When a loved one dies in Manitoba, families must rally around and tend to many tasks. One of these tasks is usually to distribute the decedent’s estate.
Generally, this involves a process called probate, by which a will is validated by the courts before any property or other assets can be distributed.
But is probate always necessary? After all, it can cause months of delay for those who stand to inherit the property.
And what happens if the deceased left no will?
Let’s take a closer look at what you need to know about probate in Manitoba if you are a personal representative (the individual nominated in the last will to carry out the last wishes of the deceased) or a beneficiary named in the will.
What is probate in Manitoba?
Probate is a formal legal process by which a last will is validated by the Manitoba courts.
Securing a grant of probate ensures that assets cannot be distributed without first certifying the will as the latest version and the right person is appointed to handle the payment of any outstanding debts/taxes and the transfer of remaining assets/property to the rightful heirs.
Probate is seen as an important legal protection for the deceased and the personal representative. The process often requires legal assistance. A lot of detailed information must be gathered and presented to the court in a certain format — and this can be complex and time-consuming if you have never had to navigate such legal processes before.
You will need to contact the court to get copies of the applicable probate forms and follow the procedures outlined. Only once probate has been confirmed can a personal representative officially distribute assets to the rightful heirs.
How much are probate fees?
Probate fees are as follows in Manitoba:
- Up to $10,000 in value: an estate must pay $70 in probate fees
- For every extra $1000 in value: an estate must pay $7 in probate fees
At these rates, an estate valued at $100,000 would cost $700 in probate fees.
Do I have to probate a will in Manitoba?
If the decedent died with assets in his/her name and left a last will with instructions for the distribution of these assets, a will must usually be probated in Manitoba.
Assets that do not require probate in Manitoba
Some assets can be transferred without a grant of probate, including:
- The CPP Death Benefit (which is payable to the estate or other eligible individuals on behalf of a deceased CPP contributor)
- Life insurance proceeds payable to a named beneficiary
- Jointly held property with a right of survivorship
- Property titled to a living trust
- Securities held in a transfer-on-death account
- Payable-on-death bank accounts
There are sensible ways to plan for some of these eventualities with careful estate planning.
For instance, a house that you own can skip probate and go straight to your children — if your children are made co-owners of the house with a right of survivorship. Upon your death, the house automatically transfers to your children without probate.
Other situations in which probate may not be necessary are if there is no real property or if the value of the estate before the funeral expenses are paid is $10,000 or less.
Dying without a will in Manitoba
If a person passes intestate in Manitoba (dies without a will), the State will need to decide how the individual’s assets are distributed.
Manitoba’s intestate succession laws govern what happens to the property. Those eligible to receive property under these laws include spouses, registered domestic partners and blood relatives. Unmarried partners, friends or others who may have benefited from a will miss out if no will was drafted.
A specific “order” has been established when it comes to the inheritance rights of family members for assets that normally require probate:
- Surviving spouse
- Children and grandchildren
- Aunts and uncles
- Other extended family
Can you take possession of property without probate?
Generally speaking, the property named in a will needs a grant of probate before the land titles offices in Manitoba will agree to transfer to the beneficiary.
The main exception is if you are the co-owner of a property with a right of survivorship. The co-owner can continue to use the property and becomes the sole owner. If no right of survivorship exists, most likely a grant of probate is required before this can happen.
Another exception to the rule is if you are the named beneficiary of a trust that owns the property.
Using joint accounts to avoid probate
Many couples use joint accounts as part of an estate planning strategy to transfer property automatically after death.
With joint accounts, two (or more) people have access to the account and can make transactions. If one of the named account holders passes away, control of the account automatically passes to the other joint account holder(s) and transactions are uninterrupted (no wait for probate).
For instance, a married couple may create a joint account or add their child’s name to their bank account to potentially reduce taxes, avoid probate and ensure that bills are paid if the main account holder becomes incapacitated. However, joint accounts don’t come without some risks.
With joint accounts, the depositor of money within the account remains the owner of the funds. So, if the depositor dies, the survivor holds the balance in trust of the estate of the depositor, unless it was intended as a gift. If the intention is unclear, the estate may sue for access to the account. Most times with family members (married couples and children) the court assumes that the funds were a gift unless it can be proven otherwise.
Other complications may arise if the joint account holder gets divorced or faces a lawsuit and there could also be negative tax consequences.
Usually, less risky options are available (such as power of attorney) to achieve important estate planning goals.
The potential legal complications for both the estate and beneficiaries mean that you may expose loved ones to unnecessary risk. It’s best to discuss your intentions and seek advice from an experienced estate planning or family lawyer first.
The Visionary Law Corporation in Winnipeg can help you optimize your estate planning. Contact us for an initial consultation.