By Heather Holden : What are probate fees? How do you calculate probate fees? How do you pay and to whom? Do you have to pay? How can you minimize probate fees?
How much you will owe:
Probate is a tax that your executor pays to the provincial government after you die. The probate fee you owe is based on the value of your estate. Estates with a total value under $10,000 do not have to pay probate fees and estates between $25,000 and $50,000 owe about $200 as a flat fee plus $6 for every $1000 of estate value over $10,000.
If your estate is worth more than $50,000, you’ll owe more in probate fees. Your estate will pay about $360 for the first $50,000 plus $14 per $1,000 over that value. Probate fees will be rounded up to the nearest $1,000.
Keep these round numbers in mind: you’ll owe about $7,000 probate on an estate worth $500,000 and about $14,000 on an estate worth $1,000,000.
How to minimize probate:
One way to reduce probate fees is to make full use of joint ownership, but definitely consult a lawyer before you put assets in joint-tenancy so you’re fully aware of other tax consequences.
You could also look into putting assets in trust, but this can be complicated and expensive to set up. This is a good option for larger estates.
The easiest (and most fun!) way to minimize probate fees after you’re gone is to give assets away before you die. Of course, you need to know that you’re not going to need those assets before you die. You also need to do your homework, and make sure you do your homework, regarding income taxes that may be triggered if you give away real estate or stocks for example.
There’s no refund if you overpay, so the executor must be especially careful in calculating probate fees. The process of paying is simple – the executor pays the Provincial Minister of Finance in the form of a certified bank cheque or a cheque from the estate lawyer.
What Executors have to know:
If you find yourself in charge of an estate and the deceased didn’t have a will, you’ll have to ‘apply for probate’ to the BC Supreme Court for an order of ‘Letters of Administration’ – only this will give you authority to act on behalf of the estate.
Now, if you’re officially named as executor in a valid will, you can choose to skip the step of applying for probate because you’ll have full authority as executor already. This may be a good thing if the deceased gave instructions to keep the estate’s assets private.
That said, you may, as executor, be forced to go to the courts to apply for probate in a few situations. These situations include:
• If required by the Land Title Office in order to transfer land
• If required by a bank in order to close accounts and/or transfer to an estate account
• If beneficiaries are challenging the estate
Executors have a difficult and sometimes complicated job to do, and understanding probate fees is just one element. A quick visit to your neighbourhood lawyer or notary public will help you understand probate for your particular situation. Feel free to call me if you need a referral to a good and appropriate legal professional.
Heather Holden, PhD, CIM
Wealth Advisor, ScotiaMcLeod