Bypassing the Estate

Bypassing the Estate

There are several good reasons for trying to pass on assets outside of the estate. Probate fees in BC are a percent of the entire estate, not just a flat fee. It typically amounts to 1.4% of the assets, so a $1,000,000 estate would have $14,000 in probate fees. The probate process typically takes about 6 months while the estate is on hold until any potential creditors are notified and family members are given an opportunity to contest the will. This might mean that assets are frozen until probate is concluded. Also, the probated will is a public document that anyone can access from the courts for a small fee.

The downside of bypassing the estate and the will, of course, is that the will carries no authority over those assets, so the person’s assets may not be distributed according to their wishes. In one case I was told about, a daughter was named as the beneficiary of the RRSP and TFSA accounts and was on joint title for the home. The will said the estate was to be divided equally between all children. When the last parent passed away, most assets rolled over to the daughter with very little actually passing through the estate. The daughter shared nothing of those assets with her brothers. This likely was not the parents’ intention.

The below table documents a few ways to bypass the estate and the pros and cons of each method. It is important to consider any unintended consequences of having an asset bypass the estate and go straight to a beneficiary.