“Probate” is a term that most people have heard but don’t know much about until they’ve had to go through the process themselves. If you are lucky enough not to have had to deal with administering an estate, learning some basics about probate now can save you and your family money, time, and uncertainty in the future.
Starting with this post and continuing in two future articles, we’ll cover:
- What do I do when someone passes away with a Will?
- What happens when someone passes away without a Will?
What is Probate?
Very broadly, probate is the process of obtaining approval from the court to act on behalf of a person who has passed away. When a person passes away, they may have had assets, business interests, or even litigation in progress. Now that they are no longer able to make decisions or sign documents, someone must be appointed as a representative in their place.
Successfully going through probate results in the court appointing an “Estate Trustee.” This person represents the estate, and the court grants them the authority to sign documents and do things on behalf of the deceased person.
What’s Involved in the Probate Process?
Probate can be a time-consuming and complicated process. An individual can do the work independently, without legal assistance. Still, without being familiar with the process, it will most likely take longer than necessary and may not be done correctly. There are many distinct estate documents, and it is up to the person applying to determine which you will require in each particular circumstance. If the application is incomplete or incorrect, the court office may not advise you for several months of the problem.
When someone passes away with a will, obtaining probate is more predictable and has fewer steps involved; when someone passes on without a will, probate is almost always more costly, more complicated, and more delayed. In either case, having a lawyer assist you with preparing the probate application and guiding you through the process will make things significantly easier at a difficult time.
The timeline for going through probate varies depending on the court’s location where you must file the application. Recently, in Ontario, it has generally taken at least three months between submitting a complete probate application and receipt of the Certificate of Appointment of Estate Trustee.
Steps in Obtaining Probate
1. Compile the probate application, which includes:
- Providing copies of all relevant documents, including a death certificate and any valid will
- Preparing all necessary documents, such as:
- an application for appointment as estate trustee
- a notice of the application to all parties entitled to notice
- any required affidavits
- a draft certificate appointing the estate trustee
- Paying the “Estate Administration Tax” (otherwise known as “probate fees”).
- The amount of tax owed is based on the value of the estate that is subject to probate. As not all estate assets must go through probate, you may not need to pay Estate Administration Tax on the value of everything.
2. Submit the complete probate application to the appropriate court.
3. Obtain a Certificate of Appointment of Estate Trustee.
- Upon receipt of a complete application, the court will grant this certificate, which names an Estate Trustee who has authority to deal with the deceased person’s assets.
Is Probate Always Required?
The short answer is: no. The legal answer is: it depends.
Upon a person’s death, they may have had several assets that they owned in various ways. There are three initial questions to answer for each asset of a deceased person to determine whether probate may be necessary:
What is the Nature of the Asset?
The nature of the asset, or what the asset is, will determine how you can deal with it. Personal property like clothing and jewellery can be passed on to beneficiaries without the need for a court-appointed estate trustee (in many cases). However, it may not be possible to deal with other assets without providing proof to a third party that you are permitted to do so. For example:
- Bank accounts and investments held with financial institutions may be frozen when the account holder has died. They may require probate for an estate trustee to access the accounts.
- Real estate transactions require the signature of each party on the title. If one owner is deceased, you will need to file proper records with the Land Registry Office.
- If there are vehicles, you will need to transfer ownership of these through the Ministry of Transportation to continue to operate them legally.
How was the Asset Owned?
How the deceased person owned the asset is also necessary to find out. Was it in their name only or held with others? For example, if they owned real estate, they may have owned it exclusively or jointly with another person/other people. To complicate things further, when multiple people own real estate together, it can be in two different legal structures – “joint ownership” or “tenants in common.” Both have different effects in the event of a person’s death.
Some jointly-owned assets will pass automatically to any other living owner(s), although this is not always the case. Assets that were solely owned would likely require probate to pass them to beneficiaries (subject to the other two questions).
Was There a Beneficiary Specified?
Certain assets, most often insurance policies and registered plans like RRSPs, allow the owner to specify a beneficiary. These assets can be transferred directly to the beneficiary without the need for probate. They are said to pass “outside the will” since they can go directly to the beneficiaries, and these beneficiaries may be different from the ones named in the will. For assets that specify beneficiaries, probate is not usually required. Another benefit is that Estate Administration Tax is not payable on assets that pass outside the will.
Probate can be a costly and complicated process, but it is not always required. Seeking legal advice will help you determine what your obligations are and help you navigate through them. If you are not dealing with an estate at this time, you can take this opportunity to make things easier for your loved ones in the future. Contact us to review your options and start creating that smoother process. Coping with the death of a loved one can be incredibly stressful – don’t add unnecessary complications to yourself or your family.