Dual Wills Can Reduce Probate Fees
While it is not uncommon for the executor of an estate to apply for a certificate of appointment of estate trustee of a will, all cases don’t warrant probate. Certain assets such as personal property including jewellery, cars, paintings, furniture and privately held shares can be transferred to beneficiaries without the necessity of probate. Named beneficiaries on investments or life insurance with a life insurance company do not usually require probate. Other types of property including land, mineral rights and real estate, often do not require probate for the title to be transferred to another person. Probate is also required in situations where the estate is engaged in litigation or third parties such as banks or other financial institutions refuse to transfer title of an asset to a beneficiary.
When engaging in estate planning, the goal is to use strategies that will reduce the value of the deceased’s estate which in turn will reduce the estate administration tax or probate fee. A few common strategies for minimizing probate fees include:
- joint ownership of assets with right of survivorship
- naming beneficiaries for RRSP/RRIF, life insurance and investments held with a life insurance company.
More recently since 1998, the use of dual wills has been approved as a tool to reduce probate fees in Ontario. Other provinces have not approved this practice. Dual will strategy has been approved in the Province of Ontario to reduce probate fees and allow a testator desiring to transfer certain kinds of assets to minimize the delay in processing the estate and to reduce the estate fees at death. Probate fees in Ontario are 1.5% of the estate value in excess of $50,000.00. The probate fee is payable to the Province of Ontario at the time of application for probate. Legal and accounting fees required to document the probate process are in addition to the probate fee and can often cost another 2-3% of the estate. An estate in Ontario with a value of $1 million would have Estate Administration Tax of approximately $14,500.00. Seeking quality advice from legal, accounting and investment professionals is critical. A team approach to your financial planning is the best way to solve your will and estate planning needs.