Although not technically an ‘inheritance tax’, in practical terms probate fees arguably constitute just that. In BC, the Supreme Court will not issue an estate grant until probate fees have been paid. They are payable whether in relation to an application for a grant of probate or a grant of administration.
Pursuant to the BC Probate Fee Act, probate fees are calculated as follows:
a) No fee for estates where the probatable assets do not exceed $25,000 in value;
b) $6 for each $1,000 or part of $1,000 of the value of the estate in excess of $25,000, up to $50,000, plus
c) $14 for each $1,000 or part of $1,000 of the value of the estate in excess of $50,000.
When all is said and done, this works out to approximately 1.4%, which although not a huge number can result in significant fees being payable depending on the value of the assets solely owned by the deceased at their death. The fees can add up fairly quickly, especially as they are calculated based on the gross value of an estate (ie. on the value of the assets before accounting for liabilities).
As a result, many clients look to reduce or eliminate probate fees as part of their estate plan. Joint ownership, beneficial designations, multiple wills, and intervivos trusts are all popular mechanisms for so doing. Importantly however, these options are not appropriate for every situation, and if not properly planned and structured, these strategies can ultimately trigger far more serious and costly outcomes than the 1.4% probate fee. So, while probate planning is an important element of the estate planning process, it cannot be the only focus.
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This article is intended for information purposes only and should not be taken as the provision of legal advice. Grace C. Cleveland is a lawyer with the law firm of Cleveland Doan LLP and can be reached at (604)536-5002 or firstname.lastname@example.org.