Earlier this week I spoke with a customer who told me that some years ago he had asked for, and paid his lawyer for, a "Will that doesn't need probate". He seemed annoyed when I told him that based on the assets he currently owned, his Will would have to be probated if he should pass away.
There is no such thing as a "Will that doesn't need probating" because the Will itself is not the only determinant of whether probate is necessary. Whether or not you need to probate someone's Will often depends on what kind of assets they own, and how those assets are held (e.g. jointly owned, owned solely but with a designated beneficiary, etc.). If you own certain assets, your Will must be probated, or if you don't have a Will, someone must be appointed as an administrator.
The customer I was dealing with owned a mineral title. On talking with me in more detail, he remembered that the lawyer had said if he didn't want his Will to be probated, he had to change or get rid of his mineral title. The customer hadn't done that.
An estate plan is a jigsaw puzzle, and the pieces are the Will, the assets, the family, the beneficiary designations, the jointly owned property, the incapacity documents (Power of Attorney and health-care directive) and the taxes. All of the pieces have to work together.
When you ask an estate-planning lawyer for a "Will that doesn't need probate", what you are really asking is for a plan in which all of your assets are dealt with during your lifetime. This is achievable, as long as you're willing to own absolutely everything from your car to your business to your bank account in joint names with other people, or to name beneficiaries (where that is possible) other than your estate. This is generally only practical for married people and even then, not always. People do get divorced, after all.
You have to ask yourself why you'd live your life that way just to avoid probate. Particularly in those provinces where the probate fees are low, probate isn't expensive so it simply makes no sense to put your assets at risk this way. You may think that avoiding probate is simpler, but if you have to change the ownership of everything you own, and possibly lose some of those assets to other people, is that really easier?
So if you're thinking of asking your lawyer for a "Will that doesn't need probate", get the facts about probate first. Don't rely on anecdotes told by co-workers or friends about what they think happens on estates. If you're reading advice in magazines or blogs, check with a lawyer in your area to see whether it applies to you. Think about whether avoiding probate is actually worthwhile - and workable - for you.
There is no such thing as a "Will that doesn't need probating" because the Will itself is not the only determinant of whether probate is necessary. Whether or not you need to probate someone's Will often depends on what kind of assets they own, and how those assets are held (e.g. jointly owned, owned solely but with a designated beneficiary, etc.). If you own certain assets, your Will must be probated, or if you don't have a Will, someone must be appointed as an administrator.
The customer I was dealing with owned a mineral title. On talking with me in more detail, he remembered that the lawyer had said if he didn't want his Will to be probated, he had to change or get rid of his mineral title. The customer hadn't done that.
An estate plan is a jigsaw puzzle, and the pieces are the Will, the assets, the family, the beneficiary designations, the jointly owned property, the incapacity documents (Power of Attorney and health-care directive) and the taxes. All of the pieces have to work together.
When you ask an estate-planning lawyer for a "Will that doesn't need probate", what you are really asking is for a plan in which all of your assets are dealt with during your lifetime. This is achievable, as long as you're willing to own absolutely everything from your car to your business to your bank account in joint names with other people, or to name beneficiaries (where that is possible) other than your estate. This is generally only practical for married people and even then, not always. People do get divorced, after all.
You have to ask yourself why you'd live your life that way just to avoid probate. Particularly in those provinces where the probate fees are low, probate isn't expensive so it simply makes no sense to put your assets at risk this way. You may think that avoiding probate is simpler, but if you have to change the ownership of everything you own, and possibly lose some of those assets to other people, is that really easier?
So if you're thinking of asking your lawyer for a "Will that doesn't need probate", get the facts about probate first. Don't rely on anecdotes told by co-workers or friends about what they think happens on estates. If you're reading advice in magazines or blogs, check with a lawyer in your area to see whether it applies to you. Think about whether avoiding probate is actually worthwhile - and workable - for you.
Lynne;
ReplyDeleteIs this article telling the truth? If your parent sells his or her house because of a protracted illness and puts all of his money from GICs, house, chequing, etc. into joint accounts, why is there a need for probate?
If all concerned trust each other, the process is seamless, right? Then why not tell your readers the truth and stop calling it a myth?
