Reduce the Cost of Probate

In many cases, probate is an unavoidable reality upon death. And given that probate all too often cannot be avoided, it is best to look at efficiencies that can reduce the cost arising from probate, together with expediting the process and curtailing the frustration for all persons involved.

And though the probate charge payable to the court in certain jurisdictions (provinces) are not necessarily significant, it is the charges payable to lawyers, accountants and other professionals that can be quite significant where appropriate steps are not undertaken in advance of one’s death, and thereafter by the executor in the administration of the estate in furtherance of the decedent’s last will & testament.

Reducing the cost surrounding probate begins with undertaking effective estate planning, including the preparation of the optimal last will & testament prior to one’s death, and following death, the executor needs to take prompt and concise action, with serious consideration being given to the engagement of the appropriate professionals, and sufficient recognition of those factors that can serious increase the costs associated with the probate process, including where possible avoiding or mitigating their potential impact.

A. Effective Estate Planning & Concise Will (Before Death):

Have a Valid and Clear Will: This is the cornerstone of a smoother probate process. A well-drafted will that clearly outlines your wishes, names an executor (and alternates), and details beneficiaries can prevent many delays and disputes.

Keep Your Will Updated: Review and update your will after significant life events (marriage, divorce, birth of children, death of a beneficiary or executor).

Ensure Your Will Includes Features to Expedite Processing: In certain jurisdictions, there are features to the will and other documents that can help expedite the processing of probate, while their absence will require additional work to be undertaken by your executor (with those features oftentimes being most effective when coupled with probate being undertaken by a lawyer).

Organize Your Assets and Documents: Maintain a detailed list of your assets (bank accounts, investments, properties, etc.) and liabilities (debts, mortgages). Keep important documents like your will, property deeds, insurance policies, and financial statements (together with contact information for important individuals and institutions) in a safe, accessible place and inform your executor of their location.

Name Beneficiaries Directly: For assets like RRSPs, TFSAs, life insurance policies, and pensions, you can name beneficiaries directly. These assets can then bypass the probate process and go directly to the named individuals.

Joint Ownership: Assets owned jointly with a right of survivorship (e.g., a joint bank account or a home registered as joint tenants) typically pass directly to the surviving owner, avoiding probate for that specific asset. However, seek legal advice on the implications of joint ownership, such as the risks emanating from losing control of the asset or exposing it to the other joint owner's creditors.

Gifting while Alive: B gifting assets to beneficiaries while you are alive, those assets are no longer part of your estate and are not subject to the probate process upon your death. However, here too tax and legal advice is recommended, as there are potential income tax implications for the person making the gift, as a "deemed disposition" may occur at fair market value.

Strategies using Trusts: In some situations, placing assets in a trust (e.g., a living trust or an alter ego trust for those 65 and older in Canada) can allow those assets to bypass probate. This is a more complex strategy that requires professional legal and financial advice, and invariably involves front-end (and ongoing) costs.

B. Prompt & Concise Action by the Executor (After Death):

Act Promptly: The executor should begin the probate process as soon as reasonably possible. In Alberta, serious consideration should be given to retaining an experienced probate lawyer that can file the probate application through the Court’s online filing system that is only available to lawyers and law firms.

Gather All Necessary Documents Expeditiously: This includes the original will, death certificate, statements for all assets and debts as of the date of death, and contact information for all beneficiaries. If there is additional documents or signatures required, especially where a lawyer can expedite the process, it is important to promptly get that completed.

File the Probate Application Accurately: In Alberta, specific Grant Application forms must be completed and filed with the Surrogate Division of the Court of King's Bench. Errors or omissions in the application can lead to significant delays. Alberta lawyers can use an online filing system that dramatically reduces the processing time for most probate applications.

Notify All Parties Promptly: Inform heirs, beneficiaries, and creditors as required by law and in a timely manner. Clear and regular communication can prevent misunderstandings and potential disputes.

Manage Estate Assets and Debts Efficiently: Secure and manage the deceased's assets. Identify and pay all legitimate debts and taxes of the estate, including the final income tax return and any applicable estate taxes. In Canada, obtaining a Clearance Certificate from Revenue Canada before distributing all estate assets is crucial to avoid personal liability for the executor.

Address Disputes Proactively: If disagreements arise among beneficiaries, address them promptly and consider mediation if necessary. Legal disputes can severely prolong the probate process.

C. Engagement of Appropriate Professionals:

Probate Lawyer: An experienced probate lawyer in the applicable jurisdiction (province) can provide invaluable assistance in preparing and filing the probate application correctly, navigating legal complexities, and ensuring all steps are followed properly. This can prevent costly mistakes and delays. Also, where the jurisdiction (province) allows lawyers to file probate documents online, this can drastically reduce the processing time for probate.

Accountant: An accountant can assist with the preparation of the final tax returns and any estate tax filings, ensuring compliance and accuracy.

Financial Representatives: From representatives of the bank, insurance company, corporation or partnership within which the decedent held an account, policy or other financial interest, it is important that they are engaged early on to determine their requirements for effectuate the transference of the decedent’s interests into the estate, together with the information needed to complete the probate application. Trying to circumvent probate, while the bank or other financial institutions requires a Court-issued grant of probate, will only delay the process and double the work. Meanwhile, specifics as to the decedent’s shareholding in a privately-held corporation or limited partnership stake a real estate project, can take some time to determine to value and subsequently liquidate.

D. What Scenarios Increase Costs (and How to Avoid or Mitigate):

No Will (Intestacy): Dying without a will significantly complicates and increase the time and cost of probate, as the court will have to appoint an administrator, and assets are distributed according to the intestacy laws of the jurisdiction (province).

Poorly Drafted or Unclear Will: Ambiguities or errors in a will can lead to disputes and require court interpretation.

Difficulty Locating Beneficiaries: If beneficiaries are hard to find, this will delay the process.

Disputes Among Beneficiaries or Challenges to the Will: These can prove extremely costly such that ascertaining and preparing for potentially contentious situations needs to be proactively addressed and appropriately planning with the lawyer working on the estate plan.

Complex Assets: Estates with numerous properties, business interests, or assets in multiple jurisdictions can take longer to administer and invariably benefit from advanced planning.

Outstanding Debts or Tax Issues: Dealing with them in advance of one’s death is optimal, however, where this is not possible working with the right professionals and having the pertinent materials is a priority.

Errors in Probate Application: Incomplete or incorrect paperwork will lead to rejection and resubmission, causing delays.

By taking proactive steps in estate planning and ensuring efficient administration by the executor, the cost of probate can be significantly curtailed, together with expediting the process and reducing frustration, even where there are problems and/or complexities that need to be addressed.

For professional legal experience with respect to drafting wills and other estate planning documents, and undertaking the probate process, contact our law firm today for a confidential initial consultation at Chris@NeufeldLegal.com or 403-400-4092.

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