In Ontario a “probate” is a certificate granted by the Ontario Superior Court of Justice to the effect that the Will of a deceased person has been proved and registered in the court and that administration of his/her effects has been granted to the Executor proving the Will.
In some cases there is a requirement for probate as, for example, when transferring land registered under the Land Titles Act. Also, banks and some other financial institutions may insist on having a copy of a probated Willin order to be certain that it is approved by the Court and is not being contested. Since court fees for probating a Will are often quite substantial, avoiding probate in appropriate circumstances has increased in importance.
Planning to avoid probate can include gifting of selected assets before death. This could also be done by simply transferring property into joint ownership with a right of survivorship. An aging parent, whose spouse has died, might consider placing the family home in joint tenancy with a child. Upon decease, the survivor becomes the owner of the property by operation of law. In this situation, the home does not even go through the estate.As an additional benefit, a principal residence can be transferred in this way without tax consequences because here, the capital gain is tax exempt.
Another way to avoid or reduce probate fees is through the use of a joint bank account. While small bank accounts can usually be transferred without a requirement to obtain probate, each bank has its own policy as to limits. To avoid possible problems, saving or chequingdeposit accounts can be held jointly, say by a mother and son or daughter. By arranging a joint bank account, with right of survivorship, if one party dies the other can access the account immediately.
Dual Wills
Where only some of the assets in an estate require probate and joint ownership is not convenient, consideration should be given to the feasibility of making more than one Will. In this situation, a separate Will can be used to deal with assets for which probate is not required and a second Will used for all other assets except those dealt with in the first Will. Probate fees would only be payable on the assets in the second Will and the savings, depending on the value of the estate, could be considerable.
Caveat
Make sure the person to whom you are contemplating transferring property into joint ownership is financially stable. The downside of this planning technique is that if he/she becomes liable for a large debt, their ownership in the property is in danger. If there is such a possibility, let caution be your watchword!
© The foregoing provides only an overview and does not constitute legal advice. You are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained in the context of your own particular circumstances.