WGW
This comment has been removed by the author.
DeleteOf course it's the truth. If you read it a little more carefully, you will see that I did not say that all wills need to be probated. What I said was that you cannot guarantee in advance that a will won't need probate. And lighten up on the accusations of lying, ok? The fact that someone says something you don't like or agree with doesn't mean they aren't telling the truth. And let's face it, I know a lot more about this than you do.
DeleteLynne
We live in Ontario, and we are wondering--is it only lawyers who can probate a will? Can a paralegal do it? Or can a regular person do it? Do you have to use a lawyer specifically in that town to probate the will, or can you use an attorney in another town to handle the probate in a neighboring town?
ReplyDeleteNo, it's not just lawyers who can do probate, though probate lawyers can get the job done more quickly and easily than most people simply because they have experience.
DeleteThe lawyer you choose doesn't necessarily have to be in the same town. The same province, yes, because the probate process and forms are very different from one province to the next. when choosing a lawyer, you should realize that probate documents do have to be filed at the court nearest where the deceased lived. However, these days with e-filing, couriers, etc the proximity is less important than it used to be. Things could be a bit slower if the lawyer is further away but not substantially so.
Any individual can do an application for probate on his or her own as long as they are able to deal with the paperwork. There is a fair amount of paperwork on an estate, and most people have never been an executor before, so it could be challenging. If the estate is not too complex, it may well be within the capabilities of the average lay person.
There are books and kits available in some provinces to help people apply for probate without a lawyer.
In Canada, most paralegals work within law firms, along with lawyers. In fact, if you hire a large firm to do your probate, you can be sure that a paralegal has been involved with it, though the lawyer bears ultimate responsibility for the paperwork being right.
In some places there are paralegals outside of law firms. I personally would be extremely careful about hiring anyone who purports to give legal advice but is not a lawyer. If you are looking into paralegals, do plenty of due diligence by calling the BBB, checking with any organization who regulates them, etc.
Lynne
You can fill out the papers and file them yourself if you want...just as you can replace the brake pads on your car...but would you feel comfortable if you did ? In my case it took me more time just to read the documents than it did to have a lawyer fill them out, file them and get the grant.
DeleteI like your analogy, Paddy. I don't take out my own appendix or build my own computer. I leave that to those with some expertise.
DeleteLynne
Have a question...hopefully I didn't already ask it. I've done the math and adding the CPP death benefit to my own taxes would be the same as completing a T3. Can I add the CPP death benefit to my own taxes and take that money out of the estate account as an estate expense ? It would likely save the estate the cost of preparing the T3.
ReplyDeleteDoes a will that leaves $20,000 to a minor beneficiary, in trust, need to be probated even if the estate is only worth $3400?
ReplyDeleteI realize this question seemingly makes no sense so I'll give a quick explanation.
The executor of said will is also the common law spouse of the testator, who claims that all bank accounts, investments and policies were jointly held or designated to herself with the exception of one older vehicle valued at $3400. I know the deceased had a fairly large estate of which there are 4 beneficiaries. His CL wife was to receive his chequing accounts and all household items, his grandson-$20,000 and his two adult children were to receive the residue.
I feel that the deceased intentions were obviously stated by the will, but he perhaps left his accounts all joint with his spouse to avoid probate...trusting her to follow his wishes on her own...who the heck leaves $20,000 from an estate to someone and then insures that there is nothing in the estate to pay it? lol It's ridiculous...
