What exactly is probate and do I need it?

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Vault doorIn Ontario, “probate” is legally known as Estate Administration With (or Without) a Will. It is, essentially, proof by the courts that the will you are using is valid and is the last one that was signed, or, if there is no will, that you are the right person to be taking care of the estate. In order to get probate, you submit an application to the court (with the will if there is one), pay the tax of approximately 1.5% of the value of the estate, and wait for the order to be issued.

The first question though is: do you even need probate?

You need probate if the estate assets are controlled by a third party who wants it. A house (in most situations), a large bank or investment account, stocks or bonds: these are all assets that are controlled by third parties who will want to know that they are releasing them to the right person. The last thing a bank wants to do is release a $100,000 bank account to you, only to find out a week later that there was another will done two weeks later with a different executor. If the estate assets are not easily accessible, you will have to get probate, which means paying that tax.

Many people do whatever it takes in order to avoid probate, but this is not always the right decision. The best thing that you can do is sit down with an accountant and figure out whether what you are doing to avoid probate will cost you more down the road in capital gains or income taxes. We all have to pay tax; the important thing to remember is that you can choose to pay the tax that is lowest. Sometimes, that is probate tax.

If you want to know whether you need probate, having an initial consultation with an estates lawyer can usually give you that answer quickly.

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