The administration of probate is done by the Minister of Revenue. Regulations dealing with the ‘prescribed information’ about the deceased have been released. The executor will apply for a ‘Certificate of Appointment of Estate Trustee with a will.’ On receipt of the certificate, the estate executor will create a list of the value of assets owned by the deceased and then make an application for probate. A lawyer is usually involved.
An application for probate will generally be ‘open’ and subject to audit and reassessment for four years from the date it is made. There may be an increased need for valuations of all assets ‘deemed to have been disposed of the day before death.’ Probate fees are $5 per $1,000 for the first $50,000 and $15 per $1,000 for assets in excess of $50,000. Most insurance contracts, (i.e. segregated funds, life insurance policies, and RRSPs, TFSAs) have beneficiary designations, resulting in probate fee savings as they are not included in probate assets.
Why Estate Planning is so Important
When it comes to planning your estate, there are four things you can do for the loved ones you leave behind:
- Have a current and valid will (even if you don’t have a lot of money or property)
- Have a living will
- Have a power of attorney
- Prepare your estate
Administering wills is complex and the rules associated with it change frequently. You need to have someone manage this task for you which can easily be done by using someone with a C.E.A. designation (Certified Executor Advisor) – Jacqui McFarlane is just who you need – give her a call and start a conversation.
Estate Planning: Wills
Basic information: This includes your name, where you live, the date you signed the will, and state that it is your last will (in other words, it replaces any wills you may have had before).
The name of your executor (estate trustee): This is the person you have chosen to carry out your wishes as stated in your will. Choose this person carefully.
Permission for the executor to manage your estate: It may seem redundant but you need to give your permission otherwise the executor will have to get the court’s permission to carry out your wishes – a costly, time consuming and avoidable procedure.
Request your executor to pay all your debts and final costs: Typical expenses are funeral costs, your mortgage, any loan payments and of course, your final income tax.
State who you want to receive what: This is where you distribute your assets (savings, property, investments, cars, furniture, jewelry and so on). You need to name each person (beneficiary) and state exactly what you want them to have. You also need to state what you want to happen to your property should a beneficiary die before you do.
State how you want your under-aged children to be cared for: If you are married you most likely want your spouse to continue to care for the children but what if you both die together? Therefore, name a guardian. Also, you should leave enough money for your children’s future and state at what age you want your children to handle this money on their own.
Demonstrate that you have read and understand your will: Record when and where you signed your will. Have two people not named in your will sign it as witnesses.
Wills can be tricky – there are just so many legal obligations that must be met for a will to be deemed valid that preparing a will is best left to the professionals. If you opt to do your will yourself and make a mistake your family can expect a court battle to ensue. Writing your own will is certainly an option but we would caution against doing this. Besides, legal costs to prepare a will are fairly reasonable, even for complex wills.
And of course, you need to review your will when you undergo important life changes such as when:
- You marry or choose a life partner
- You are raising a family
- You divorce
- You start, buy or sell a business
- You reach mid-life and peak earning years
- You retire or enter your senior years
- Your spouse or life partner dies
Estate Planning: Living Will and Power of Attorney
A living will is a legal document that states your wishes in regards to your medical care should you be unable to express this yourself. For example, you may not want to be put on life support if there is no chance you’ll recover. Don’t make your family guess as to what it is you want, tell them in your living will. A Power of Attorney is another legal document. This one states who you have designated to speak and act on your behalf when you are unable to do so.
Estate Planning: Preparing Your Estate
There will be certain costs associated with your death. Which costs apply to your situation will depend on what you leave in your estate but here are a few to consider:
Income tax: These are the taxes due on your income in the year you die.
Tax on investments: These could be taxes you pay on any gains you have for which you have not paid tax or it could be taxes your beneficiaries pay on certain investments they inherit, or both.
Unpaid debts: All of your debts must be paid before any of your assets can be distributed to your named beneficiaries.
Other final costs: These are generally your funeral expenses and probate fees. Probate is the process of settling your estate and most wills must be probated. Probate fees vary by province. How your estate is calculated makes a big difference on what the probate fees will be.
Legal fees: If there is a dispute over your estate there will be legal fees to settle the case. There will also be legal fees if you don’t have a will.
You should also think about preplanning your funeral – the type of music you want, where you want to be buried, whether you want to be cremated or not, will you donate your body organs, etc. You can also prepay your funeral. This money is put into a trust account or insurance fund until your funeral.
The loved ones you leave behind will likely need some help to deal with your estate. We suggest you visit our Resource library for handy guides. And if you still have questions, talk to Jacqui McFarlane – she’s here to help you with your estate planning decisions.