

Estate Tax

Wealth Transfer

Passing on wealth to the next generation

This is where the importance of passing down your inheritance comes in:

For a lucky few (we’re talking a very small minority of people on the planet), they have had the good fortune to inherit wealth. The small minority of lucky (wealthy) Millennials and members of GenZ may face other problems when it comes to receiving their assets: they may inherit less than they actually believe. Taxes and other estate fees may eat up their inheritance. Here is how you can learn from the uber wealthy: a study of 270 individuals from families with $50 million showed that some of the most important lessons on wealth planning are as follows:  

The most Common Challenges in Wealth Succession

Managing tax liabilities while transferring your assets can significantly impact (i.e. diminish) the wealth passed on to heirs. This means that proper estate planning and a good strategy for passing down wealth is of the utmost importance. In fact, 33% of respondents to a survey said that COVID-19 lead to more frequent conversations about their familial wealth.

78% of people reported having unplanned conversations about wealth, which didn’t go well at all. 26% of of those respondents actually regretted having those conversations. Ouch!

Managing Family dynamics:

The above stat shows why families with strained relationships, conflicting values, and differing values all complicate the process of transferring wealth. This is where the strategies for successful wealth succession comes in: asset preservation, safeguarding your assets from economic downturns, and preparing your heirs for the future are all important (it’s especially important in this day and age, where inflation is at 40-year high.)

Strategies for Successful Wealth Succession:

Estate planning is the basic cornerstone of wealth succession for affluent families (and not-so-affluent families.) This involves creating a comprehensive strategy to manage and distribute assets upon death (or in some cases, while the heirs are alive – which you can read about here.)

Wills: This is a no-brainer: everyone should have a Last Will and Testament, and if you need a basic Last Will drawn up, see here as to how we can help you with that. These are legally-binding documents to help specify how your assets should be distributed and managed upon your death.

Other things an Estate Plan should include:

Asset protection: optimize your tax strategy by utilizing tax-efficient strategies to minimize estate taxes. That will allow you to maximize your wealth and increase the amount of money that your loved ones get. That may include receiving professional financial advice, if you need it.

Family Relationships:

This should be a no-brainer, but having these conversations about money can elicit feelings of anger, sadness, confusion, etc. If you’re going to sit down and have these (uncomfortable) conversations about money, you’d better be prepared for some crying, anger (possibly screaming, yelling), and maybe even threats of physical violence. One way to handle this is through annual family meetings: gather everyone to discuss your plans for your estate, your long-term goals, and how you want your things to be handled upon your death. A good discussion to air things out may help clear the air of any ambiguity regarding your estate.

Philanthropy and Charitable Giving:

Many affluent families engage in philanthropy: they pass on their money to worthy charitable causes. This is their way of leaving behind a positive impact on society upon their deaths. You can see this with wealthy celebrities who have left everything to charity, rather than to loved ones. There are celebrities who believe that their own children should work for their own money (usually with the help of their parent’s connections, of course.) Funneling money through family foundations or through charitable trusts can seamlessly support charitable causes, and get the heirs involved in charitable giving. In other words, having your heirs involved in charitable giving and distributing that money may keep the children of the uber-wealthy from being spoiled brats who live off of their inheritance.

Financial Education and Mentorship:

Rich people, just like everyone else, don’t want to see their wealth squandered. They may also prepare the younger generation with lessons about financial literacy at a young age. Of course, this involves networking and connections (probably connections that many of us don’t have.)

Life Insurance:

Life insurance can serve as an effective tool for wealth succession. It’s pretty much a viable tax-efficient way to transfer wealth to heirs. Life Insurance can also be used as a way to pay off taxes on real estate.

Estate Tax Planning:

Estate taxes can significantly eat away at the wealth people have accumulated into your estate. For wealthy people, this is where estate planning attorneys/tax expert come into play: they help minimize tax liabilities. That isn’t what you want, right? You may want to do the same, and talk to an estate planning lawyer when you are settling your estate. You may also want to start with our estate planning articles, here.

Wealth Transfer Laws:

Wealthy families have to stay informed about new laws and tax regulations. They adapt and adjust plans accordingly. Regardless of your income level, you should follow suit and adapt by staying informed with the laws surrounding tax regulations.

