Avoiding probate in Canada: joint accounts, beneficiary designations, multiple wills and the risks
How Canadians reduce probate with joint ownership, beneficiary designations, TFSA successor holders and multiple wills, and the risks of each.
Canadians can keep assets out of probate in four main ways: joint ownership with right of survivorship, beneficiary designations on RRSPs, RRIFs, TFSAs, pensions and insurance, multiple wills (common in Ontario for private company shares), and in Quebec a notarial will, which needs no probate at all. Each works, but each has a cost that can be larger than the fee it saves: joint assets with an adult child are presumed to belong to the estate unless a gift is proven (Pecore v. Pecore, 2007), designations can put the tax on one heir and the money with another, and none of them defeats an Ontario dependant's support claim. In Ontario a 1.5% saving on a $400,000 house is $6,000; a sibling lawsuit costs much more.
Part of the overview of mistakes and official sources. General information, not legal or tax advice.
What probate avoidance can save (illustrative)
| Asset removed from the estate | Ontario EAT saved | BC probate fee saved | Alberta fee saved |
|---|---|---|---|
| $100,000 | $1,500 | $1,400 | Up to $250, depending on the bracket |
| $400,000 | $6,000 | $5,600 | Up to $250 |
| $1,000,000 | $15,000 | $14,000 | Up to $250 |
Ontario and BC savings are proportional above the thresholds. In Alberta, where the maximum fee is $525, avoidance is rarely worth any risk. In Quebec, a notarial will removes the need for probate entirely. The arithmetic for each province is in probate fees by province.
Strategy 1: joint ownership with right of survivorship
When one joint owner dies, the asset passes to the survivor without going through the estate.
Works well: between spouses who both contributed and intend the survivor to own everything.
The risks with adult children:
- Resulting trust presumption. If a parent adds an adult child to a bank account or home title for no payment, the law presumes the child holds the asset in trust for the estate, unless the parent intended a gift. Without written evidence, siblings may sue.
- Creditors and spouses. The child's creditors, or their spouse in a separation, may reach the asset.
- Loss of control. The parent needs the child's consent to sell or mortgage.
- Tax. Adding a child to title of a non-principal-residence property may be a disposition of part of it, triggering capital gains now.
- Ontario support claims. SLRA s. 72 counts joint accounts and joint tenancies as part of the estate for dependants' claims.
Strategy 2: beneficiary designations
RRSPs, RRIFs, TFSAs, pensions and life insurance can name a beneficiary. The asset is paid directly, outside the estate and its probate fee.
| Risk | Example (illustrative) |
|---|---|
| Tax on the wrong person | A $300,000 RRIF to one child; the income tax on it, perhaps $130,000 or more, is paid by the estate, which goes to all the children |
| Out of date | An ex-spouse is still named because nobody changed the form |
| Minor beneficiary | Money paid to a child under 18 may go into court or to a guardian of property, not to the trust in your will |
| Disability benefits | A direct payment can affect a beneficiary's provincial disability support; a trust may be better |
| Quebec limits | For non-insurance plans in Quebec, designations generally need to be made in the will |
TFSA: successor holder versus beneficiary
Only a spouse or common-law partner can be named successor holder. They take over the account as is, tax-free, without using their own contribution room. A beneficiary (anyone) receives the value at death tax-free, but income earned after death is taxable. Naming a successor holder is usually simplest for couples. Your TFSA issuer's form controls; in Quebec, check whether the designation must be in the will.
Strategy 3: multiple wills (Ontario)
Ontario courts have accepted that a person can have a primary will for assets that need probate and a secondary will for assets that do not, typically private company shares and personal effects. Only the primary will is submitted for probate, so estate administration tax applies only to its assets. The drafting must be precise: each will must say which assets it covers, neither may revoke the other, and the executor must have authority to deal with the secondary assets without a certificate. Multiple wills are used in some other provinces too, but the rules differ.
Strategy 4: Quebec notarial will
A notarial will is an authentic act kept by the notary and needs no probate. The liquidator can act on it with a will search certificate and a copy. Quebec has no probate tax anyway, but a notarial will saves the time and cost of verifying a holograph will or will before witnesses.
Other strategies
- Gifts during life. Removes value, but you lose control, and capital property is deemed sold at fair market value when gifted to anyone other than a spouse.
- Alter ego and joint partner trusts (age 65+). Can avoid probate on transferred assets; set-up and annual tax filing costs apply. Get professional advice.
- Insurance to pay the tax. Doesn't avoid probate, but can fund the estate's tax bill without selling a cottage or business.
A safer way to decide
- Estimate the probate cost with the BC or Ontario estimator.
- List who would receive each asset under each strategy, and who would pay the tax on it.
- Write down your intention for any joint asset (gift or convenience only).
- Check that designations match your will and that minors receive through a trust.
- Review the plan with a lawyer, notary or tax adviser if the asset is large or the family is blended.
FAQ
If I add my daughter to my bank account, will her siblings lose out?
Only if you intended a gift to her. If you added her only for convenience, the account belongs to your estate and is shared under your will. Put your intention in writing.
Should I name my estate as beneficiary of my RRSP?
Usually not, because it adds probate fees, but sometimes it is useful to fund a trust or equalize heirs. Ask a professional.
Does probate avoidance stop someone contesting my will?
No. In Ontario dependants' claims reach many non-estate assets, and joint assets can be challenged on trust grounds.
Sources
- Ontario e-Laws — Estate Administration Tax Act, 1998; Succession Law Reform Act, Part III (designations) and s. 72
- Government of Ontario — assets included and excluded from estate administration tax
- BC Laws — Probate Fee Act
- Canada Revenue Agency — TFSA successor holders and beneficiaries; RRSPs at death
- Chambre des notaires du Québec — notarial wills
