Resources & Insights

What is Probate?

Sitting down to prepare a Will and estate plan is something that many Canadians plan on doing… eventually. According to a recent poll, over half of all Canadians do not have a Will (Source: Estate planning can, understandably, be a difficult and emotional process. While the prospect of dealing with your own mortality is daunting, a thorough and well-executed estate plan can help to ensure that your hard-earned savings and possessions end up in the hands of those you love, while also minimizing the fees and taxes involved in the transition. One prominent fee related to the administration of an estate, which can often be minimized through proper estate planning, is Estate Administration Tax or ‘probate fees’.

What is probate?

The probate application is now formally known in Ontario as an ‘Application for Certificate of Appointment for an Estate Trustee with (or without) a Will’, however tongue-tied lawyers still commonly refer to it simply as ‘probate’. Probate is the process of the court ‘proving’ a Will and certifying that the person who has filed the application is the individual entitled to be the executor of the deceased’s Last Will. The executor is the individual who manages the deceased’s estate and distributes their assets in accordance with their Will, or, if there is no Will, according to the distribution mandated by the Succession Law Reform Act.

Once the probate application has been filed and approved by the court, the applicant will receive a ‘Certificate of Appointment’ confirming that they are the executor of the estate. While the executor derives their powers from the Will, and not the probate process, this Certificate of Appointment is often necessary to allow the executor to deal with some of the most important assets in the estate, including certain accounts with banks and other financial institutions and any real property owned by the deceased.

Unfortunately, applying for probate is not free. In order to apply, the applicant must also submit a cheque for Estate Administration Tax (often referred to as ‘probate fees’) to the government, which works out to be approximately 1.5% of the value of the estate. This means that the applicant needs to have access to thousands of dollars before being able to deal with any of the deceased’s assets, and this money is not always readily available in the estate, particularly if the main asset in the estate is real property.

How long does probate take?

While the Ministry of the Attorney General of Ontario states that the processing of a probate application should take approximately 15 days, the courts can get backed up, and applications at some courts in the province can often take several months. Many valuable estate assets are tied up during this time, and cannot be sold or transferred to the beneficiaries until the application has been processed.

Does every estate need to be probated?

Not every estate will need to be probated; the process is only required for an estate when there is a specific asset in the estate that requires probate to be sold or transferred. However, if a single asset in an estate requires probate, it will ‘drag’ all of the estate assets into probate, meaning that their values will be included in the calculation of the Estate Administration Tax. Given this, effective estate planning often involves strategies which are designed to keep assets out of the estate and minimize the number of assets which require probate to be dealt with. For example, it is becoming increasingly common practice for an individual to have multiple wills – one to deal with assets that require probate, and a second to deal with those assets that do not, including, importantly, shares in private corporations. This can substantially reduce the Estate Administration Tax payable, and increase the amount of money flowing to the beneficiaries of the estate. Other strategies to minimize probate fees include joint ownership of assets and certain trust agreements.

The importance of a Will

If a deceased individual does not have a Will, the executor must distribute the estate assets in accordance with the rules of Ontario’s Succession Law Reform Act. Given that the law is generalized and cannot know the intricate details of each person’s relationships, this often requires executors to distribute assets in a way that is not consistent with, or potentially expressly against, the wishes of the deceased. For this reason every Canadian, regardless of age, should have a Will and should review it on a regular basis to ensure it continues to represent their wishes.

If you require assistance administering an estate, or are looking to start estate planning, don’t hesitate to contact Barriston Law, where we will work with you to navigate the laws surrounding wills and estates and give you piece of mind ensuring your loved ones are taken care of.

Chris Holmes and Jacklyn Tuckey