Many people are confused by the term “probate”. They likely know it is connected to Wills in some way, but they do not know exactly what it is, and why it is required.
In essence, “probate” refers to the process in which a court formally confirms that a given document is the valid last Will of the deceased, and appoints the person(s) who are to act as the Estate Trustees. Technically, in Ontario “probate” is no longer the proper term for this process. Under the current court rules in Ontario, instead of referring to a “probate application”, the term used now is an “Application for a Certificate of Appointment of Estate Trustee with a Will”. That is a bit of a mouthful, so for purposes of this article, we will continue to refer to this process by the much simpler “probate”.
When a Will goes through probate, it is necessary to obtain valuations of all the Estate assets as of the date of death. A fee is then paid to the court as a percentage of the total value of the Estate. This fee is calculated as 1.5% for the value of the Estate over $50,000.00. Prior to January 1, 2020, there was also a fee of 0.5% on the first $50,000.00 of an Estate, but due to a recent amendment to the relevant regulations, there is now no fee owing on the first $50,000.00 in Estate value.
Probate is generally necessary in order for the Estate Trustees to deal with any bank accounts of the deceased, or to sell real estate owned by the deceased. For this reason, it is essentially mandatory for many Estates. However, there are certain circumstances where probate (and thus probate fees) can be avoided.
This can happen if certain assets pass “outside” of the Estate. For example, assets held jointly, such as joint bank accounts or real estate held in joint tenancy, automatically pass to the other named owner(s) when one of the owners passes away. There is no Will required to deal with this type of property, so there is no probate or probate fees necessary.
Probate can also be avoided if a Will only deals with certain types of assets that can be transferred without the requirement for probate. As an example, if the only assets dealt with in a Will are shares of a private corporation owned and controlled by the deceased, the transfer of these shares can occur without probate. It is for this reason that an individual may choose to make two different Wills, one dealing with assets that must go through probate (often referred to as a “general” or “primary” Will), and one dealing with assets where probate is not required (often referred to as a “limited” or “secondary” Will). This strategy is legally permissible; both Wills can operate at the same time, since they deal with different assets. Only the general/primary Will needs to go through probate, so there are savings on probate fees.
When the Estate Trustees named in the Will apply to the court for probate, they must provide notice to all the beneficiaries named in the Will. At this time, if a beneficiary has concerns with the Will, they may decide to challenge its validity. To do so, a beneficiary must file a Notice of Objection with the court within the appropriate time period. This places a hold on the probate process until the Will challenge can be resolved.
If you have any questions regarding the probate process, or if you need advice or assistance with regard to making or defending against a challenge to a Will, contact Miller Thomson’s estate litigation team.