How To Minimize Probate Fees

by Tax Guy - Burlington Accountant on May 23, 2008 Print This Post Print This Post

Probate is process where the courts confirm the appointment of the estate trustee or executor.

Probate is a level of assurance to others that the will is valid and that your executor has the authority to act in accordance with your wishes for the handling and distribution of your assets after your death.

Probate fees (also known as estate taxes) are changed by the province where the deceased resided only if the estate goes through the probate process.  Certain provinces may have laws that allow estates of a certain value to bypass the probate process to allow for the quick and efficient settlement of smaller estates.  However, it is important to recognize that probate fees are different from income tax.

When determining the value of the estate for probate purposes, certain items such as assets held joint with the right of ownership passing the surviving partner (known as joint tenancy with the right of survival) or certain assets with named beneficiaries like life insurance or RRSP’s & RRIF’s.  If you do not name beneficiaries on the RRSP’s or RRIF’s they become part of the estate and the value of these accounts will be used to determine the probate fees.

For income tax purposes, the RRSP’s, RRIF’s and other like deferred income accounts are included in income when filing the final tax return for the deceased unless they have a named beneficiary who is a spouse or common-law partner, financially dependent child or grandchild under 18 years of age, or financially dependent mentally or physically infirm child or grandchild of any age.

Tax Planning Considerations

  • Joint accounts will normally pass to the surviving account holder and typically not affected by the terms of the will.
  • Joint tenancy (joint accounts and ownership) may have adverse implications if property is held joint with persons other than your spouse or common law partner.
  • If your RRSP has named beneficiaries and is specifically mentioned in the will and there is conflict between the two, the matter will be settled by the laws of the province in which you reside and may not be settled according to your wishes.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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Hannah November 3, 2010 at 2:14 pm

I am executrix of my mothers estate. I obtained probate on her house with the assessed value not fair market value. It took 2 years to fix the house and sell, the estate has an increase of almost $49,000. I have been advised to amend probate with the house value or amend the total probate value and not the house. Which one is correct? It is in the estate so does the estate claim capital gains and it is on the $49,000. Can I claim the $18,000 I needed to repair plumbing etc and heat and have an alarm for the home. Thank you.

Tax Guy November 3, 2010 at 3:33 pm

The value of the house as at the date of death plus the cost of repairs is the adjusted cost base. The proceeds of the sale, less commissions and legal expenses (related to the sale) less the adjusted cost base is the gross gain or loss.

Half of the gain is the taxable capital gain.

The repair and upgrade cost to make the house sale ready reduce the capital gain.

Gail Grant-McAssey September 20, 2013 at 10:47 am

Is the principal residence of someone that dies, subject to probate in British Columbia?

Tax Guy - Burlington Accountant October 22, 2013 at 5:33 pm

Probate is a provincial court related matter. The principal residence is a federal income tax matter. However, it may or may not be but unfortunately I don’t have an answer on BC probate.

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