When dealing with someone’s estate after they are deceased, there is a process called probate which must happen before assets may be transferred to that person’s beneficiaries. This helps to ensure that the relative taxes are first paid out accordingly.
The executor or administrator of the estate ensures that debts and taxes are paid off before helping facilitate the transfer of remaining assets to the beneficiaries.
When is probate required?
Not all assets are required to go through probate. For example, life insurance payouts and money held in segregated funds may pass directly to the beneficiaries without having to go through probate.
Generally, probate will only be required for assets where an estate certificate is necessary before the assets may be collected, liquidated, distributed or transferred.
For some types of assets, it will depend on how they are held or how the beneficiaries have been recorded as to whether these assets pass through probate or not. For example, in the case of life insurance, if a beneficiary has been named on the policy, then the money can go directly to that beneficiary. But if the beneficiary is not named, or if they are named somewhere else instead (such as in a will), then the policy is paid out to the estate and may be subject to probate.
When determining probate, the size of the estate is also important. For smaller estates (those which are under $150,000), you may apply for probate under the small estate court process. Larger estates require a more extensive application for probate.
What assets are subject to probate?
In Ontario, the following assets may trigger probate:
- Real estate located in Ontario.
- Bank accounts (both domestic and foreign)
- Property of the deceased in another person’s name.
- Other property tangible and intangible property, insurance (if left to the estate) and business interests.
What assets are not subject to probate?
In Ontario, the following assets are not subject to probate:
- Assets held jointly with a living spouse.
- Assets with a named beneficiary such as a TFSA or RRSP.
- Assets where there is a right of survivorship such as the matrimonial home.
- Real estate not located in Ontario
- Unsecured debts owned by the deceased.
How can you minimize probate?
Many people seek to minimize the probate on their own estates because they know that by doing so, there will be less financial strain on their loved ones in the event of their death.
There are many ways to minimize probate or even avoid it altogether. This can be a complex matter however, so you should always seek out professional legal and tax advisors before implementing any of these.
Some tools which may be used to minimize probate include trusts, joint tenancies, certain investment and insurance products and multiple wills.
Contact Minhas Lawyers today
If you are the executor of an estate and require help navigating through probate or if you would like to learn how you can minimize probate on your own assets, call us today to book a consultation with our estates lawyer.
Minhas Lawyers LLP is a multi-practice law firm based in Mississauga. We advise and represent clients across various segments and practice areas.
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