Probated or Not Probated: Investments
Neufeld Legal P.C. can be reached by telephone at 403-400-4092 or email Chris@NeufeldLegal.com
When an individual dies owning financial investments, be it stocks, bonds, mutual funds, brokerage accounts, bank accounts, RRSPs, RIFs or life insurance proceeds, the executor of the deceased person’s estate will need to effect the transfer of those investments with the financial institution that has legal purview over that particular investment.
And to effect that investment transfer, the executor of the deceased person’s estate will need to consider whether or not the financial institution will require the estate to be probated or not, such that the appropriate procedure is undertaken to settle the deceased person’s estate (in Alberta, an estate is probated with a valid will; however, where there is no will or the will is inadequate, the process is administration and attaining a Grant of Administration).
To understand whether an investment requires probating the estate or not, the decision rests with the specific financial institution and their internal policies, although there are certain indices that would be indicative of the transfer being undertaken with or without probate.
The two primary methods by which investments circumvent the need for probate are (1) naming a beneficiary with the financial institution and (2) owning the investment jointly with a right of survivorship.
Naming a Beneficiary with the Financial Institution
When the investment’s owner plans a future transfer with the financial institution, in accordance with their stated procedures, those transferences are intended to satisfy the financial institution’s own policies for effecting a transfer on death to the named beneficiaries. This enables the financial institution to be assured that the arrangement that has been implemented, in accordance with its own policy, satisfies their requirements, legal and otherwise, for transference. And provided the specified transference proceeds as set out in the financial institution’s own paperwork, it may proceed without the need to be probated, if that was the intended structure and this remains the financial institution’s position.
However, should there be issues associated with the transfer to the named beneficiaries (such as their own death), there be legal issues with the intended distribution (such as the attempted circumvention of statute-protected beneficiaries), technicalities in the financial institution’s paperwork, etc.; attaining a Grant of Probate or a Grant of Administration may well be necessitated to settle the deceased person’s estate.
Joint Ownership of Investments
Joint ownership of investments with a right of survivorship is also capable of circumventing the need for a Grant of Probate, where the surviving joint owner is capable of continuing as the owner of the investment and the financial institution’s position is not to require a Grant of Probate. Nevertheless, if there is no surviving joint owner or the fine print in the financial institution’s paperwork states otherwise, the investment assets would be subject to be probated and the executor could well be necessitated to attain a Court-issued Grant of Probate.
The fact that investments need to be probated is not as deleterious as certain commentators have made it out to be, especially in a province such as Alberta, where court probate fees are some of the lowest in the country, and lawyer fees for non-contentious, straightforward estates tend to be quite reasonable (especially when one considers how much more tends to be spent with ‘probate-avoidance strategies’, which need to be created, maintained and implemented on death, all with considerable cost and other possibly adverse results, such as one’s loss of control), such that probate can be timely, cost-efficient and provide appropriate legal protections and security in the legitimate distribution of the deceased person’s estate, both their investments and other assets.
Contact our law firm today to learn how our legal team can help you with the legal demands following the death of a loved one, from probating the decedent's last will & testament to administering an estate where the decedent did not have a valid will. Contact our law firm at 403-400-4092 or via email at href="mailto:chris@neufeldlegal.com">Chris@NeufeldLegal.com to schedule a confidential initial consultation.
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