Let’s face it: someday, we’re all going to die. With any luck, that will happen after we’ve lived full, happy and meaningful lives, and hopefully we’ve got a few bucks left in our bank account at that time. But what happens to those assets after we die? What is probate, and how does it relate to a will?

Don’t worry, it’s neither as complicated nor as dirty as it might sound. Basically, probate is the process your will goes through to make sure it’s legitimate. If you’re not sure why that might be important, let’s take a look at an example.

A Probate Example

Alright. So. Let’s say you die, and you left a will. In it, you named Bobby as your Executor – in other words, the one who is responsible for carrying out whatever you put in your will. So, Bobby goes to the bank and presents your will, so that he can get your investments and give them to your beneficiaries. The bank reviews the will and decides it’s legit, and hands over control of your assets to Bobby. Bobby walks away with your assets to keep the process moving.

So far so good, right?

Then, the next day, Becky walks in with another version of your will that’s more current… and it names her the Executor, not Bobby. Crap. Now what? The bank just released your assets to Bobby, so there’s nothing to give to Becky!

As you can imagine, no bank or financial institution wants to be caught in the middle of that. So, we have probate, which gets your provincial court involved to validate once and for all which version of your will is final, and who the final Executor will be. Once all that’s confirmed, they’ll issue an official document to the Executor that they can take to the banks (and anyone else who might need to see it) that confirms that they’re the right guy to hand the assets over to.

This process isn’t free – there are fees, which vary in name and amount depending on your province, that are deducted from the value of your estate. These fees can be a flat rate, or charged as a percentage of your assets. That’s why it’s worth knowing which assets aren’t subject to probate when you die.

What assets are excluded from probate?

Great question, I’m glad you asked! Proceeds from life insurance benefits, and investments held in registered accounts like RRSPs, TFSAs and RRIFs don’t need to go through probate, as long as you’ve named a beneficiary on those accounts. Just another reason you should be taking full advantage of them!

Jointly-held assets – those are assets that have more than one person listed as owners or accountholders – can also skip the probate process. Heads-up though, this strategy isn’t for everyone. If your significant other has significant debt, for example, and they can’t make their payments, their creditors might come after your assets if their name is listed as an owner.

Wrapping it Up

I simplified things pretty significantly here in order to make the topic of probate easier to understand. The reality though, is that it’s actually a pretty complicated subject, and you’ll want to talk to an estate planning expert to understand how it applies to your specific financial situation.

Its’s worth doing, because depending on the value of your estate when you die, probate fees could eat up tens of thousands of dollars. Why spend that on probate if you could pass it along to your heirs? I know, I know. It sucks talking about dying. But guess what? We haven’t figured out how to live forever yet, so it’s going to happen… and burying your head in the sand when it comes to this stuff is hardly the adulting thing to do.