How to Reduce Probate Fees
What is probate?
Probate fees are the fees charged by provincial governments to probate your Will when settling your estate. Probating your Will is the process of having your Will authenticated and also of confirming the appointment of an executor for your Will.
The cost of probate
Probate fees are highest in Ontario at $5 per thousand on the first $50,000 of estate value and $15 per thousand on the excess. This compares to other provinces that are typically $3 to $6 per thousand. The consequence is that Ontario’s probate fees for a modest estate of $500,000 amount to $7,000. There is no “spousal credit,” which means assets that were subject to probate fees on the death of the first spouse, will be subject to probate fees again, when the surviving spouse dies.
Fees payable on entire estate
When your Will is probated, fees are applied to the total value of the assets in your estate. There are no deductions for debts other than those against real estate. For example, if you have a mortgage on your home and a bank loan for your business, the value of your home will be reduced by the amount of the mortgage, but the bank loan will not reduce the value of your business.
How to reduce probate fees wisely
There are a number of ways you can reduce probate fees without jeopardizing your assets. The two most popular are:
- Transferring property prior to death
- Transferring assets outside of your estate
Additionally, small business owners may also avoid probate by having two Wills. One Will deals with the ownership of private company shares and loans. The second Will deals with all other assets.
The Will that deals with the private company shares does not need to go through probate since the beneficiaries do not need the Will authenticated. Also, both Wills may be identical in all aspects, except the assets dealt with in the respective Wills.
Next entry: Keep it Simple
Previous entry: Questions You Should Ask Yourself About Succession