How to avoid probate in Ontario

How to avoid probate in Ontario

In order to understand how to avoid probate in Ontario, we need to (first and foremost) understand what it is and when it’s required.

Once you understand that, then knowing how to avoid probate in Ontario isn’t all that difficult, especially when you know which steps to take. This article explains in detail how you can do just that.

How to avoid probate in Ontario

What is Probate in Ontario?

Probate is a legal process that is managed by the court, to provide an individual with the authority to act as the executor of a deceased’s estate. An executor can be named in the Will and if there is no Will then an executor can be appointed by the court.

Upon completion of the probate process, the court will issue a Certificate Appointment of Estate Trustee to the executor. The person appointed as an Estate Trustee has the legal authority to deal with the deceased’s estate.

Supreme Court of Canada defined the purpose of probate in the case of Re Eurig Estate [1998] S.C.J. No. 72 

” The purposes of probate is to certifiy that a will and codicils have been duly proved and registered in the court and that the administration of the property of the deceased has been committed by the court to the person named in the will as executor”

So, to put it simply, probate is a legal process which sees the collection and distribution of a deceased individuals assets after his/her demise. Since court costs, lawyer fees, probate taxes, probate fees, and any other associated charges can rack up easily and prove to be very expensive, most people plan their estate in their lifetime in order to avoid probate costs and save time.

Therefore, when we talk about how to avoid probate in Ontario, one of the key things involved is seeing to it that specific assets are not declared as part of the probate estate.

 

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How do I know if probate is needed?

A short answer is “probate is required in nearly all estates in Ontario”. Only in some rare cases, probate can be waived off or avoided through pre-death planning. 

In essence there are two types of assets that do not require probate.  Joint assets with right of survivorship & assets with designated beneficiaries. Therefore, it is the nature of assets that would determine if probate is neeeded  or not?

In some cases probate would be required because of the selection of executor as there may be a dispute about who the executor should be or due to some of the beneficiaries being minors or those living with a disability, and hence, not being able to consent on their own.

If the estate is simply passing from “the first partner to die to their spouse”, then probate may not be needed because there is no estate to probate. 

This is particularly the case when a house is jointly owned by both individuals under a ‘joint tenancy’ having a right of survivorship – and the surviving spouse has been named as the beneficiary of a life insurance policy, pension, TFSA (Tax-Free Savings Accounts) or PRSP (Registered Retirement Savings Plans).

Again, under these circumstances, there is no estate which requires probate.

Now, if the estate in question is being passed from one generation to the next (such as parent-children), then probate is typically needed. Still, some individuals try to avoid probate by utilising beneficiary designations.

While this is entirely possible and may be an effective strategy when it comes to ‘how to avoid probate in Ontario’, it can lead to significant risk of estate disputes.

This practice is generally not recommended and only feasible where all of the estate will be passing to just one adult child.

Another scenario to consider is when the estate includes any property which does not automatically vest in someone, such as the deceased’s spouse, and in this case, probate will most likely be required.

When is probate not required in Ontario?

Although probate will be required for most assets within Ontario, there will be situations when the probate process is not required. In particular, if the deceased did not own any assets there will be no need for probate. In addition, if any of the following situations apply, probate will not always be required:

  • If real estate property is owned outside of Ontario, then probate is to be filed in that jurisdiction. Consult a probate lawyer for more information.
  • If there are Canada Pension Plan (CPP) death benefits.
  • Assets which pass by beneficiary designation, such as jointly owned bank accounts, RRSPs, RRIFs, and TFSAs with a named beneficiary other than the ‘Estate’.
  • With real estate properties where the title of the property is ‘Joint Tenants’, as a transfer can complete without probate if a Survivorship Application is filed.
  • RESP is not required to be probated if both partners are joint subscribers of the plan, such as with spouses or common-law partners. However, If RESP is under a single subscriber’s name, then RESP would need to be probated. This is because RESP is an asset, which until paid to the Beneficiary for school purposes, remains the asset of the estate.
  • Gifts made during the deceased lifetime.
  • Assets which were held in a trust during the deceased lifetime.
  • Any insurance proceeds which are paid to a named beneficiary.

Do you need a lawyer to file for a probate in Ontario?

No. A short answer is you do not need a lawyer to file for a probate application. There is no legal requirement to hire a lawyer to file a probate application in Ontario.

However, it is essential to understand that a probate lawyer would be qualified to draft the probate application as per Ontario’s civil procedure rules. An experienced estate lawyer or a probate lawyer can look after all aspects of a probate application. The chances of rejection of a probate application would be less if you were to retain an estate & probate lawyer who is more experienced in drafting such applications. Your lawyer will be responsible for attending to any court objections and resolving such complaints to the judge’s satisfaction.

A probate lawyer can also advise a tax-efficient way to file probate and guide you to take steps to protect assets and what other measures are needed other than probate application.

Overall, an estate lawyer can get the probate process completed faster than others. A probate lawyer will be your go-to person if you run into a problem when distributing the assets.

What our probate lawyer can do for you?

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Who is Executor of Estate

An executor is a person named in the Will to carry out the deceased’s wishes and directions. The court confirms the appointment of the executor named in the Will by issuing a Certificate of Appointment of Trustee. If there is no will, then the executor effectively is the person who received a Certificate of Appointment of Trustee by the court.

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3. List All of the Assets.

The Estate Act requires a determination of estate assets value to calculate the Estate Administration Tax. It is necessary to prepare a list of all the deceased assets as soon as possible and the valuation of each asset. The valuation of all assets is used to calculate the Estate Administration Tax.

For probate application, you need to base the value on the asset’s at fair market value at the time of death. Ideally, all valuation should be supported by proper documentation such as statements or opinions from an appraiser.

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