There are ways to avoid probate fees

A recent story on the perils of putting property in joint ownership to avoid probate drew a panicked response from a reader.

"Because we knew our mom wanted her house to go to us when she dies, my sisters and I put our names on the title and took hers off. Did we go too far?"

You could say that.

People have this misconception that probate is a bad thing," said Trent Hamans, Edmonton regional vice-president of TD Waterhouse Private Trust. "Alberta has the second-lowest probate rate, next to the Yukon. It's a very effective way to deal with assets."

Alberta charges $200 on $125,000 in estate value net of debts, $300 if the value is between $125,000 and $250,000 and $400 if the amount is above $250,000.

Other provinces charge a base amount plus a percentage of the gross value of the estate. For example, according to PricewaterhouseCoopers, probate fees on a $500,000 estate are $140 in the Yukon, $400 in Alberta, Nunavut and the Northwest Territories, $6,658 in B.C. and $7,000 in Ontario. Fees on a $2-million estate are $150 in the Yukon, $400 in Alberta, $27,658 in B.C. and $29,500 in Ontario.

"Our vibrant economy has enabled people to buy second or third pieces of property in multiple jurisdictions and they appreciate the probate issue and the potential tax implications on an estate," said Hamans.

There are two popular ways to avoid or reduce probate fees, depending on the type of property investment. One an name beneficiaries or enter into joint tenancy with rights of survivorship.

Sandy Cardy, senior vice-president of tax and estate planning with Mackenzie Financial, said that "naming beneficiaries on RRSPs, RRIFs and insurance policies means these monies pass directly to the beneficiary."

Registered retirement savings plans and registered retirement income funds can't be registered jointly.

With them, you may name as beneficiary a surviving spouse or a common-law or same-sex partner, dependent children or grand- children under age 18, mentally or physically disabled children or grandchildren, adult children, registered charities or your estate.

Remember to fill out a new beneficiary designation if you remarry and when converting an RRSP to a RRIF.

Taxation depends on who the beneficiary is.

Naming your estate as beneficiary is the default action if the named beneficiary is no longer alive.

Meanwhile, holding non-registered assets, such as investment accounts and family cottages in joint tenancy, allows them to be passed on easier and quicker and without probate fees.

(Ray Turchansky/Edmonton Journal/Vancouver Province)