How to Use a Corporate Will to Save Money on Probate Fees

What are Probate Fees?

Probate fees are the costs involved in probate, the legal process of handling a deceased person’s estate. These fees tend to be a percentage of the total value of the assets involved in the probate process. Due to the potential scale, probate fees can be costly in the context of a business and can include fees such as court fees, executor fees, legal fees, accounting fees, and more. 

What is a Corporate Will?

A corporate will, also known as a secondary will, can help avoid probate and the fees involved by clearly specifying how a company’s assets should be distributed after the death of the company owner as well as listing the ongoing intended business operations, discussion of successors, and business assets. This will save both time and money that would alternatively need to be spent on probate and court fees if a corporate will isn’t in place.

A corporate will deals with the types of corporate property you own such as privately held shares. Typically, before assets in your estate can be disbursed, the will needs to go through probate, which in British Columbia costs roughly 1.4% of the value of the assets being probated. For those with large estates, this can amount to a large sum however, if properly managed, corporate wills don’t need to go through probate.

If you have shares in a privately held company, establishing a corporate will for those shares will help you bypass the probate process. Depending on the value of your shares, you could save your estate a significant amount of money and pass a greater portion of your legacy to the next generation. For example, if the shares in your company are worth $10m, then your estate will save $140,000 in probate fees.

Having Multiple Wills

By keeping your corporate estate distinct from your personal estate, the assets under your corporate will can be passed down to the next generation faster than if they were going to be governed by the personal estate. This can be helpful when management continuity is important, as is often the case for active businesses.

Keep in mind that you will need to have different executors for your personal and corporate wills. This can increase the complexity of the management of youkjr estate upon your passing. You should discuss this with your tax advisor to validate whether this is an appropriate estate planning solution for you.

Multiple wills are only allowed in certain Canadian provinces including British Columbia, however it is recommended you get professional advice before creating your secondary will. 

Save Money & Ensure Privacy

By having a corporate will, you will save money and increase privacy. Probate is a public process where the details are accessible to any member of the public, so you will also be protecting sensitive information and details about the company and its assets by avoiding probate. 

Keep in mind that there are some instances where your secondary or corporate will might require probate depending on local legislation and the nature of your assets, so it’s always recommended to discuss with a professional before making any decisions. 

Final Thoughts

To ensure the continued success of a business after the passing of its owner, it is highly recommended to invest time in establishing your corporate will to avoid future problems. Fees are among the biggest inconveniences when going through the probate process, particularly in businesses where costs can be high, but this doesn’t have to be the case.

Our team specializes in corporate wills so whether you need help drafting one or advice on how to start, get in touch with Parr Business today and we will be able to help.