Important Estate Planning for Tips You and Your Executor

Posted: January 30, 2014 in articles

Important Estate Planning for Tips You & Your Executor

Choose Your Executor Wisely – Candidate should be capable, responsible, local and impartial.  Importantly the Executor you choose needs to outlive you, otherwise their Executor becomes Your Executor.  A Named Executor Can Renounce their Position, be sure your Executor is willing to serve, which means talk to them in advance.

No Will? – Intestate – Not leaving a will, means leaving a big mess! – Otherwise the Courts decide who gets your hard earned Estate.

What is Probate? The process of the Provincial Court approving the presented Will as authentic and valid.  When an executor of a will applies to probate (in other words prove) the will in British Columbia, he/she must pay probate fees before the court will grant probate.  Similarly, a person applying to court to be appointed an administrator of an estate (where there is no will or no executor willing and able to act) is required to pay probate fees before the court will grant letters of administration.

Calculating Probate Fees – In the province of British Columbia – The amount of probate fees is based on the value of the estate assets. There is an initial filing fee of $208. After the application for probate is filed, but before the court registry will release the grant of probate, the executor is required to pay $6 for every $1,000 or part of $1,000 by which the value of the estate exceeds $25,000 up to $50,000, plus $14 for every $1000 or part of $1000 by which the value of the estate exceeds $50,000. Accordingly, for most estates probate fees are a tax approaching 1.4 percent of the value of the estate.

Strategies to Avoid Probate

Joint or Co-Ownership – Can trigger a taxable disposition/capital gains, if you are joint owner with someone other then a spouse (like your kids)  .  While still alive, you are exposed for their misfortunes.  If they divorce the ex can lay claim to half of your asset. If they go bankrupt, the jointly owned asset could be subject to the bankruptcy.  I feel this is poor estate planning and can do more to you and your beneficiaries then good.

Segregated Funds, the Estate Friendly Investment – Segregated Funds are much easier for your Executor, the value is not submitted for probate, thus avoiding probate fees, avoids delays, and remains private and out of public record.  Segregated Funds (Investment funds offered by a Canadian Life Insurance companies), are an excellent tool to avoid probate fees & delays  Available in Money Market Funds, Bond Funds, Dividend Funds, etc… (like other Investment Funds).  They can be held in a variety of accounts: RRSPs, RRIFs, TFSAs, and Non-Registered accounts.  Chartered banks haven’t told you about them because they can’t offer them!  Lawyers often don’t even know about them, and are unlikely to recommend them as they can greatly simplify Estate Planning, and can preclude the need for complex trust structures.

A Probated Will becomes Public Record – Anyone can pay a fee to obtain a probated copy of your Will.   This may create problems, from disgruntled family members wanting a larger piece, too scam artists looking for the those who just received more money then they know what to do with.

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