To Probate or not to Probate

One of the most common questions that arises in the course of discussion with clients about wills and estates is “do I need to apply for probate?” Often an individual finds him or herself as the executor of the will of a recently deceased friend or family member and is unsure which avenue of estate administration to follow: Probate or not probate? Whether or not probate is required will depend on what assets the deceased held and will either be a function or law or policy.

“Probate” refers to the application an executor makes to the Court to formally prove the validity of a will. Once the will has been proven, the Court issues a “grant of probate”. Applying for probate involves filing an application with the Court, along with various affidavits that confirm, amongst other things, that the will is indeed the final, valid will of the deceased, that the beneficiaries and others have been notified, and the value of the deceased’s estate. Based on the value of the estate, probate fees are paid to the Court in order to receive the grant of probate. (The amount of fees is set out in the Probate Fee Act.) The larger the estate, the higher the probate fees. Executors and beneficiaries like to avoid probate and keep more of the value of the estate in the pockets of the beneficiaries.

Probate, however, is not inevitable and where it is avoided so are those pesky probate fees and much of the formality surrounding administering the estate. Whether or not one must apply for probate will depend on what the deceased owned and how those possessions have been bequeathed.

The first question to be asked is about property (by which I mean “real property”, real estate, or land). Did the deceased own any? If so, how was it owned? If property passes through the will, probate is required. Period. If the deceased owned a house in his own name alone and left his estate to his children through his will, then the house passes through the will and you must apply for probate. If, however, the deceased owned a house in joint tenancy with his daughter, then the house passes to the daughter by the magic of joint tenancy and not through the will. (All that would be required is that appropriate forms are filed with the Land Title Office to effect the transfer.)

Outside of ownership of real property where the requirement for probate is fairly rigid, other possessions of the deceased do not come with such rules. None of the deceased’s personal possessions require probate: not the jewelry, the vintage comics, or collection of pre-embargo Cuban cigars. Such things can be distributed probate free.

Also probate free are things like insurance policies or RRSPs which provide for a beneficiary to receive the value of the policy upon the death of the policy holder; in these cases, the policy passes to the named beneficiary without the need for probate. Typically, just a certified copy of the death certificate is required.

Where it gets more complicated is with items such as cars, bank accounts, and securities.

If the deceased owned a vehicle in joint tenancy with another individual, probate is not required, as the vehicle passes outside the will. If the vehicle was owned by the deceased alone and the overall value of the estate is relatively small (under $25,000), the vehicle may be able to be transferred without probate, while if the estate is larger, probate will usually be required. ICBC has policies regarding estate transfers of vehicles and what is required; once the assets and value of the estate are known, whether probate of a vehicle is required can be determined by contacting ICBC.

If the deceased had a joint bank account with another person, that other person assumes ownership of the account outside of the will and probate is not required. If the deceased’s bank accounts were not held jointly, then whether or not probate is required will depend on the amount of money in the account and the policies of that particular bank. Some banks will require probate to release any amount of funds in the account, while others will only require probate if the amount in the account is over a certain threshold (such as $25,000 or $50,000). This depends on the bank. If they require probate to release the funds, then you will likely have to apply for probate. The same goes for term deposits held at a particular bank and for securities (stocks and bonds) – check with the particular financial institution to determine their requirements.

Ultimately, whether probate is required will depend on what the deceased owned, how he or she owned it, and what the rules of the relevant institutions are. Accordingly, it may not be possible to determine if probate is required until the executor or his or her agent has made some inquiries into the nature of the estate itself.

One lesson that can be taken away from this is that if paying probate fees is especially distasteful to you or if you do not want to saddle your executor with the added burden of applying for probate, it is possible to structure one’s affairs so that probate can be avoided on your death (but that is another topic for another time). For the time being, if you find yourself as an executor of an estate, before you decide whether you must or should probate the estate, you need to carry out the required inquiries and seek assistance as required.

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