Most people have heard of an estate being described as “in probate” or are familiar with the expression “the estate is going through probate.” Fewer people know what probate actually entails, which can lead to confusion, worry, and stress. When an estate is in probate, it means that a court is overseeing the legal process of validating the deceased person’s will, paying debts, and distributing assets to beneficiaries.
For experienced help with estate planning or navigating the probate process, reach out to Onyx Law Group. Our BC probate and estate administration lawyers can provide you with effective strategies to protect your wealth—and your beneficiaries’ inheritance—via the estate planning process. We also provide legal advice to beneficiaries and estate trustees, including handling will disputes. Contact us today to schedule a consultation.
Today’s post will provide a practical guide including what probate does, when probate is needed, and the steps in the probate process. We’ll also talk about some of the estate planning options that can be used to bypass probate.
What Does It Mean When an Estate Is in Probate?
Probate is a legal process that validates a deceased person’s will and gives the executor legal authority to act on behalf of the deceased person’s estate. The executor named in the will starts the legal procedure by bringing an application to probate court. In British Columbia, the Supreme Court handles probate applications.
If the probate application is successful, the probate court issues an estate grant (also called a Grant of Probate), which approves the executor as the person with legal authority to “take over” the deceased’s assets and “convert” the ownership of those assets (such as real estate and bank accounts) from the deceased’s name to the name of the estate. The executor can then move forward and administer the estate (deal with estate assets, pay estate debts, and distribute what is left of the estate to beneficiaries named in the will, etc.). More on this below.
So, when an estate is “in probate,” it means that the legal process has been started in probate court. A probated will is one that has been through the legal process and has been recognized as valid by the BC Supreme Court.
Probate with a Will vs. Without a Will
We just discussed the purpose of probate when a person dies leaving a will. When a person dies without a will, the situation is different. The person is said to have “died intestate,” and their estate assets must be distributed to their heirs in accordance with BC intestacy laws. A probate application is often necessary to officially appoint a person, such as the spouse or other family member of the deceased person, to act as the administrator of the estate. An administrator has the same legal authority and responsibilities as an executor.
If the probate application succeeds, the probate court will issue an estate grant called a Grant of Administration. Both types of estate grants (a Grant of Probate and a Grant of Administration) have the same legal effect and vest the applicant with the same legal powers to act on behalf of the deceased’s estate.
When Is Probate Necessary?
Not all wills require probate, and not all intestate estates require probate. Whether probate is required depends largely on the value of the estate, the types of assets involved, and how those assets were owned.
The need for probate is often discovered when a person tries to deal with the deceased’s registered property, such as real property, vehicles, bank accounts, or other financial institution holdings. Third parties (e.g. the Land Title Office, financial institutions, ICBC, the Canada Revenue Agency), have strict rules in place to ensure that a deceased person’s property is not transferred contrary to the law.
A court-certified copy of the estate grant is recognized by third parties and provides assurance that it is a court supervised proceeding. The estate grant tells those third parties that the executor or administrator has the legal authority to act on behalf of the estate (to sell or transfer real property, transfer money and close bank accounts, etc.).
What Assets Are Subject to Probate in Canada?
As we just mentioned, the type of assets owned by the deceased person and how they owned them at the time of their death are two of the main factors that determine whether probate is required. In Canada, assets subject to probate typically include those solely owned by the deceased, such as real estate, bank accounts, investments, and personal property. For example, if a person dies owning a house registered in their name alone, probate is required to deal with the house. The same is true when a person dies owning bank accounts or pension accounts in their sole name, or registered retirement accounts that fail to name a designated beneficiary.
When Is Probate Not Necessary?
Probate is not required for assets that pass outside of the deceased person’s estate. For example, if the deceased person jointly owned their home or bank account with their spouse at the time of their death, that jointly owned property does not form part of their estate. The surviving spouse takes full ownership of the property, without the need for probate, and without paying probate fees or property transfer tax.
Other assets that pass outside of an estate (and thus are not subject to probate) include assets held in trusts and life insurance policies with named beneficiaries. For more information about assets that are not subject to probate, contact an experienced estate lawyer at Onyx Law Group for advice.
There is also an exemption for small estates. If the value of the estate is less than $25,000, a probate application may not be required, but it depends on the type of assets the deceased person owned when they died. Most types of personal property don’t need probate (e.g., household items, personal effects). If they own a vehicle, bank account, or certain types of investments held by a financial institution, a probate application may still be needed for a small estate.
Note that if the value of estate assets does not exceed $25,000 and probate is needed, the Grant of Probate is issued without the estate having to pay probate fees or court fees.
How Probate Works: Step-by-Step Probate Process
The probate process can be very challenging, especially when you are already dealing with the loss of a family member or loved one. It can be difficult to determine if probate is required, and if it is, the thought of navigating probate forms and court rules can feel overwhelming.
The steps discussed below will provide you with an overview of the process, but you don’t have to go through the process alone. A probate lawyer at Onyx Law Group can help you with the probate application and estate administration process, making this difficult time less stressful.
