The typical scenario we are often asked about is this. Elderly parents, maybe in poor health but not always, with a few adult children, and all the adult children are equal beneficiaries in the will. By adding the adult children to title with the parents, the adult children will inherit the property upon the passing of the parents without the need for probate.
Probate is defined below but know that it takes time and is expensive. Probate fees are paid to the provincial government based on the value of the estate. Probate fees are generally 1.4% of the value of the estate, so if there is an estate worth $2,000,000, the probate fees payable to the courts are roughly $28,000.00.
One way to avoid probate is to have all assets in the names or more than one person as Joint Tenants. Joint tenancy allows for the passing of the asset to the surviving party with little cost, and certainly no probate fees.
While the transferring of property into joint tenancy offers obvious benefits, including:
There are several reasons why caution should be exercised, including:
However, a declaration of trust will help to reduce some of the above negative consequences.
One of the key considerations is the cost of probate versus the cost of transferring all assets into joint tenancy. An analysis should be done to determine the cost savings and then one can choose if it is worth the risk.
An executor is someone you appoint in your will to be responsible for carrying out your wishes and instructions in your will. The executor can be one person or several people.
An executor is responsible for administering your estate and carrying out your wishes and your directions as stated in your will.
The basic duties of the executor or an administrator (if there is no will) include the following:
While having a will, power of attorney and a representation agreement are important, they do not eliminate the need for probate, with the associated probate fees.
Probate is the process whereby the B.C. Supreme Court reviews the will and confirms that it is valid and binding. The B.C. Supreme Court will also review the application for a representation grant and once approved, will confirm the authority of the executor if there is a will or appoint the administrator if there is no will.
A grant of probate or grant of administration is often required to transfer property, bank accounts and investment accounts to the executor or administrator and then to the beneficiaries. However, if all assets were jointly owned then probate may not be necessary.
Probate also involves the payment of probate fees, which are based on a percentage of the value of your estate assets.
Probate fees are based on a percentage of the value of one’s estate assets. In B.C. probate fees are essentially 1.4%, so on an estate worth $1,000,000, probate fees alone are approximately $14,000.
The basic application fee to commence an application for the grant is $200. In addition, if the value of the estate exceeds $25,000 the following fees are payable:
Basically, the guiding rule to determine the requirement for obtaining a grant of probate is to ascertain whether the holders of assets (for example, a bank) require a copy of the grant in order to transfer the asset.
However, even with small estates, an executor should still apply for probate if the estate will be a party to a lawsuit (perhaps brought on by family or creditors).
If there is a will, then usually the first named executor will apply. If the first executor is unable or unwilling to apply, then the alternate executor will apply. If there is no will, then the Wills, Estates and Succession Act determines the priority of those who may apply (usually a beneficiary with the consent of the beneficiaries representing a majority interest).
In our experience probate applications can take from a couple of months to a year depending on the size of the estate, the location of various assets, the number of beneficiaries and where they live, how long third parties take to respond to requests for information and how busy the probate registry is at the time of filing an application. However, the entire estate administration process can take up to two years, or more, to be completed.
Any person listed in the will as an executor, a beneficiary, and those who would have been entitled as beneficiaries if there was no will, are all entitled to see the will.
In British Columbia executors are entitled to compensation for their care, pains, trouble and time spent. Under the B.C. Trustee Act they are entitled to a maximum compensation of 5% of the gross aggregate value of the Estate. The compensation must be reasonable, agreed upon by the beneficiaries and for a simple estate is usually about 2-2.5%.
The Act also provides for a yearly fee for the care and management of the assets to a maximum of .4%.