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Probate Reviewed

by Michael A. Mann

Michael A. Mann canvasses some key points in understanding probate and recent developments in the law of probate that could affect you.

It has been said that the only “certainties” in life are death and taxes. In fact, most people argue that the two inevitably go hand in hand and that where there is death, taxes will surely follow. This may be true, and in most cases, the government is indeed “entitled” to a portion of our hard-earned assets when we breathe our last breath; however, the amount that is handed over to the government is, to a greater degree, within our control.

Recently, the Supreme Court of Canada ruled that charging “probate fees” on the distribution of a deceased person’s assets is unconstitutional. As you would expect, the Legislature was not complacent in the wake of this decision. The Ontario government quickly re-named the fee as a government tax – thus legally “justifying” the requirement to pay.

The question of whether or not your estate will have to be “probated” (now referred to as a Certificate of Appointment) is beyond the purview of this article; however, if your will is probated, you should be aware that the probate “tax” paid to the government at such time will be based upon the value of the assets flowing through your estate. If you want your loved ones, and not the government, to inherit as many of your assets as possible, then keep the following two points in mind: (1) It is crucial that you have your affairs in order and that you create the necessary “paper trail” while you are still able to do so (i.e. wills and powers of attorney); and (2) Where practical, keep your assets separate from your estate distribution and thereby avoid paying taxes.

There are two fundamental ways to avoid a distribution of assets through the administration of your will upon death: (1) where it is possible to name a beneficiary of assets (such as with insurance policies, RRSPs and segregated funds), make sure that you do so; and (2) if you own an asset jointly with a person who survives you (such as real property or joint bank accounts), then that asset will be transferred to the survivor without the necessity of paying probate tax.

Before committing to either of these tax-saving actions, please speak with your legal and financial advisors for sound advice which will be personal to your circumstances.

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