A few things to know.
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Here are 10 ways to avoid probate in Ontario, Canada:
Joint ownership of assets: Joint ownership of property, such as real estate, bank accounts, and investment accounts, allows the property to pass to the surviving joint owner without going through probate.
Naming beneficiaries: Naming beneficiaries on life insurance policies, RRSPs, RRIFs, and other similar assets, allows these assets to pass directly to the designated beneficiaries without going through probate.
Gifting: Making gifts of assets during your lifetime reduces the value of your estate, which can lower the probate fees payable.
Trusts: Creating a trust can help you transfer assets to your beneficiaries while avoiding probate fees.
Family Law Act: Using the Family Law Act to transfer assets to your spouse or dependants can reduce the value of your estate and lower the probate fees payable.
Small Estate: Estates valued at less than $50,000 may be able to avoid probate altogether.
Life Estate: Creating a life estate can allow you to transfer the property to someone else while retaining the right to use it during your lifetime.
Joint Bank Accounts: Setting up joint bank accounts can allow your co-owner to access the funds without going through probate.
Multiple Wills: Creating multiple wills can allow you to separate your assets, so only the assets included in the primary will require probate.
Revocable Trusts: Using a revocable trust can help you transfer assets to your beneficiaries while avoiding probate fees.
In Ontario, the following assets are not subject to probate tax:
Life insurance policies with a named beneficiary: The proceeds of a life insurance policy pass directly to the named beneficiary and do not form part of the estate.
RRSPs and RRIFs with a named beneficiary: Similar to life insurance policies, the proceeds of registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs) pass directly to the named beneficiary.
Property held in joint tenancy: When property is owned in joint tenancy, the surviving owner automatically becomes the sole owner of the property upon the death of the other owner.
Assets held in a trust: Assets held in a trust are managed by a trustee for the benefit of the trust's beneficiaries, and do not form part of the estate.
Gifts made during the deceased's lifetime: Gifts made by the deceased during their lifetime are not subject to probate tax, as they are no longer part of the deceased's estate.
Real Estate owned outside of Ontario
CPP death benefits
Debts owing by the deceased, such as credit cards, car loans, or lines of credit that are unsecured.
It's important to note that while these assets may not be subject to probate tax, they may still be subject to other taxes, such as income tax or capital gains tax. It's recommended to seek advice from an accountant to ensure all taxes are properly accounted for.
Information current as at May, 2023.
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In Ontario, it is possible to use multiple wills to manage and reduce the amount of probate fees that are payable by an estate. The process involves creating two or more separate wills, with each will dealing with specific assets.
One will, referred to as the "primary will," deals with assets that are subject to probate, such as real estate, bank accounts, and investments. This will is submitted for probate, and the probate fees are paid on the value of the assets included in this will.
The other will, referred to as the "secondary will," deals with assets that are not subject to probate, such as private company shares, assets held in a trust, and personal property. This will does not need to be submitted for probate and therefore, no probate fees are payable on these assets.
Using multiple wills can help reduce the amount of probate fees payable by the estate, as only the assets included in the primary will are subject to probate fees. However, it is important to seek the advice of a lawyer experienced in estate planning to ensure that the use of multiple wills is appropriate for your specific situation and that the wills are properly drafted and executed.
This is general information and does not constitute legal or other professional advice. However, if any of these solutions are of interest to you we can help.
Contact us today for a free consultation and take the first step towards securing your future without breaking the bank. Helping you achieve peace of mind.