Whether you’re an executor, beneficiary, or just planning for the future, understanding the basics of probate can help you navigate this often-complex process with confidence. Let us break down what probate is, when it’s required, and what you need to know to ensure a smooth transition of assets.
What is Probate?
Probate is the legal process through which the courts accept a deceased person’s will. If the person left a will, the court verifies its validity and ensures that the executor follows its instructions. If there is no will, the court appoints someone to act on behalf of the deceased (an administrator).
Is Probate Required?
In many cases, probate is necessary to legally transfer a deceased person’s assets. However, there are exceptions. If the total value of the estate is under $25,000, probate is typically not required. Jointly owned assets, such as bank accounts, vehicles, or real estate, automatically pass to the surviving owner without going through probate. Certain financial accounts, including RRSPs, TFSAs, and life insurance policies with named beneficiaries, also bypass probate and go directly to those beneficiaries regardless of the asset’s value. However, for estates and assets exceeding $25,000 in value, probate is usually required to ensure a legal and orderly distribution.
What if there is no will?
Whether there is a will or no will, the estate may still need to go through probate. The key difference is that a will names an executor, while an administrator is appointed when there is no will. The administrator is typically chosen with the consent of a majority of the intestate beneficiaries (those entitled to inherit under the law). If no agreement is reached, the court will appoint an administrator. Unlike an executor, whose authority begins immediately upon death, an administrator can only act once the court approves their application. This process ensures that the estate is distributed according to provincial intestacy laws.
The Probate Process
Probate involves several key steps to ensure a deceased person’s estate is properly managed and distributed.
Due Diligence: Conducting a will search, determining the deceased’s debts and assets, including corresponding with banks and other financial institutions.
Give Notice: Providing notice to beneficiaries (if there is a will) or anyone who would have claim on the estate (if there was no will).
Prepare Documents: Preparing court documents that confirm the situation of the deceased, their assets, marital status, family members, etc.
Pay Probate Fees: Due once the application for probate is approved. For estates between $25,000 – $50,000 the fee is 0.6%. For estates over $50,000 the fee is 1.4%.
After Probate: the 210 Day waiting period
Once probate is granted, executors and administrators are required to wait 210 days before distributing the deceased’s assets. This waiting period allows time for any potential claims against the estate to be brought forward (if necessary). In some cases, the waiting period can be waived if all beneficiaries provide their consent. Even after the waiting period ends, it is recommended to obtain written consent from beneficiaries before selling any real estate owned by the deceased to ensure a smooth and dispute-free process.
Cautions When Handling Probate
Executors and administrators must be careful when managing and distributing a deceased person’s estate. Failing to notify all potential claimants of the estate, such as a long lost child, could lead to legal action against both the estate and its executor(s) or administrator(s). Distributing assets too soon or incorrectly can result in personal liability. Additionally, if someone challenges the executor’s or administrator’s role and assets have already been distributed before the 210-day waiting period, they may be held responsible. Finally, if estate funds are sent out of the country while taxes remain unpaid, the CRA can demand payment from the executor or administrator. Proper diligence is essential to avoid these risks.
Conclusion
Probate can be a complex and time-consuming process, but understanding how it works can help ease the burden on everyone. Whether there is a will or not, following the proper legal steps ensures that an estate is settled fairly and in compliance with the law. By staying informed and seeking professional guidance when needed, you can navigate probate with confidence and ensure a smooth transition of assets to beneficiaries.
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Disclaimer: This blog post is for informational purposes only and should not be construed as financial or legal advice. Consult with qualified professionals to create a personalized estate plan suitable for your specific circumstances.
