What is probate? A quick overview

Probate is a term you'll hear when talking about estate planning, but what exactly is it?

Probate plays a crucial role in the administration of a deceased person's estate. In this article, we'll give a quick overview that covers what it is, its significance, how it works, and a few misconceptions.

What is probate?

Probate is the legal process through which a deceased person's will is verified by the court. It ensures that the will is authentic, and that the executor named in the will has the legal authority to administer the estate.

Oversimplified - it determines if the will is good and designates who will carry it out.

Why is probate important?

Probate serves a number of key purposes.

Validation of the will The court verifies that the will is legitimate, was created according to legal standards, and that no other wills exist that might contest it.

Executor authorization The executor is given the legal authority to act on behalf of the estate, which includes things like managing assets, paying debts, and distributing inheritance.

Protection for beneficiaries Probate provides legal assurance that the executor is distributing assets fairly and according to the deceased’s wishes.

Debt settlement It ensures that all debts and taxes are paid before any assets are distributed to the beneficiaries.

What is the probate process?

The process may vary depending on your province or territory, but this will provide a general overview.

Filing the application The executor must file an application with a probate court, and include the original will and numerous other documents, that may include a death certificate, inventory of the deceased’s assets and liabilities, land titles, trust agreements, vehicle registrations, and so on.

Notice to beneficiaries and creditors The executor must notify all beneficiaries named in the will and any potential creditors of the probate application, and disputes can be raised by the aforementioned at this time as well.

Court review The court reviews the application, and if everything is in order, issues a Grant of Probate, officially recognizing the will’s validity and the executor’s authority.

Asset management Once probate is granted, the executor can access the deceased’s bank accounts, transfer property, and manage other assets.

Debt and tax payments The executor is responsible for paying any outstanding debts and taxes from the estate.

Distribution of assets After debts and taxes are settled, the executor distributes the remaining assets to the beneficiaries according to the will*.

*If there is no will, the court will appoint an administrator to handle the estate.

Is there any way to avoid probate?

There are a few strategies that can help minimize its necessity.

Joint ownership Holding property jointly can help bypass the need for probate, as the property automatically transfers to the surviving owner.

Named beneficiaries Designating beneficiaries for accounts such as RRSPs, TFSAs, and life insurance policies can help avoid probate.

Living trusts Establishing a living trust can allow assets to be transferred without going through probate.

Some common misconceptions about probate

Probate is always required Not always. If the deceased’s assets are jointly held (bank accounts, property) or have designated beneficiaries (life insurance policies, RRSPs, TFSAs), probate may not be necessary.

Probate is expensive While probate can involve costs and take time, the complexity and duration depend on the estate’s size and the clarity of the will. Clear and well-drafted wills can significantly streamline the process and reduce both time, and cost.

Only big estates need probate Probate can be required regardless of the estate’s size, especially if there are disputes among beneficiaries or if the assets are solely in the deceased’s name.

Conclusion

Probate is a critical process in estate administration, ensuring that a deceased person’s wishes are honored and that their assets are distributed fairly and legally. Understanding the probate process can help you plan your estate more effectively, and provide peace of mind for your loved ones.

At Avail CPA, we are committed to helping you navigate the complexities of probate and estate planning to help ensure that your estate is managed smoothly and according to your wishes.

Questions?

If you have any questions about this article, probate, or any of our other related services, please contact one of our Estate Planning experts, or complete the contact form below.