Minimizing Probate Fees With Multiple Wills
In British Columbia, a deceased’s will must be submitted for probate in order for the executor of the estate to properly deal with and transfer certain assets of the estate. Probate fees become payable once the estate is probated. One strategy that is available in some circumstances to reduce the probate fees payable is the use of multiple wills.
A will must be probated in British Columbia where the estate owns certain assets. For example, probate is necessary if the deceased owned shares of a corporation that requires probate to transfer the shares or real estate located in British Columbia. In some cases, a deceased’s will must be probated (or “resealed”) in British Columbia to deal with such assets even if the deceased was a resident of a different jurisdiction and had a will probated in that other jurisdiction already. For instance, the will of an Alberta resident who died owning British Columbia real property will have to be resealed in British Columbia before any transfer of that property can be registered with our Land Title Office.
The British Columbia Probate Fee Act imposes probate fees on the issuance of a grant of probate or a resealing. The amount of the probate fees is approximately 1.4% of the “value of the estate”, which means the following assets that pass to the deceased’s executor:
- The deceased’s real estate situated in British Columbia;
- The deceased’s tangible personal property (i.e. property that you can “feel and touch” other than real estate) situated in British Columbia; and
- The deceased’s intangible personal property (i.e. property that you can’t “feel and touch” such as stocks, bonds or accounts receivable), wherever situated, if the deceased was ordinarily resident in British Columbia immediately before death.
Based on the above definition of the “value of the estate”, probate fees will be payable on a deceased’s real and tangible personal property situated in British Columbia that passes to his or her executor. This is the case regardless of where the deceased resided.
With respect to intangible personal property, a person who is not “ordinarily resident” in British Columbia will not have to pay probate fees on such property passing to his or her executor. On the other hand, the legislation requires that a person who is “ordinarily resident” in British Columbia will have to pay probate fees on such property regardless of where that property is situated. (Note that the imposition of probate fees on intangible personal property situated outside of British Columbia may be unconstitutional, and has not yet been resolved by the Courts.)
“Ordinarily resident” has been interpreted by the Courts to mean “the place where in the settled routine of your life you regularly, normally or customarily live” which is relatively open to interpretation. In addition, it is possible to be ordinarily resident in more than one jurisdiction (e.g. a person could be ordinarily resident in both British Columbia and Alberta at the same time).
One of the key elements to the definition of the “value of the estate” is that it limits the probate fees payable to the property that passes to the executor at the date of death. If a deceased has more than one will, each dealing with different assets and naming different executors, only a portion of the deceased’s assets will pass to each of the executors. This will restrict the “value of the estate” because it restricts the assets passing to each executor, and therefore can reduce the probate fees payable.
Consider the following example. An Alberta resident dies leaving British Columbia real estate valued at $1 million, with the balance of his estate consisting primarily of stocks, bonds and bank accounts in Alberta valued at $5 million. If he has executed only an Alberta will, that will must be probated/resealed in British Columbia in order to transfer the British Columbia real estate. If the deceased was “ordinarily resident” in British Columbia, the estate will have to pay British Columbia probate fees equal to 1.4% of the entire $6 million estate ($84,000). If instead that same Alberta resident executes two wills – a British Columbia will dealing only with the British Columbia real estate and an Alberta will dealing with all other assets – British Columbia probate fees will be equal to 1.4% of only the $1 million value of the British Columbia real estate ($14,000), resulting in a savings of $70,000.
In conclusion, multiple wills may be a useful tool to reduce probate fees payable in British Columbia in the right circumstances.