Surplus stripping is back in the news with recent changes to legislation. This makes it…
By Nizam Shajani, CPA, CA, MBA
Obtaining a grant of probate may be a necessary part of administering the will of an estate. The authority of the executor (“Personal Representative” in Alberta) appointed under a will arises immediately upon the death of the testator. However, in many cases it is necessary for the executor to also obtain letters probate in order to deal with the assets of the estate and carry out the duties of the administration of the estate.
If there is no will, the administrator of an estate has no authority until the grant of letters of administration is given by the court.
Probate confirms the executor’s appointment under the will and prevents any subsequent challenge, limits the liability in the event a subsequent will is discovered or the will is declared invalid. Claims against the property will also expire only after the grant (in Alberta, 6 months from date of grant).
The requirement to obtain probate is necessary to deal with third parties. Banks, financial institutions, transfer agents for shares of public corporations and other third parties will not permit a transfer of property into the name of the executor or administrator without the grant because of potential liabilities. Real property also cannot be transferred without probate.
There is property that can be transferred without probate. This includes the Canada Pension Plan survivor benefit, personal effects, automobiles, shares of private corporations, along with amounts that pass outside of the estate. Amounts that pass outside of the estate include property held jointly with right of survivorship, life insurance with named beneficiaries, registered plans passing with named beneficiaries (RRSP, RIF, TFSA) and bank accounts that do not exceed $30,000.
Where probate is required, probate fees or probate taxes must be paid, and the original will must be located before the grant can be obtained. Probate fees in Alberta range from $25 to $400. However, probate fees in other provinces can be much higher, and where property is located in other provinces, those probate fees will need to be addressed.
Probate fees are only paid on assets that pass through the Will (or administration if no will). This should not be confused with assets that are not subject to probate. Probate taxes apply to all assets under the will and are based on net assets (after liabilities).
The process for obtaining the grant of probate include the following:
- The application for grant along with supporting documents, payment of probate fees and proof of security (where required) filed on an over-the-counter basis at court office.
- “Proving the Will in common form – judge reviews the application and signs the order in camera (no one present).
- Proved in “solemn form” – cannot be challenged subsequently except in limited circumstances. – formal court hearing with more onerous requirements.
- Issue “Letters Probate” (if dies with will) or “Letters of Administration” (if dies intestate)
Shajani can work with your solicitor during the will and estate plan to assist in minimizing probate fees where applicable. Strategies may include multiple wills to address assets requiring probate with those that do not as well as separate wills for property held outside the province or outside of Canada.
This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. © 2020 Shajani LLP