By Olev Edur
My wife and I are in our 80s, and our wills leave all our assets to our only son, who is now in his 50s. We both have pretty good pensions, so we don’t need to touch our savings (other than what we’re required to withdraw from our RRIFs every year). The RRIFs have about $80,000 left, and we also have about $200,000 in ordinary investment accounts, plus we own our home. We’ve read that you can avoid probate fees by giving assets to kids before you pass on or putting those assets into joint ownership. Would there be a lot of savings?
In your case, probably not. While some provinces—notably British Columbia, Ontario, and Nova Scotia—have fairly high probate fees (up to 1.5 per cent of total estate assets, even more in Nova Scotia), the fees in your province of Alberta are capped at a maximum $525. That’s the most you could save, and it would probably cost you that much or even more just to execute the transactions.
There might be some income-tax savings to be had from an early transfer of assets, but it’s unlikely. You don’t mention your income, but unless your son is in a lower tax bracket than you—and given that you’re retired while he’s probably in his peak earning years, that’s unlikely—the assets you transfer could be taxed higher in his hands than in yours. You can, however, look into this by comparing tax returns.
One further point: if your son owns his own home and you transfer your home or go the joint-ownership route, you’d effectively be converting a tax-free asset into a taxable one, since an individual (or couple) is allowed to own only one tax-exempt principal residence.