It’s not unusual for clients to own property in multiple provinces. People born in one province often settle in another but keep lifetime connections to their original community; or they’ll own a home in a neighbouring province for a change of scenery. Interprovincial ownership is so common, people are often surprised to learn that where they live and where they own property can dramatically affect their estate plan.
Consider our fictional family John and Mary Jones.1 Besides owning a home and living and working in Alberta, they own a cottage in British Columbia. Mary also owns a house in Ontario, which she rents to long-term tenants. John has two adult children from his previous marriage. Before “testing” their situation, it’s important to note some fundamentals on how property ownership and estate law work in our country.
In our work with clients, two of the most common planning concerns are related to probate fees and protecting the estate from claims. How does owning real property in different provinces affect those concerns?
Let’s look at probate fees first. Since estate law is provincial, some jurisdictions see the transition of wealth as an opportunity to generate tax revenue. They do so by imposing a surcharge upon an estate’s value when the provincial court issues a formal legal document called a grant of probate (or certificate of appointment in Ontario). These fees bear no relation to the actual time or effort required by the court to validate a will, so the term “probate fee” may be misleading (Ontario is more transparent, calling their surcharge “estate administration tax” or “EAT”).
As the page nine chart shows, probate fees vary widely among the provinces. What happens when a person who is domiciled in a low probate-fee jurisdiction owns real property in a high probate-fee jurisdiction? In John and Mary’s situation, they can probably arrange their estate so that when the first spouse dies, the entire estate passes to the surviving spouse by survivorship. On the second death, their executor must:
The estate will incur legal expenses and probate fees in three provinces. This kind of reality typically prompts clients to explore options that can reduce probate fees. Let’s turn to how owning real estate in multiple locations other than the domicile province affects someone’s ability to make a claim against the estate.
John has been estranged from one of his children for decades. His son is not in contact, having told his father when he remarried that he never wanted to see John again. After much consideration, John decides to divide his estate between Mary and his daughter, leaving nothing to his son.
Living in Alberta, John can be fairly confident that it would be difficult for his son to make a claim to receive part of John’s estate. In Alberta, an adult child only has the right to apply to receive more from an estate if that child is unable to earn a livelihood due to mental or physical disability. Alberta’s laws do not assume that John has any moral obligation to leave anything to his healthy and independent adult child.
However, British Columbia rules are different.3 In that province, all adult children (regardless of whether they’re financially dependent on their parent(s)) can apply to the court to receive more if they feel a parent’s will hasn’t adequately provided for them. They’re entitled to make this claim during the probate process. Since John owns real property in British Columbia, his executor must follow BC probate rules, thereby exposing part of John’s estate (the BC property) to a claim by his son. Furthermore, the BC court will consider John’s legal and moral obligations to his children. Based on earlier cases, BC courts appear to start with the presumption that a parent, barring exceptional circumstances, has some moral obligation to leave part of their estate to each child. This means that if John’s son makes a claim, there’s the possibility a judge might rule in his favour and award some of the BC estate to him. Even if John’s son is unsuccessful, his claim could tie up the estate in litigation, which could be expensive.
Practical options, ranging from creating living trusts to using multiple wills, can help reduce the bite of provincial probate fees and/or defend your estate from such claims. The best place to start: Consider your real property ownership situation with the concerns we’ve raised in mind. Then, as always, we recommend you seek expert legal and wealth management advice when planning your will.
| Province | Probate Fees $2MM Estate | Probate Fees $5MM Estate |
|---|---|---|
| Low Probate Fees | $ | $ |
| Manitoba | - | - |
| Quebec | 114 | 114 |
| Yukon | 140 | 140 |
| Nunavut | 400 | 400 |
| Northwest Territories | 435 | 435 |
| Alberta | 525 | 525 |
| Medium Probate Fees | $ | $ |
| Prince Edward Island | 8,000 | 20,000 |
| New Brunswick | 10,000 | 25,000 |
| Newfoundland | 12,054 | 30,054 |
| Saskatchewan | 14,000 | 35,000 |
| High Probate Fees | $ | $ |
| British Columbia | 27,650 | 69,650 |
| Ontario | 29,250 | 74,500 |
| Nova Scotia | 33,208 | 84,058 |
Given the range in probate fees across Canada, we encourage clients to know the
implications for their estate and to weigh the costs and benefits of estate planning to
reduce those potential probate fees.4
NOTES:
1. John and Mary are a fictitious couple created for the purposes of illustrating examples for this article.
2. Canada does charge capital gains tax at death upon the increase in value of property held by an estate. This tax does not apply to the entire value of the estate and may be nominal depending on the type of property owned.
3. Similar provisions exist in Nova Scotia and Newfoundland and Labrador. Adult children do not have to be financially dependent upon a parent to be eligible to make a claim upon the parent’s estate.
4. TaxTips.ca – Canadian Tax and Financial Information, sourced on August 31, 2022, https://www.taxtips.ca.