FP Answers: Which assets require probate and is there any way to reduce these costs?

financialpost.com:

By Julie Cazzin with Ed Olkovich

Q: Which assets require probate and which do not? How much would probate be on a $4-million estate made up of cash, three properties, a $52,000 registered retirement income fund (RRIF) and a $100,000 tax-free savings account (TFSA) in Ontario? How can I minimize probate and would it be worth it for me to do so on an estate of this size?

FP Answers: Gianni, first, let me explain the term probate. Probate is the process of having courts certify that wills are valid. If you don’t have a valid will, government intestate laws determine who administers and shares in your estate. Thus, the government writes a will for you if you don’t make one. You cannot avoid probate taxes by not making a will.

Probate taxes apply based on where your real estate is located and where you reside at the time of death. It isn’t always mandatory and varies in each jurisdiction. Reducing provincial probate taxes paid by your estate is tax planning.

After you’re gone, assets in your name alone may require estate certificates to sell or transfer. If your Ontario real estate properties are only in your name, no one can usually transfer those properties without an estate certificate. You pay probate taxes when anyone applies for an Ontario estate certificate.

The process of obtaining an estate certificate to appoint an estate trustee (with or without a will) requires the payment of probate tax. In Ontario, this probate tax is called the “estate administration tax” (EAT). This tax is paid in advance as a deposit for an estate certificate. The court identifies who is authorized to transfer your assets and who is to receive them even if you did not make your will.

You may own real estate through a corporation,