What Assets Need to Go Through Probate in Alberta?

When a loved one passes away, understanding what assets need to go through probate can be overwhelming, especially during such an emotional time. Probate is the legal process of validating a will (if one exists) and appointing an executor to distribute the deceased’s estate. However, not all assets require probate. In Alberta, the need for probate depends on the type of asset and how it is owned.

Here, we break down the most common types of assets and whether they typically require probate, along with some key considerations to keep in mind.

What Is Probate?

Probate is a court-supervised process that confirms the validity of a will (if applicable) and authorizes the executor to manage and distribute the deceased’s estate. For some assets, financial institutions or other entities will require probate as proof that the executor has the legal authority to act on behalf of the estate.

Assets That Typically Require Probate

Certain assets must go through probate before they can be distributed. These usually include:

1. Solely Owned Real Estate

 o If the deceased owned property solely in their name (e.g., a house or land), probate is typically required to transfer ownership to the beneficiaries.

2. Bank Accounts Without Joint Ownership or Beneficiary Designations

 o Bank accounts held solely in the deceased’s name, without joint owners or designated beneficiaries, often require probate for access.

3. Investments Without Named Beneficiaries

 o Investment accounts, such as mutual funds or stock portfolios, may need to go through probate unless a beneficiary has been named.

4. Vehicles Registered in the Deceased’s Name

 o Probate may be needed to transfer the title of vehicles if they were solely owned by the deceased.

5. Business Interests

 o If the deceased owned shares in a private corporation or was a sole proprietor, these assets typically require probate for proper transfer.

Assets That May Not Require Probate

Some assets bypass probate, making their transfer simpler and faster. These usually include:

1. Jointly Owned Assets

 o Property, bank accounts, or other assets held jointly with the right of survivorship pass directly to the surviving owner without probate.

2. Life Insurance Policies and RRSPs/RRIFs With Named Beneficiaries

 o If a valid beneficiary is named, these funds are paid directly to the beneficiary and do not form part of the estate.

3. Small Estates

 o In Alberta, probate may not be required for small estates, especially if the total estate value is below the threshold at which financial institutions demand probate. While there is no fixed monetary threshold in Alberta law, banks or other institutions often have internal policies that exempt estates under $15,000 or $20,000 from probate requirements. However, the need for probate depends on the policies of these entities rather than a specific legal rule.

4. Trust Assets

 o Assets held in a trust are managed according to the terms of the trust and typically avoid probate altogether.

Important Consideration: The Risks of Avoiding Probate

Many people consider strategies to minimize probate fees, such as joint ownership or transferring assets before death. While these can sometimes save costs, they come with risks:

Loss of Control: Adding a joint owner to an account or property may limit your ability to make decisions independently.

Unintended Tax Consequences: Certain probate-avoidance strategies can trigger significant tax liabilities, such as capital gains taxes.

Potential Disputes: Transferring assets outright or bypassing the estate process can create legal disputes among beneficiaries.

These risks highlight the importance of balancing probate avoidance with thoughtful estate planning. Consulting a lawyer can help ensure that strategies align with your overall financial and legal goals.

What Should Executors and Beneficiaries Do?

If you are an executor or beneficiary and are unsure which assets require probate, consider these steps:

1. Gather Documentation: Collect bank statements, property titles, and insurance policies to understand how the assets are owned.

2. Consult with Financial Institutions: Each institution may have its own policies about when probate is required.

3. Seek Legal Advice: Probate can be complex, and the right legal guidance can help you navigate the process smoothly.

How Jaswal Law Can Help

At Jaswal Law, we understand that dealing with the legalities of probate during a time of loss can feel overwhelming. Our compassionate team is here to help executors and beneficiaries navigate the probate process in Alberta with confidence and clarity. Whether you need help understanding your role as an executor, determining what assets require probate, or managing the overall process, we’re here for you. Contact us today at 780-737-9999 or visit www.jaswal-law.ca to schedule a consultation. Let us help you bring peace of mind during this challenging time.