Hi Lynne, thank you so much for having this page and answering questions -much appreciated. You stated on another blog: "If you have assets that will form part of your estate after you die, such as life insurance policies and RRSPs that name your estate as beneficiary, your Executor will need to get probate. This also applies to any assets held in your name alone, such as a bank account, investment, or expensive personal items (e.g. art collection)." My father passed away July 25, 2013, he made a will 16 days prior leaving everything to my mom - if something should happen to her then it comes to me. They had their house under both their names and all bank accounts and RRSPS etc so there was no problem. My mom is the executor of the will. In the will it states everything that present and future that is my dad's becomes my moms. (My mom has a will as well leaving everything to me). The problem is that my dad worked for nortel - which went into bankruptcy back in I think 2009. Everything owing my dad was greatly reduced and now finally a cheque made out to the estate for $26,000 (which is a minute sum of his life insurance and medical for which my mom was listed as beneficiary (life) has come. She wanted to open an estate account at TD but was told it would likely have to go to probate because it has been 4 years. My mom is 82 - this whole bankruptcy issue has been very stressful for her - after having my dad's pension greatly reduced, having no medical benefits anymore and having the life insurance so drastically reduced she doesn't want to lose more money and time having to go to probate. THe will is crystal clear that she is the sole beneficiary. I am not contesting it and am willing to sign anything verifying that. I just want her to have the money so she can pay bills and do a much needed reno on her heating system. Does it have to go to probate or is there anything that can be done? Thank you for your time.
ReplyDeleteI don't really see what the four years has to do with it. I don't think that's the reason they want the will to go to probate. It probably has more to do with the size of the assets and perhaps the concern that there may be litigation about Nortel.
DeleteThere isn't a law that says you do or you don't have to get probate when it comes to assets other than land. The need for probate is set by the bank or investment house. They decide whether they are prepared to take the risk of releasing money to someone without the indemnity provided by the probate order.
The only alternative to probate that is likely to happen at a bank is you and your mom - as the people who would inherit if the will was not valid - signing an agreement that indemnifies the bank if they pay the funds to your mom (or to an estate account). This is sometimes available when there is only one asset in the estate and that asset would be unreasonably drained by the cost of getting probate. I have my doubts about whether they'd allow this process for $26,000 because I believe they would consider that amount to be too large. But try it for nothing! The indemnity agreement would be provided by the bank and would not cost anything.
If the bank will not follow that procedure (and let's face it, they don't have to) then your mom may be stuck with going through probate. But it isn't the horrible process it is often made out to be.
From what you've said, there really is next to nothing in the estate because you wouldn't include anything that was joint property or anything that directly designated your mom. So it could be that the 26,000 is the only asset and the probate fee would be based on that.
Since it is going to be simple and straightforward, you might consider doing the probate paperwork yourself to save on legal fees. Depending on where you live, you might find a kit to use. I have personally prepared probate kits for Alberta and for Newfoundland. Self-Counsel Press does probate kits for BC and Ontario.
Lynne
Hi
ReplyDeleteMy mom recently passed away and left a will in which she left everything to me (only child) and gave me latitude as to whether I wanted to have a trust for my children (19 and 21) and me. I have decided to hold her RRIF and TFSA (no beneficiary named) in the trust in order to income split with my children and to build a bit of money for them to buy their first homes etc. The issue I have is with the family home. My parents were private and didn't want anyone knowing their business and expressly told me they did not want their wills probated. I have had no trouble with banks or her investment company transferring assets into an "estate of" account. It's all been done according to her wishes. The land registry doesn't want to change the name on the property however without probate. I asked what happens if I don't probate the will and they advised it would be renamed "estate of". I don't have a problem with this as we have another property which will require our principal residence exemption. However at some point when we retire, we may want to have this be our principal residence. This is likely 10 years out. At that point, how will we get the property transferred. I am executor of the will and trustee of her estate. I want to respect their wishes to keep their business private and I also don't want to be paying probate and legal fees given there are no debts in the estate and I am the only heir so there is no one who would contest the will. The property is in Nfld. Thanks!
You can't transfer it without getting probate. If they were so set against probate they shouldn't have owned real estate.
DeleteLynne
Hi,
ReplyDeleteMy dad just passed away and I am the executor of his will. The only asset he had left is the property CAD500K) in which he and my mom thought it has been in join tenancy for the last 40 years. It turns out that my mom's name is never on it. They have a line of credit on this property and my mom's name is on this line of credit as well. This is why they thought they both have their names on it. My lawyer told us that we need to do the probate on this property. However, since they dont have much cash left except this property, she is worried that she will need to sell the house in order to get the cash to pay for the probate tax. I am wondering if we can avoid the probate as the fact that my mom and dad had been married for over 50 years and share everything all their lives. She has thought that she can live in the house for the rest of her life. She is now very devastating after she heard about the probate from the lawyer.
Thanks!!