Step 1: Filing a Petition with the Probate Court
The applicant for probate is either the executor named in the will or the person seeking to be appointed as administrator. They must prepare a set of legal documents and sworn affidavits required by BC probate laws, and they must comply with any and all applicable notice requirements and other rules, in order to convince the Supreme Court that an estate grant should be issued.
A typical probate application needs several important documents. Relevant documentation typically includes the originally signed version of the will and codicils, if any, and the death certificate.
Step 2: Notifying Interested Parties
Formal notice of the proposed probate application must be served on certain people before filing the estate grant application. Using the proper form, the estate representative must notify the beneficiaries named in the will and other interested parties (intestate successors, creditors, immediate family members such as the deceased’s spouse, even if they aren’t named in the will, etc.).
Ideally, the notices will go out while the probate application is being prepared and other documents are being gathered. There is a 21-day waiting period that must be observed after the notices are delivered, which means the probate application itself can’t be submitted until at least 21 days after the notices have been sent.
Step 3: Inventory and Appraisal of Estate Assets
The court requires detailed information about all the assets (bank accounts, real estate, investments, etc.), including the fair market value at the date of death, and a detailed list of all of the deceased person’s liabilities (outstanding debts, loans, taxes, etc.). Inventorying should be started as soon as possible, as it can take 4-8 weeks to obtain information from some financial institutions. When it comes to valuing assets such as real property, for example, it may be necessary to hire an appraiser.
Step 4: Submit the Probate Application
The complete probate application package must be filed with the BC probate court. The estate grant will only be issued once the necessary documents have been filed, any issues have been resolved, and probate fees (if any) have been paid.
Step 5: Manage Estate Assets
After the estate grant has been issued, the executor or administrator can start the estate administration process. The personal representative of the estate will get certified copies of the estate grant, which he or she can then provide to third parties as proof of their authority to deal with the deceased’s assets.
The executor can liquidate the deceased’s assets and/or transfer ownership of the deceased’s assets into the name of the estate. The money is pooled together after estate assets have been sold or liquidated and the funds held in trust.
Step 6: Paying Debts and Taxes
The executor or administrator is responsible for locating and notifying creditors and for settling debts and liabilities of the estate (e.g., mortgages, credit cards, household bills, lines of credit, loans). The executor must also prepare income tax returns on behalf of the deceased and their estate, and ensure all taxes are paid.
Step 7: Distributing the Remaining Assets to Beneficiaries
The personal representative must prepare a detailed accounting of receipts and disbursements incurred during the estate administration process. After paying debts, accounting to the beneficiaries, and receiving the clearance certificate from the Canada Revenue Agency, the remaining assets or remaining value in the estate can be distributed to the beneficiaries according to the will (or to the intestate heirs if there was no valid will).
How Much Does Probate Cost?
If probate is necessary, BC probate fees are assessed as follows:
- No probate fee if the value of the estate does not exceed $25,000
- 0.6% on the value of estate assets between $25,000 and $50,000, and
- 1.4% on the value of estate assets exceeding $50,000.
(see the Probate Fee Act, [SBC 1999] CHAPTER 4, s. 2).
In general, the cost to obtain an estate grant typically ranges from $3,500 to $7,500 in legal fees, plus disbursements and taxes, which may add an additional $1,000 to $2,000. The court charges a $200 filing fee, plus $40 for each court-certified copy of the estate grant and Statement of Assets and Liabilities required.
How Long Does Probate Take?
The rough timeline for a typical probate application is about 6 months, though it can take more or less time. Factors that can influence how long probate takes in BC include:
- The complexity of the estate
- The executor/administrator’s availability and experience
- Court processing times
- Whether any unusual issues or disputes arise
- Mistakes in probate forms or missing documents
Once the estate grant has been issued, it can take upwards of a year for the estate to be fully administered and for beneficiaries to receive their inheritance. There is a general rule of thumb in British Columbia that an executor or administrator has one year to gather the estate assets and settle the affairs of the estate. This is known as the “executor’s year.”
Avoiding Probate: Is It Possible?
There are steps you can take in the estate planning process to organize your affairs and simplify your estate, which will in turn reduce the probate tax burden—and possibly bypass probate requirements altogether. Strategies include inter vivos trusts, gifting property during your lifetime, and ensuring designations in life insurance policies and retirement accounts are properly made.
There are legal, practical, and tax implications of implementing strategies to avoid probate that must be understood before making any decisions. If you’re looking for advice on ways to avoid probate and minimize probate fees, we encourage you to reach out to an experienced lawyer to discuss your estate plan.
Need Help from an Experienced Estate Lawyer in British Columbia?
The team of BC estate and probate lawyers at Onyx Law Group regularly assists clients in administering estates and trusts. We ensure the smooth probate process and the proper administration of estates, from start to finish. Whether the situation is contentious or non-contentious, relatively simple or highly complex, a probate attorney can guide you through each stage of the estate administration process. Contact us today to arrange a consultation.
For more information or legal advice concerning probate law or an estate law matter, reach out to Veronica Manski, Probate and Estate Administration Practice Leader.