“Probate” is the legal process whereby a Will is “proved” in a court and accepted as a valid public document that is the true last testament of the deceased. In B.C., essentially the need for probate is determined by the policy of the agency or financial institution which holds an asset which is part of an estate. By granting Letters Probate, the Court confirms that the will is valid, and that the executor has authority to deal with the estate assets. Without probate, other people or institutions may refuse to recognize the executor’s authority over the estate assets.
Assets That Require Probate
However, not all estates require probate as probate is not needed to transfer certain kinds of assets. Specifically, you do not need probate to transfer property that is held in joint names. This is because joint ownership carries with it a right of survivorship of the other owner(s). For example, if a husband and wife own their home jointly (as joint tenants) and the wife passes away, the husband owns the house by right of survivorship and doesn’t need probate to put the title in his name alone. You also do not need probate to transfer assets that have a named beneficiary. These assets include RRSPs, RRIFs, life insurance policies, pensions and some other assets. When the owner of the asset passes away, you only need to provide a Death Certificate and some information in order to transfer that asset to the person who is named.
The need for probate is determined by the policy of the agency or financial institution which holds an asset that is part of an estate. Banks, the Land Title Office and ICBC (in some cases) require probate for the executor to transfer an asset of a deceased to another individual. Also, If you have assets that will form part of your estate after you die, including a life insurance policy, RRSP or other assets that do not name a beneficiary, or that names your estate as the beneficiary, your executor will need to get a “Grant of Probate” from the Court. Your executor may also need a Grant of Probate if the deceased was involved in litigation at the time of his or her death and the executor will need the Grant to finish the lawsuit on behalf of the estate.
Applying for Probate
In British Columbia, the executor of a deceased’s estate may apply to the Supreme Court of British Columbia to probate the will. Probate registries do not provide forms, give legal advice or assist in preparing wills, applications or affidavits.
Utilizing a Lawyer
There is no requirement to have a lawyer to apply for a Grant but, if you intend to do so yourself, you will need to be well organized and be prepared to do a lot of paperwork. If you hire a lawyer to assist you, legal fees are considered a proper expense and (subject to the approval of the beneficiaries, heirs-at-law or the court) may be paid out of the estate funds.
The services of a lawyer are recommended, particularly where questions about the validity or interpretation of a will arise, and an application to court becomes necessary. It’s also a good idea to also hire an accountant to help with the several tax returns that need to be filed, as the proper filing of returns and payment of taxes is one of the executor’s responsibilities.
Executor Duties
In most cases, probate is an uncontested court process. The executor mails a copy of the will, together with a notice that he or she is applying for probate, to the beneficiaries of the will and to the deceased’s nearest relatives. The executor must also prepare an inventory of the estate’s assets and liabilities. A copy of the notice that was sent to the beneficiaries, the inventory, a certificate of wills notice search, and the original will, together with some court forms are then filed with the court in support of an application for probate.
The executor has many duties during the probate process including paying filing fees and probate fees with the Court Registry. Before the Registry will issue a Grant, Probate Filing Fees must be paid and they are based on the gross value of the deceased’s assets which pass through the estate. Assets that do not pass through the estate and certain assets situated outside British Columbia are not subject to Probate Filing fees.
Probate Fees
No fee is payable if the gross value of the estate is less than $25,000 but if the gross value of the estate is over $25,000 – the amount of fee payable is: (a) $6 for every $1 000 or part of $1 000 by which the value of the estate exceeds $25 000 but is not more than $50 000, plus (b) $14 for every $1 000 or part of $1 000 by which the value of the estate exceeds $50 000. For example, on an estate valued at $500,000, the probate Filing Fees would be $6,650 (including the $200 basic fee).
Before the final distribution of the estate to the beneficiaries, the executor must prepare and obtain approval from the beneficiaries, heirs or the court for the executor’s accounts showing the assets, receipts, disbursements, and proposed distribution of the estate. The executor’s accounting will usually include a claim for reimbursement of expenses that the executor has paid him or herself while serving as executor. The executor will also have to decide if he or she will claim a fee for acting as executor. This fee can be up to 5% of the estate and is taxable income.
Estate Distribution
Finally, unless there is only one beneficiary, such as a spouse, or the deceased’s children, you may not want to distribute any portion of the estate to beneficiaries until the clearance certificate from the Canada Revenue agency is obtained.
It is difficult to predict with any accuracy when an executor will be in a position to make a final distribution of an estate and often the executor is pressured by the beneficiaries to indicate the timing of the distribution. The executor usually has a year (called the “executor’s year”) to complete this process but it can take much longer than that, especially if there is a delay to get the Clearance Certificate, the estate involves trusts, there are vast and/or complicated assets, or if litigation ensues.
Having an Estate Planning Strategy
All of this demonstrates the value of quality estate planning which can streamline the probate process, minimizing expenses and taxes and possibly avoid probate completely.
The information provided above is for educational purposes only. This information is not intended to replace the advice of a lawyer or address specific situations. Your personal situation should be discussed with a lawyer. If you have any questions or concerns, contact a legal professional.