How to Avoid Probate in BC

Why people want to avoid probate

Probate in BC involves two costs: the probate fee itself and the time it takes. The fee is calculated on gross estate value (before debts), and the process typically takes 6–8 weeks for court processing alone. For larger estates, the fees are substantial.

But probate also serves a purpose — it validates the will and gives the executor legal authority. Avoiding probate entirely means relying on other mechanisms to transfer assets, each with its own considerations.

Strategy 1: Joint tenancy with right of survivorship

Property held in joint tenancy passes directly to the surviving joint tenant upon death. It never enters the estate, so no probate is required for that asset.

Common uses: Family home between spouses, joint bank accounts.

Risks and considerations:

• Loss of control: Both joint tenants have equal rights to the property. You can't sell or mortgage without the other's consent.
• Creditor exposure: If the other joint tenant has debts or is sued, the property may be at risk.
• Tax implications: Adding a non-spouse as a joint tenant may trigger an immediate capital gains tax event.
• Resulting trust claims: The courts may determine that adding someone as a joint tenant was for convenience only (not a true gift), which can lead to disputes.
• BC Supreme Court case law: The landmark case Pecore v. Pecore established that transfers to adult children are presumed to be held in trust, not as a gift — meaning the joint tenancy may not work as intended.

Strategy 2: Beneficiary designations

Certain assets allow you to name a beneficiary directly, so the asset passes outside the estate:

• RRSPs and RRIFs: Name a beneficiary or successor annuitant (spouse)
• TFSAs: Name a successor holder (spouse) or beneficiary
• Life insurance: Name a beneficiary on the policy
• Pensions: Most pension plans have their own beneficiary designation rules

Key point: If you don't name a beneficiary, or if your named beneficiary dies before you, these assets fall into your estate and go through probate.

Tax note: While a named beneficiary receives the RRSP/RRIF funds directly, the tax on those funds is still payable by the estate (unless the beneficiary is a spouse or dependent). This can create problems if the estate doesn't have enough other assets to cover the tax bill.

Strategy 3: Inter vivos (living) trusts

A living trust transfers ownership of assets to a trust during your lifetime. Because the trust — not you — owns the assets, they don't form part of your estate when you die.

Advantages: Avoids probate, provides asset management if you become incapacitated, and can offer privacy (trusts are not public documents like probated wills).

Disadvantages:

• Cost: Setting up and maintaining a trust is significantly more expensive than a will
• Complexity: Assets must be formally transferred to the trust. Anything left outside the trust still goes through probate.
• Tax: Trusts are taxed at the highest marginal rate in Canada, and there's a deemed disposition every 21 years
• Not common for most estates: The cost and complexity of a trust usually only make sense for larger estates where the probate savings outweigh the setup and maintenance costs

Strategy 4: Multiple wills

Some provinces allow multiple wills — one for assets that require probate and one for assets that don't (like shares in a private company). This is more established in Ontario than BC, and the legal position in BC is less clear. Consult a lawyer before attempting this strategy.

Strategy 5: Gifting during your lifetime

You can reduce your estate by giving assets away while you're alive. Fewer assets in the estate means lower probate fees.

Considerations:

• Gifts are irrevocable — once given, you can't take them back
• Gifts of property (other than a principal residence) trigger capital gains tax at the time of the gift
• Large gifts may raise concerns about undue influence or capacity
• Giving away assets you still need (like your home) creates obvious problems

Is avoiding probate worth it?

Run the numbers before restructuring your estate. A $500,000 estate pays about $6,450 in probate fees. A $1,000,000 estate pays about $13,450. These are real costs, but they need to be weighed against:

• The legal fees to set up avoidance strategies
• The tax consequences of restructuring
• The risk of losing control of your assets
• The potential for family disputes

For most BC residents, the best approach is a combination: use beneficiary designations where they make sense, maintain joint tenancy with a spouse on the family home, and accept that some probate fees are simply a cost of orderly estate administration.