Probate/Estate Administration Fees - Keep Perspective
Jarrett McKay - Jul 04, 2016
Probate, or estate administration (as it is known in Ontario), is the process by which a court examines a will of a deceased person and determines that it is indeed the final and valid will. This declaration gives comfort to executors and institution
Probate, or estate administration (as it is known in Ontario), is the process by which a court examines a will of a deceased person and determines that it is indeed the final and valid will. This declaration gives comfort to executors and institutions to proceed on the basis of the instructions in that document, without fear of later disputes.
Provincial authorities charge for this service — in most cases, on the basis of the value of the estate. Over the years, these probate/estate administration fees have evolved into a defacto estate tax.
It makes sense to arrange your affairs to minimize these fees, of course. The basic strategy is to pass on as much of your property as possible to your heirs without going through your will.
However, there are dangers of being too zealous in trying to minimize probate fees. It can lead to more tax, trouble and expense in other areas. For example, suppose you have two grown children as your only heirs and you designate one of them as the beneficiary of your Registered Retirement Savings Plan (RRSP) in an attempt to bypass probate. When you die, you are deemed to have liquidated your account and taken the value of your RRSP into income. The RRSP will be transferred, but the taxes will need to be paid by the estate. Unless a provision is made for this, serious inequities may result between the two bequests.
Keep probate/estate administration fees in perspective. In the final analysis, they may be little more than a nuisance relative to the size of your estate. As estate planning is a complex manner, always consult a professional in the field before taking action.
If you would like assistance being connected to an Estate Planning Specialist, please don’t hesitate to let us know.
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