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Elimination of Probate Fees in Manitoba
Probate fees were eliminated in Manitoba as of November 6, 2020.
Accordingly, requests for probate, administration, or resealing in
Manitoba no longer require payment of a probate fee (previously,
$70 for the first $10,000 of an estate, and $7 for every additional
$1,000 or fraction thereof). The applicable legislation, now
renamed The Court Services Fees Act (Manitoba), still
maintains that the Court may charge a processing fee for such
requests; however, the fee would need to be prescribed by
regulation and is expected to be nominal.
Pitfalls of Probate Planning
Probate planning has been a common element of estate planning,
in which the ownership of assets is structured to reduce or avoid
probate fee exposure. However, improper planning (notably through
joint ownership and beneficiary designations) can lead to a gap
(not bridged by any clear terms of trust) between the recipient of
an asset and the asset’s intended beneficiaries. Accordingly,
in an effort to save on probate fees, families have occasionally
stumbled into years of costly litigation.
Joint Ownership
Since the decision in Pecore v. Pecore, 2007 SCC 17,
the law has been clear that there is a presumption of a resulting
trust when a parent gratuitously transfers ownership of an asset
into joint ownership with an adult independent child; however, the
presumption can be rebutted if the child transferee can prove that
a gift was intended.
Notwithstanding the decision in Pecore, it is still
relatively common for an older parent to hold one or more bank
accounts jointly with an adult child in an effort to avoid probate
fees. The intent of the parent in establishing this joint ownership
continues to be litigated because the transferee child may be
reluctant to part with an asset of which he or she is the nominal
owner (see, for example, Taran v. Ellison Estate, 2019
MBQB 154, and Sawchuk Estate v. Evans et al., 2012 MBQB
82).
Transfer of real property by a parent into joint ownership with
an adult child has also occasionally resulted in harsh unintended
consequences for the transferor parent. For example,
- the parent may be unable to undo a
gift of joint tenancy to the child once it has been duly made (see,
for example, Boda Estate v. Boda, 2014 BCCA 354);
and - the child’s interest in the real
property may become subject to a claim by his or her creditors,
even while the transferor parent is alive and even though the
transferee child contributed no value to the property and is
unaware of the transfer (see, for example, Gauthier Estate v.
Gauthier, 2012 MBQB 101).
Beneficiary Designations
Beneficiary designations can also lead to strange results when
they do not evolve with changing circumstances. Marriage generally
revokes a will in Manitoba, unless the will was made in
contemplation of marriage (see The Wills Act, sections 16
and 17); however, it does not revoke a beneficiary designation (see
The Beneficiary Designation Act (Retirement, Savings and Other
Plans), section 13). Similarly, although divorce
revokes a gift made in a will to a spouse (see The Wills
Act, section 18(2)), it does not revoke a beneficiary
designation made in favour of the same beneficiary (see The
Beneficiary Designation Act (Retirement, Savings and Other
Plans), section 13; and, for example, Klassen Estate v.
Klassen (1998) 131 Man. R. (2d) 158 (MBCA)).
A parent may name an adult child as the executor of her estate
and the beneficiary of an insurance policy or registered account,
with the expectation that the child will carry out the wishes
articulated in her will; however, the child may perceive his
entitlement as beneficiary of the policy or the account less
considerately and act to the detriment of another sibling who the
parent also intended to benefit (see, for example, Dreger
(Litigation Guardian of) v. Dreger, [1994] M.J. No. 520
(MBCA)).
We hope that given the elimination of probate fees in
Manitoba, probate planning through joint ownership or beneficiary
designations is undertaken more carefully, and undue confusion and
litigation are avoided.
Why Plan for Probate in the Absence of Probate Fees?
Despite the elimination of probate fees in Manitoba, probate
planning remains useful in particular circumstances, such as the
following:
- Creditor protection.
Section 173(2) of The Insurance Act exempts an insurance
contract from execution or seizure while a beneficiary
“designation is in effect in favour of a spouse or common-law
partner, child, grandchild or parent, or any of them, of a person
whose life is insured.” It also exempts any insurance money
payable to a designated beneficiary on the death of the insured
from “claims of the creditors of the insured” (see
The Insurance Act, section 173(1)). Accordingly, if a
person anticipates having significant exposure to creditors
(including exposure pursuant to a contingent liability, such as a
guarantee for the loans of a business venture), it is important to
ensure that beneficiaries are duly designated for any personally
held insurance policies (if necessary, by means of an insurance
trust declaration to provide appropriately for any minor, disabled,
or spendthrift beneficiaries). - Land transfer tax
planning. Under section 112(1) of The Tax
Administration and Miscellaneous Taxes Act (TAMTA),
land transfer taxes are usually payable when real property is
transferred in kind by an estate to a beneficiary, although
exemptions apply to certain transfers of farmland (TAMTA section
113(1), transfers of non-commercial property by an executor or
administrator of a person’s estate to the person’s spouse
or common-law partner (TAMTA section 114(1)(e)), and transfers to
charities (TAMTA section 113(2)(b)). Consideration should continue
to be given to corporate ownership of real property (whether by
means of a bare trustee or otherwise) in order to limit land
transfer tax exposure, when appropriate. - Alter ego and joint
partner trusts. Alter ego and joint partner trusts remain
viable will substitutes for maintaining confidentiality, limiting
the possibility of a dependant’s relief claim, and reducing
probate fee exposure with respect to a person’s assets in other
provinces. - Multiple wills.
Multiple wills have been successfully used as a probate planning
technique in Manitoba, starting with The Estate of Robert
Parrish Spear (PR 14-01-99254) where the Court issued a grant
of probate limited to Mr. Spear’s primary estate on or about
August 17, 2015. Subsequently, Manitoba courts have issued grants
of probate limited to the primary estate subject to service of the
filings on the attorney general, and the office of the attorney
general confirming in writing that it either consents to the grant,
takes no position with respect to it, or does not object to the
grant. In the absence of a probate fee levy, the Court may no
longer require confirmation of the attorney general’s position
with respect to such requests in the future. Multiple wills remain
a consideration when estate planning for clients with corporate
interests, such as those who desire confidentiality and want to
prevent public disclosure of business information, or those who
have assets in or may move to jurisdictions such as Ontario or
British Columbia, where they will experience more probate fee
exposure.
If you have questions with respect to the foregoing or,
otherwise, require assistance with your estate planning or
administration, please do not hesitate to contact our Winnipeg
Estate Planning and Administration group.
This article first appeared in STEP Inside, a
publication of The
Society of Trust and Estate Practitioners.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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