Saturday, October 22, 2005

British Columbia Probate Fees

When an executor of a will applies to probate (in other words prove) the will in British Columbia, he or she must pay probate fees before the court will grant probate. Similarly, a person applying to court to be appointed an administrator of an estate (where there is no will or no executor willing and able to act) is required to pay probate fees before the court will grant letters of administration. Probate fees are paid pursuant to, not improbably, the Probate Fee Act, SBC 1999, c. 4. For simplicity, I will refer only to applications for probate, but the same fees apply to applications for letters of administration.

The amount of probate fees is based on the value of the estate assets. There is an initial filing fee of $208. After the application for probate is filed, but before the court registry will release the grant of probate, the executor is required to pay $6 for every $1,000 or part of $1,000 by which the value of the estate exceeds $25,000 up to $50,000, plus $14 for every $1000 or part of $1000 by which the value of the estate exceeds $50,000. Accordingly, for most estates probate fees are a tax approaching 1.4 percent of the value of the estate.

The executor is entitled to take the probate fees out of the estate, if he or she has access to estate funds, or the executor may be reimbursed later from the estate. Raising the money required for probate can be difficult in large estates, with high probate fees.

The Probate Fee Act provides that the executor must pay fees on all real property and tangible personal property of the deceased situated in British Columbia that passes to the executor on death. The Act also provides that “if the deceased was ordinarily resident in British Columbia immediately before the date of death,” the executor must also pay probate fees on “the intangible personal property of the deceased, wherever situated.”

In other words, the executor is not required to pay probate fees on the value of any of the deceased’s land or tangible personal property (things you can touch) situated outside of British Columbia. However, if the deceased was ordinarily resident in British Columbia, the legislation requires the executor to pay probate fees in respect of intangible property such as financial assets even if under common law rules these assets are situated in another province or country. (The Provincial Legislature may have exceeded its constitutional authority in requiring that probate fees be paid in respect of intangible property outside of British Columbia. See Mr. Justice Ehrcke’s analysis in Re: The Estate of Bessie Bloom, 2004 BCSC 70, at paragraphs 31-34.)

The fees are calculated on “the assets and liabilities of the deceased, irrespective of their nature, location or value, which pass to the deceased's personal representative,” all of which the executor must disclose on the disclosure document filed with the application for probate.

Accordingly, the executor does not need to disclose those assets that do not pass to the executor, but pass to beneficiaries outside of the estate; those assets are not considered for the purpose of calculating probate fees. For example, if the deceased had designated a beneficiary of a life insurance policy, the insurance proceeds may pass to the beneficiary outside of the estate, and probate fees are not payable in respect of the insurance proceeds.

However, the disclosure requirements are not limited to those assets registered in the deceased’s name. If another person holds title to an asset in trust for the deceased, and if the deceased’s beneficial interest in the asset passes to the executor, the executor is in my view required to include it in the disclosure document.

In the case of joint bank accounts, if the surviving joint account holder is entitled to keep the proceeds of the account for his or her own benefit, then the account does not need to be included in the disclosure document, and the executor should not pay probate fees in respect of the joint account. On the other hand, if the surviving joint account holder is really holding the proceeds of the joint account in trust for the estate, then the account should be listed as an estate asset, and is subject to probate fees. (See my earlier post “Joint Accounts with Right of Survivorship”).

An executor is only required to pay probate fees if he or she applies for a grant of probate. If the executor is able to administer the estate without applying for probate--and chooses not to apply for probate--he or she does not have to pay probate fees.

8 comments:

Anonymous said...

Mr. Rule,

You are to be commended for publishing such an informative and useful site.

I am exectuor of a will and I am unclear on allowable liabilities. The deceased owes considerable income tax, is this deducted from the value of the assets? Also, are probate fees considered a liability?

Stan Rule said...

Thank you for your comment. I also wrote a post on November 27, 2005, dealing with liabilities and probate fees in British Columbia. Although all liabilities owing as at the date of death should be listed on the disclosure document in support of the application for probate, only certain liabilities such as mortgages on land reduce the probate fees payable. I don't think probate fees are a fair or rational tax at all.

The probate fees themselves are not conventionally listed on the disclosure document as a liability. I encourage anyone with specific questions on completing the probate documents to consult with an estate lawyer near them.

Anonymous said...

I have a complicated issue and wonder if you can help.

My father died in 1963. It came to light last year that he apparently bought gold shares shortly before his death. My lawyer in Vancouver is preparing "letters of administration" for me as his sole heir. The shares were valued at $3,690 in 1983, value at his death not being available. Today they are worth approximately $90,000. Would the capital gains tax be calculated on $3,690 or $90,000. I have been a resident of Spain since 1972 but do receive a small government pension for the 12 years I worked in Canada. Am I liable for any Canadian taxes?

I hope you can help me on this matter.

Anonymous said...

Is there a time frame in which estates/wills must be probated? If there is, what are the consequences for non compliance?

Justice Seeker said...

I am one of seven beneficiaries in the estate of my late mother. As her health declined, she chose to allow he finances to be controlled by one of my brothers, through a joint account. She also chose to put her property in joint-tenancy with the same brother. Mother passed away about three months ago.

It is now his position that, through the survivorship rules of joint-tenancy, both the assets in the account and the property are now his - exclusively. There are no other assets, so he did not apply for probate.

What is the best course of action to require him to distribute the estate between the seven siblings?

Anonymous said...

My father passed away in June 2012, our brother had/has Power of Attorney and Executorship. He convinced my Dad into transferring over all of his money into his name. As we have, 2 half brothers and 1 half sister from our dad previous marriages, dad didn't want to leave much to them. The intent is to give us 3 girls and brother the rest. Well, now that Dad has passed away we had a conversation with our brother and I taped recorded it without him knowing but my sister agreed to it as well. He stated we are supposed to be getting it once the "Will" has been probated. Since, there is over $60,000 left in the estate. $10,000 is going to the other half siblings and the rest to us. Then once that is said and done we will get our portion. I asked if we could see records of Dad's estate and how much he had, our brother, said we were not allowed to demand this information or go to a lawyer or he will hide the money on us. We asked for the Deed of Gift letter and he showed us a gift letter with blacked out portions of it, even the Notary who did it. We do not know what to do? It is very suspicious, our Dad was 89 years old and very lonely since our mother passed away. We know he had Dementia. Can you give any suggestions? Our brother said he could make a phone call and the money will disappear.

Stan Rule said...

In reply to the comment about concerns that a brother may have taken funds from your father,make an appointment with a lawyer who practices in this area of law near you. You may speak with your lawyer confidentially.

Anonymous said...

Very good article and quite clear for layman reading, thanks. I had another question whether BC Probate fees apply if the deceased is a resident of Alberta and owns vacation property in BC? If so, I was told that you should have a seperate will for the BC real property, otherwise the BC Probate fees will apply to the whole estate assets (other then noted exclusions, i.e. life insurance, etc)? Thanks in advance for your assitance.