The article “Can I Avoid Probate?” was originally published on MoneySense on September 15, 2015.

Spike is settling an estate and trying to determine which assets are subject to probate

Q: Do I have to probate cash if that is all there is in an estate? The estimate is $90,000 in a bank. Do I have to probate the estimated $120,000 in Canadian stocks? There are three siblings that will all sign off on a decision according to the only will ever prepared (equal split).


A: Benjamin Franklin once said: “In this world, nothing can be said to be certain, except death and taxes.” Probate brings these two certainties together, as it is essentially a death tax. Technically, it is an administrative court procedure to validate a will and each province levies different flat or percentage rate ranging from a low of $0 in Quebec (for notarial wills) to 1.5% in Ontario.

Probate is derived from the Latin word “probare,” which means “to prove.” It is generally required in the event that someone dies intestate, with no will, or if required by third parties–namely financial institutions or lawyers–to “prove” the eligibility to transfer certain assets. Each province has different legislation about how to arrive at the value of one’s estate for probate purposes and the province in which the assets are located designates the calculation of the probate fees ultimately payable.

Cash and stocks are generally required to be included in the calculation of a taxable estate for probate purposes, Spike, unless they were held in a TFSA or RRSP/RRIF account with a named beneficiary. If the cash and stocks were in registered accounts payable to the estate or if they were held in non-registered accounts, the $210,000 value of the estate in question is likely all subject to probate.

It is possible that the financial institutions holding the cash and stocks will release the funds to you as executor or the three siblings as beneficiaries, but it is unlikely. Without a probated will that has been validated by the provincial court, they are putting themselves on the hook for $210,000 if the will is invalid or if the siblings are not in fact the equal beneficiaries of the entire estate. That said, each financial institution has different internal guidelines.

Probate is not so much for the beneficiaries as it is for financial institutions and the province, so the fact that the siblings will sign off is of little consolation.

Although it doesn’t seem to be the case here, assets that are held jointly will typically pass to the survivor and avoid probate altogether.

Another consideration is that if the deceased was married at the time of their death–to a step-parent, for example–that person may be entitled to an election under the Family Law Act to receive an equalization payment and make a potential claim against the estate.

Whether you need to apply for probate or not, Spike, before you distribute an estate among beneficiaries, you should determine the tax implications of your loved one’s death. For example, if the stocks have gone up in value, there may have been a capital gain on death that will create a tax liability on the final tax return. And if any of the assets were registered assets, there may be a tax liability on the de-registration of the RRSP or RRIF, for example. So be careful about distributing all of the assets of an estate before assessing what tax owing might result. The executor can otherwise be held personally liable for the payment of tax to the Canada Revenue Agency.

Avoiding or reducing probate is generally a proactive strategy before one dies rather than a reactive one after the fact, so at this point, Spike, you’re likely going to have to file for probate in order to distribute this estate to the beneficiaries.

Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto. He does not sell any financial products whatsoever.