How to Manage Estate Planning Costs in Alberta
Reducing Your Estate Planning Costs
The costs of preparing your estate and administering it in probate can dramatically decrease the amount that is left for your beneficiaries.
By working with an estate planning lawyer, you can find the rights strategies to reduce your planning costs and mitigate the expenses incurred by the estate after your death.
What Are Common Estate Costs?
There are several different fees that affect estates in Alberta. Each province sets its own probate fees. In Alberta, these fees are calculated as a percentage of the total value of the estate. (See the chart below.) There can also be administration costs, such as preparing documents that allow the estate assets to be distributed.
The executor (also known as the estate administrator or personal representative) is also entitled to compensation for the time and expense he or she expends in settling the estate.
This compensation can be set by the will, agreed between the beneficiaries and the executor, or ordered by the probate court.
In addition to these fees and costs, many different taxes can apply to the estate. If capital gains occur from the sale of estate assets, these will be taxed.
Some estate assets might have deferred taxes (such as exempt savings plans and retirement accounts). Because these taxes were deferred during the owner’s lifetime, they must be paid if the asset is liquidated in probate. It is important to plan for all taxes that could apply to your estate.
It is possible to use mitigation strategies to reduce these taxes and maximize the amount that is left for your heirs.
What Are the Probate Fees in Alberta?
In Alberta, probate fees are collected based upon the value of the estate, and they must be paid before the court will issue a Grant of Probate or Grant of Administration. Once the Grant has been issued, the beneficiaries can be paid by the executor. Fees are assessed on the following schedule:
- If the estate is valued at $10,000 or less, the probate fee is $35.
- If the estate is over $10,000 but not more than $25,000, the fee is $135.
- If the estate is over $25,000 but not more than $125,000, the fee is $275.
- If the estate is over $125,000 but not more than $250,000, the fee is $400.
- If the estate is over $250,000, the probate fee is $525.
There are many ways that an estate planning lawyer can help you reduce both the costs of preparing your estate plan and the costs of administering the estate (whether through the probate court or not).
Here are some of the most important strategies our lawyers use to reduce the costs to both you and your heirs:
Have a Valid Will
If you pass away without a will, default provisions of Canadian law might be applied to determine what happens to your property.
If you die with a will that is not executed with all the necessary legal formalities, or a will that does not account for all of your debts and assets, your heirs might have to waste time and money litigating your will in the probate court.
Having a legally enforceable will that clearly addresses all of your financial matters will reduce the risk of costly legal disputes.
Plan for Minor Beneficiaries in the Will
It’s important to include provisions in your that apply to any beneficiaries of your estate who may be minors.
Many younger people are not able to handle significant amounts of cash responsibly, so it may be a good idea to creating a trust your will to ensure that your minor beneficiaries suddenly come into a windfall on their 18th birthday.
Plan for an Adult Guardianship
If you become unable to make your own medical decisions, the court can appoint someone to make these decisions for you. A family member must file a costly application with the court in order to receive this appointment.
If other family members dispute the appointment, the process can become even more expensive. By issuing a Personal Directive prior to any physical or mental incapacity, you can prevent these expenses.
Use Strategic Tax Planning
An estate planning lawyer can help find the tax strategy that will work best for your particular estate. For example: if your will provides for a charitable donation that is made by your estate, this will reduce the amount of taxes that must be paid by the estate.
Capital gains taxes can be reduced by selling an asset at the right time. By using the right strategies both before and after your death, your estate can drastically reduce its tax liability (thereby increasing the amount that is left for your heirs).
Give the Executor Flexible Authority
In order to execute these financial strategies effectively, your executor will need some flexibility in the financial authority that you grant.
For example: If you stipulate that your assets must be liquidated within a short time after your death, your executor might not be able to wait until they appreciate or until there is a tax advantage to the sale.
Your will should clearly state your intentions, but give your executor flexibility in the methods he or she may use to reach these goals.
Don’t Wait for the Last Minute to Start Estate Planning
All too often, estate planning attorneys hear from new clients who are in a hurry. They might be preparing for a risky surgery or dangerous overseas travel. Perhaps they have received a dire medical diagnosis. Whatever the case, last-minute work becomes more expensive. An estate planning lawyer may need to charge a premium in order to prepare your documents as quickly as you need them.
If information and documents are needed to prepare the estate plan, there might be rush fees to obtain them immediately. All of these costs will increase the overall expense of estate planning.
Planning in a rush also makes it more likely that you will forget some crucial detail or make some mistakes that could lead to costly probate disputes. Reduce the costs of both rush fees and errors by allowing yourself and your lawyer plenty of time to prepare a thorough estate plan that mitigates as many costs as possible.
Reduce Your Estate Planning Costs by Consulting an Experienced Alberta Estate Planning Lawyer
At Spectrum Family Law, our experienced estate planning lawyers know how to manage costs and give your final wishes the full force of Canadian law.
We currently have three offices across Alberta — Edmonton, Calgary, and Red Deer. We serve the entire province of Alberta (and BC). We also have the infrastructure to work with any of our clients virtually — even the furthest regions of Alberta.
We also have a dedicated intake form to help you get the ball rolling. Our intake team will review your specific case and advise you on the next steps to take as well as what to expect moving forward. That’s the best way to schedule an appointment
Our offices are generally open 8:30 a.m.—4:30 p.m., Mon—Fri.
Allison provides a balanced approach to family law files and strives to help families in the midst of separation and divorce. She has a wealth of experience in litigation including appearing in trials, Special Chambers applications and case conferences.