Preparing the next generation:

Rich people don’t want their money to be blown – there is some evidence to show that by the third generation, inherited wealth ends up squandered. You too, can avoid having your money (and estate) squandered by emphasizing the importance of your heirs (and their children) about managing their money, consistently educating themselves on changes to the laws, and learning how to spend money wisely.

You can start this entire journey by creating a Will, Power of Attorney or a Living Will for yourself. You can start here. Wealth succession is a complicated journey that goes beyond the transfer of financial assets. You have to balance your assets, estate, family relations, philanthropy, etc. Managing all of this almost appears to be a full-time job. You can learn from wealthy families by making sure that your own heirs are up for the job.

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When Should I Update My Will? Navigating Life’s Twists and Turns
A romantic couple

When do you need to update your Will? Estate planning is an ever-evolving process that adjusts and adapts to the ebbs and flows of our lives. Central to this is your Last Will and Testament. But creating a Will isn’t a one-time affair; life’s unpredictability demands regular revisions. So, how do you know when it’s time to dust off that old document and make some changes? Let’s dive in.

The Living Document

Major Life Events

Financial Changes

Relationship Changes

Geographical Changes

Tax Law Changes

Setting up Trusts

Periodic Reviews

Appointing or Changing Executors

1. Introduction: The Living Document

A Will is often viewed as a ‘living document’. Just as our lives undergo changes, so should our Wills. It’s good to review your Will to ensure that it remains relevant and reflects your current wishes. This includes reviewing your Will whenever you move, have more children, etc. Essentially, anytime your life circumstances change, your Will should change right along with it.

2. Major Life Events: The Obvious Catalysts

Whenever a significant event occurs in your life, it’s a clear signal to revisit your Will.

  • Marriage: Newlywed bliss also comes with legal implications. Update your Will to include your spouse or adjust asset distribution. What is your spouse getting in your Will?
  • Divorce: The end of a marital union often necessitates changes in asset beneficiaries and executors. How will your Last Will and Testament change?
  • Birth or Adoption: The addition of a child is a joyous occasion. Ensure they’re a part of your Will and consider setting up trusts. Is there a guardian you want to add?
  • Death of a Beneficiary or Executor: When a named person in your Will passes away, adjustments are crucial. How will your Last Will change?

3. Financial Changes: Wealth’s Ebb and Flow

Major financial shifts can greatly impact how you’d like your assets to be distributed.

  • Acquisition of Significant Assets: Whether it’s a new home or a valuable piece of art, newly acquired assets should be addressed in your Will.
  • Sale or Disposition of Assets: If you’ve mentioned specific assets in your Will which you no longer own, those sections need revising.
  • Starting a Business: This not only adds to your assets but might also involve complex distribution desires.

4. Changes in Relationships

Beyond marriages and divorces, other relationship dynamics can influence your Will.

  • Estrangements: Sometimes, we grow apart from those once close. Such shifts might impact your distribution wishes.
  • New Dependencies: Whether it’s a new stepchild or an aging parent, new dependents might need to be factored into your Will.

5. Geographical Moves: New Horizons, New Rules

Relocating, especially across state lines or countries, can necessitate a Will update due to differing estate laws. Your Will may need to be updated to the provincial/state laws of the province that you’re living in.

6. Changes in Tax Laws

Estate and inheritance tax laws are prone to shifts. An update in these laws might prompt a restructuring of your estate plan to maximize benefits. It’s wise to change your Will to adapt to the province/state of residence.

7. Setting Up Trusts

If you’ve recently established trusts or wish to integrate them into your estate planning, it’s time for an update. You can choose this option in your Last Will and Testament; choose to leave everything in a trust.

8. Periodic Reviews: A Proactive Approach

Even without significant life changes, it’s wise to review your Will every 3-5 years. Regular checks ensure that your Will remains aligned with your current wishes. Always good to be prepared.

9. Appointing or Changing Executors

Your chosen Executor plays a pivotal role in the execution of your Will. Any change in your trust level or their ability to perform the task should trigger an update. Who would you trust to be the Executor of your Estate?

Keeping your Will up-to-date ensures that upon your passing, your wishes are carried out as envisioned. You will want to avoid as many disputes between loved ones as possible. That is why it’s important to ensure that your Will is updated to match your life circumstances.

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