Your life is ever-evolving and multi-faceted, and so are your goals. Wiegers Financial & Benefits offers a holistic approach to financial planning to ensure that no matter how your circumstances and goals change and no matter how complex they become, we cover all of the bases. In our latest blog post, we highlight probate strategies for high-net-worth individuals in Canada.
What Is Probate?
Probate is the judicial process where a court confirms a will as the final testament of a deceased individual. Once probated, the executor can access and transfer the deceased’s assets to beneficiaries.
Is Probate Expensive?
Probate can be costly, especially for high-net-worth estates. In Saskatchewan, for instance, the probate fee is $7 per $1,000 of estate value, plus court and other fees. Consulting a lawyer, tax professional, or financial advisor can help minimize these costs effectively.
Are All Assets Included in Probate?
Not all assets go through probate. For example, real estate is subject to probate unless transferred through the right of survivorship. Jointly owned assets, such as real estate or unregistered accounts with no beneficiaries besides a surviving spouse, bypass probate. However, when the surviving spouse passes, these assets will likely go through probate.
Assets exempt from probate include:
- Jointly held assets with right of survivorship
- Life insurance policies with named beneficiaries
- RRSPs, RRIFs, TFSAs, and pensions with named beneficiaries
Shares of a private company might also avoid probate if they are the estate’s sole asset, depending on provincial laws.
Strategies to Reduce or Avoid Probate
- Put Assets in a Trust
Creating an Alter Ego Trust (for individuals) or a Joint Partner Trust (for couples) is a common strategy. These trusts allow you to transfer assets outside a will, avoiding probate fees. Unlike other trusts, transferring assets into these types of trusts does not trigger taxes. Available to individuals aged 65 or older, these trusts ensure that only the trust creators can access income and capital during their lifetimes. Upon their passing, the assets transfer to named beneficiaries, bypassing probate.
Although trusts offer tax advantages and bypass probate, they come with complexities. Once assets are in the trust, you no longer legally own them, which may complicate transfers to family members. Additionally, setting up and managing a trust involves costs and potential challenges.
- Give Away Your Assets
Canada does not tax gifts. By giving away assets during your lifetime, you can avoid probate on these items. Donating to charity is another way to reduce probate while supporting a cause you value. However, avoid giving away too many assets, as unexpected expenses could arise in the future.
Plan with a Professional
A comprehensive financial plan is essential to ensure your financial future aligns with your needs and goals. For high-net-worth Canadians, working with a financial advisor ensures smooth wealth transfer and proper planning for loved ones and causes that matter most. To learn more, please contact us.
- Clifford A. Wiegers, CFP, TEP, CH.F.C., CLU, B.Comm.
Insurance Representative, Wiegers Financial and Insurance Planning Services Ltd.
Although the author is affiliated with a partner firm of Q Wealth, this publication was prepared prior to its affiliation with Q Wealth, it is not an official Q Wealth publication, and the author is not a registrant or research analyst of Q Wealth. The views expressed herein are those of the author alone, and they have not been approved by, and are not necessarily those of, Q Wealth. This publication is for information purposes only, it is not legal, tax, accounting or investment advice and should not be relied as such.
