Solutions for your future needs.

Book a meeting


416-367-4417

Why is it necessary to probate an estate?

Article Licenses: DL, LI
Advisor Licenses:

Compliant content provided by Adviceon® Media for educational purposes only.


Careful estate planning can untangle an estate from costly government inspections or the application of their administrative taxes and/or fees. Probate fees are calculated on assets, regardless of liabilities, at predetermined rates by the government. Methods of reducing the need for probate can save you money.

shutterstock_61205413

 ‘Estate’ is the legal term. When used in connection with probate proceedings, the term encompasses the total property that is owned by a deceased person prior to the distribution of that property in accordance with the terms of a will, or when there is no will, by the laws of inheritance in the jurisdiction of residence.

When an individual dies, his or her last will and testament is read. Because financial matters need tending to, your will should outline how you want your assets divided, your debts paid, and where applicable, define the management of these assets using established trusts for your heirs.

Family members may read a will if it is in their possession. Next, the will must go to the executor, who then assesses it, to see if it needs to be probated. Probate is a court assessment that may require government approval to settle your estate and transfer the ownership of your assets.

Probate is generally necessary in cases when:
• A bank, trust company or financial institution insists on the will being  probated to prove that the executor has the authority to act.
• The assets include shares owned in a private company.
• The executor needs to sue an individual owing the estate money.
• Creditors are owed money from the estate.
• A will’s terminology is unclear, ambiguous or certain provisions are not stated. (For example, if there is no provision to pass assets to another heir where a spouse has predeceased you).
• A will is improperly witnessed.

Is probating an estate expensive?

It is a significant job for the executor to probate a will. The original will must be submitted with an inventory listing the estate’s assets recorded at their fair market value to the court in the jurisdiction where the deceased last lived. There may be increased fees if a lawyer is retained to cross-examine the asset list or if the executor charges a percentage of the asset base to do the work.

Life Insurance can solve estate tax problems.  If you have not paid taxes on your capital gains which have accrued in a business or on an investment asset, or on a cottage, you may face estate taxes that are not affordable for the estate which may minimize the heirs assets or make it impossible to retain an asset such as a cottage. By planning for probate, you can use life insurance to pay off potential estate taxes due in the estate.

Note: In Ontario, the Estate Administrative Tax (EAT) will assume the process of probate. In Quebec, probate is not needed when a notary under seal prepared the will.

 


 

Publisher's Copyright & Legal Use Disclaimer Replication is prohibited beyond the use of this website. The publisher does not guarantee the accuracy and will not be held liable in any way for any error, or omission, or any financial decision or purchase or use of a financial product, including investment or insurance products, and suggest that a professional advisor's counsel is sought, especially with regard to Segregated Funds which have investment risks as noted in the Fund Disclaimer. All rights reserved by Adviceon®

Disclaimer The particulars contained herein were obtained from sources which we believe are reliable, but are not guaranteed by us and may be incomplete. This website is not deemed to be used as a solicitation in a jurisdiction where this representative is not registered. This content is not intended to provide specific personalized advice, including, without limitation, investment, insurance, financial, legal, accounting or tax advice; and any reference to facts and data provided are from various sources believed to be reliable, but we cannot guarantee they are complete or accurate; and it is intended primarily for Canadian residents only, and the information contained herein is subject to change without notice. References in this Web site to third party goods or services should not be regarded as an endorsement, offer or solicitation of these or any goods or services. Always consult an appropriate professional regarding your particular circumstances before making any financial decision.

Commissions, trailing commissions, management fees and expenses all may be associated with segregated fund investments. Please read the fund summary information folder prospectus before investing. Segregated Funds may not be guaranteed, their market value changes daily and past performance is not indicative of future results. The publisher does not guarantee the accuracy and will not be held liable in any way for any error, or omission, or any financial decision. Talk to your advisor before making any financial decision. A description of the key features of the applicable individual variable annuity contract or segregated fund is contained in the Information Folder. Any amount that is allocated to a segregated fund is invested at the risk of the contract holder and may increase or decrease in value. Product features are subject to change.

 

A A
Financium.getAdvisorInfo()=miss Financium.getPage()=miss Financium.getPage()=miss Financium.getPage()=miss