Breakthrough Wills and Estate Planning Answers

#9 Can You Dodge Probate?

Probate need not be perplexing.

Probate comes from the Latin verb probare, to prove. As for what probate is, that’s one of the most difficult questions I must answer when a member of the media interviews me. There is no sound bite answer that covers the essentials of probate, but I will do that for you.

Many people have problems understanding probate. Perhaps they have heard of many horror stories and they have an irrational block on the word.

The first thing to note is that probate tax or provincial estate administration taxes (EAT) are not the biggest problem to avoid by planning.

Income tax rates are much more important. For example, probate tax on every $100,000 in Ontario is roughly $750.

Your income tax liability on that amount, however, may be much higher depending on your rate of tax.

What this means is the income tax bill is higher than a payment for probate taxes.

Now do you see why you should spend more of your time trying to reduce income taxes?

The Probate Process

That said, it’s still worth examining probate issues further.

Probate is a process as well as a tax. Let’s look at the process first.

Probate has been around for a long, long time. The government sets up probate or estate courts. This is the legal system that supervises and controls the transfer of your stuff when you’re gone. These courts certify who speaks for your estate legally and who will share in your assets.

This is important. If you have no will, the government has rules that click in to decide who takes home the pie. In such a case, the government decides how to divide your money without exception and without your say.

Institutions will not transfer your estate assets to anyone including executors until a court confirms who is entitled to control the estate. Probate is the process that allows a judge to issue court documents once called letters probate. Ontario now uses terms like estate trustee without a will.

If you do not leave a valid will, the probate process is slower and costlier. The law allows relatives to apply to be your estate’s administrators. They can get court certificates of appointment or administration as estate trustees without a will.

Missed my earlier posts? Read #7 Do-It-Yourself Dangers or #8 Do-It-Yourself Quiz now.

Do you have probate questions? Need help as an executor but not sure what to do? I can help you. Contact me for a meeting.

I am an Ontario Certified Specialist in Estates and Trusts Law.