| How to Save on Probate Fees |
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Learn some planning tips on how to reduce probate fees for your estate in this short article. In British Columbia, probate fees are charged on the value of your estate. While we don't have estate or death taxes in Canada, probate fees are similar in effect. The rate of probate fees charged by the various provincial governments has been rising in the past few years. In B.C., there is a sliding scale and the top rate is now 1.4% on the value of the estate above $50,000. This may not seem like a lot but it can really add up when you consider that there an no exemptions. For example, if your home in Vancouver is worth $1,000,000 (which is not uncommon now) and you have other investment assets worth $1,000,000 then you have a total estate valued at $2,000,000 which would trigger probate fees of almost $28,000. The only way to avoid probate fees is to remove assets from your estate. This is not that difficult. Here are some common ways to do that. 1. Joint Tenancy Assets that are held in joint tenancy do not form part of your estate and will be transferred automatically to the surviving joint tenants on your death. Houses are commonly held in joint tenancy by spouses. However, it is possible to hold almost any asset in joint tenancy. For example, cars can be owned as joint tenants. Bank accounts and investments can also be held as joint tenants. If you have a spouse and would like to avoid probate fees, it is a good idea to hold as many assets as possible in joint tenancy. Generally, the transfer of assets into joint tenancy with your spouse can be done without tax implications. 2. Life Insurance, RRSP, RRIF and Pension Plans Death benefits payable to a designated beneficiary (not your estate) under insurance policies and registered plans such as RRSPs, RRIFs and employer pension plans will not form part of your estate and will avoid probate fees. Generally you can designate whomever you wish under these types of plans. However, be aware that employer pension plans are usually covered by pension legislation that requires that death benefits be paid to a surviving spouse if there is one. In addition, you should be careful about designating minor children as beneficiaries of these types of plans. If you do not do so properly using a trust, the funds will be payable to the Public Guardian and Trustee and will be administered by them until the child turns 19. Most people do not want this. 3. Trusts Property transferred to a living trust (or inter vivos trust) during the property owner's lifetime will not form part of the estate and will avoid probate fees. Rather, it will be administered by the trustee according to the terms of the trust. 4. Gifts You can gift property to the intended beneficiaries during your lifetime, thus avoiding probate fees. For more information on any of these planning ideas, please contact us. Particularly, there are sometimes important tax consequences that need to be considered. |
