Folk wisdom is often expressed in short, memorable sayings like this: Don?t jump over a dollar to save a dime. And that?s a good one to take note of ? especially when it comes to the potential cost of overeager attempts to save on probate fees. By focusing too closely on those costs, people run the risk of saving a few nickels and dimes on probate while paying way too much in income taxes.
That?s where a well-considered probate plan comes in ? one that not only seeks to limit probate fees, but also sets out the most efficient methods for limiting income taxes, as well. After all, the main objective is to leave the largest possible legacy to your beneficiaries.
The first step is to determine if probate is a concern for your estate ? and to do that, you need to know what probate is and how it works.
Probate is the process by which a Will is validated by a court. In most provinces probate fees are calculated on the fair market value of all the assets in your estate. In British Columbia, the top rate is 1.4% over $50,000 and in most other provinces; the top rate is less than 1%.
Although the rules differ from province to province, probate fees generally apply to the entire value of your estate, with no deductions for debts, although some provinces allow a deduction for mortgages on real estate. There are also other expenses that may be associated with probate including legal, accounting and Executor fees and these are typically based on the size of the estate and the amount of work involved.
Continued in next week?s Tumbler Ridge News.
This column is presented as a general source of information only and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice. For more information on this topic or on any other investment or financial matters, please contact your financial advisor.