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Wednesday, November 20, 2019

Does every will have to go through probate?


The post below originally appeared on this blog in 2010. I wanted to re-post it because the comments section was full to bursting, and I'd like to ensure that readers can comment and ask questions on posts that interest them. I also took the opportunity to update the post a bit.

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Does every will have to go through probate? This is a question that I'm asked over and over again, so I thought I'd mention it here. The short answer to the question is "no", but that doesn't tell the whole story.

Probate is not needed to transfer certain kinds of assets. Specifically, you do not need probate to transfer property that is held in joint names. This is because joint ownership carries with it a right of survivorship of the other owner(s). For example, if a husband and wife own their home jointly and the wife passes away, the husband owns the house by right of survivorship and doesn't need probate to put the title in his name alone. Take note that this rule does not necessarily apply to assets that were jointly owned by the deceased and his or her children.

You also do not need probate to transfer assets that have a named beneficiary. These assets include RRSPs, RRIFs, life insurance policies, pensions and some other assets. When the owner of the asset passes away, you only need to provide a Death Certificate and some information in order to transfer that asset to the person who is named.

Because of these rules, it's quite possible, and in fact is the norm, that a husband and wife can set up their financial affairs using joint property and beneficiary designations so that when one of them dies, the other one does not need to go through probate.

For anyone who is not in that situation, and whose assets are not all going to pass to someone automatically due to joint tenancy or beneficiary designation, the question of whether probate is needed is going to depend at least partly on the type of asset they own.

If you own real estate in your own name alone, or if you own it as a tenant-in-common, your executor will need a Grant of Probate to transfer or sell your property.

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).

If you have a significant amount of money in your estate, your Executor will need probate before he or she can gain access to it.

There are other, less common, reasons why executors must go through probate. For example, the executor might have to finish litigating a lawsuit on behalf of the deceased. There could be a dependent who wants to make a claim against the estate. There could be some question about whether the will itself is valid or some of its terms might need to be clarified. Perhaps the executor wants to start the clock running on the 6-month period for a spouse to make a claim against the estate.

It's sometimes hard to tell right at the beginning of an estate whether or not you need to go through the probate process. Often, an executor will go to the bank where the deceased had an account and ask whether the bank will release the funds without probate. If the account is the only asset in the estate and the bank will release the funds, then the executor will not have to apply for probate. However, it's important to realize that when the bank says that probate is not required, they are only speaking about THEIR requirements. The bankers are not trying to advise you about whether probate is needed for transferring real estate or clarifying the will. They are only saying THEY don't want probate for their purposes. This can be confusing for executors when they are told by the bank that probate isn't needed and suddenly an insurance company or land registry tells them something different.

Sometimes the only way to know for sure whether probate is required is to take the will to an experienced lawyer, together with information about the deceased person and his or her assets, and ask for an opinion.

3 comments:

  1. Thanks Lynne for this reminder and opportunity to comment.

    In my experience, another reason not mentioned, probate will typically be required for the court to appointment an administrator when an executor is not named in the will, regardless of estate asset types or value. Similarly, I anticipate probate will also likely be needed if the named executor is not available or renounces the appointment and the court must assign a replacement.

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    Replies
    1. Okay, point taken. I was talking about valid and complete wills in my post, without having said so. You are right that if a will is otherwise valid but does not make a valid executor appointment, the will cannot be used unless someone applies to the court to be appointed as administrator. In a case like that, the application is not actually for probate. It's for "administration with will annexed".

      Lynne

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  2. Thank you for your reply. My intention was not to be critical, but to further support your usual advice to reader's to ensure their will is complete and properly formatted.

    In my case, as you said, applying for probate was not the initial reason for court involvement, but probate became a consequence to my application to be appointed as estate Administrator. If this will had been properly formatted and complete including appointing an executor, probate may not have been otherwise required.

    Comments on this blog often suggest there is much focus in eliminating the need for probate and saving probate fees. Readers need to keep in mind, probate and associated fees including additional legal costs, may become an unintended consequence when a will is incomplete including appointing an executor and an alternate that is willing and capable of taking on the responsibility when the time comes.

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