The Benefits of Avoiding Probate
Probate can help ensure a fair distribution of your assets, but it can be time-consuming, expensive, and could compromise your family’s privacy.
What Is Probate?
Probate is the process of proving that a will is in fact the last will and there are no challenges to it, and then adjudicating any claims against the will under court supervision. Once all creditor claims have been paid the remaining assets are distributed as specified in the will.
The Benefits of Avoiding Probate
Probate can be costly, including court costs, executor fees, legal fees, accounting fees, and even asset appraisal fees. By avoiding probate, your estate can save a significant amount of money that would otherwise be spent covering these costs.
Probate in Ontario requires an estate certificate, which triggers “Estate Administration Tax” (EAT). EAT is applied at 1.5% of the value of your estate over $50,000. To avoid being liable for EAT, you would have to avoid probate.
Probate can last months, and in some cases years. Creditors must be vetted, and each of your assets must be assessed and valued, sorted, and then distributed — as approved by the court. The larger the estate and the greater the number of your will’s beneficiaries, the longer the process. This delay in asset distribution may cause financial hardship for surviving family members who rely on those assets for support. By implementing strategies to bypass the probate process, your beneficiaries can receive their inheritances more promptly.
Details of probate court are on the public record. This means that information about your estate is available to the public at any time. Avoiding probate will ensure the contents of your estate remain private within the circle of your beneficiaries.
Reducing Family Disputes and Stress
Probate can be a long, stressful process often requiring your beneficiaries to attend court. The process may result in family disagreements and disputes. A long probate process may even give unhappy family members time to argue and even initiate litigation, which can further delay the process and add significantly to expenses.
How To Avoid Probate
The most common way to avoid probate is to have a well-documented estate plan that includes a trust containing the assets to be distributed to your beneficiaries rather than merely having a will. An effective estate plan should distribute assets to your intended beneficiaries with the minimum in taxes and fees, and as quickly as possible. Avoiding probate is key to achieving these goals.
The assistance of an estate planning professional will help you establish a plan that avoids probate and ensures a stress-free and timely transfer of your estate. Bloom Investment Counsel, Inc. is pleased to work with all of our clients’ trusted partners to help protect, preserve and build wealth. Since 1985, Bloom has been providing customized investment management to wealthy individuals, family offices, foundations, corporations, institutions and trusts.
This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.