Imagine a world where you can sidestep the often cumbersome and costly probate process—sounds appealing, right? One intriguing way to achieve this is through the possession of gold bars! In a recent series of eight articles I penned, I explored various methods for avoiding probate fees and complications. This endeavor was inspired by a reader's challenge, who accused legal professionals like myself of profiting off the misfortunes tied to probate disputes. He urged me to shed light on effective strategies for circumventing probate altogether.
Recently, I had the pleasure of presenting on this very topic to an enthusiastic group from the Society for Learning in Retirement. What a remarkable organization it is! While they do have some paid administrative staff, the heart of the organization is powered by volunteers. They host a variety of presentations, all delivered by dedicated volunteers, covering a broad range of subjects. These range from historical explorations such as “The Acadians: From Nova Scotia to Louisiana”, to health-related topics like “Understanding Stroke: Prevention and the Role of a Healthy Lifestyle”, and even technology-focused discussions on “AI Literacy for Everyday Life.”
Beyond presentations, the society also offers courses, including intriguing options like poetry writing, memoir crafting, and an introductory course titled “iPad for Novices.” With an annual membership fee of just $25.00 and minimal costs for classes and presentations, it's no wonder that many upcoming offerings are already at full capacity.
During my presentation, while addressing questions from the audience, it dawned on me that I had overlooked another vital probate avoidance strategy: holding assets that do not require probate approval. Yes, I'm talking about items like gold bars!
One audience member, her eyes sparkling with excitement, shared that she had invested in gold back in 1968. According to my research, the price of gold has skyrocketed from $43.50 USD per ounce in 1968 to over $4,600.00 USD today. It’s easy to see why she was so thrilled!
Now, let’s delve into how assets like gold bars—and other unregistered items—affect the probate process.
First, let’s clarify what probate actually means. When I refer to "probate," I'm talking about the estate grant, which is essentially a court order that empowers an estate representative to manage estate assets.
This estate grant is necessary when it comes to transferring or accessing any assets that are registered with third parties, such as banks, insurance companies, or land title offices. I’ll refer to these as "registered assets."
In my column series, I provided several strategies for arranging your affairs in a way that avoids having any estate assets. I discussed approaches like spending money during your lifetime, gifting to loved ones, and utilizing mechanisms such as joint tenancy, trusts, and investments with designated beneficiaries.
Assets held in joint tenancy automatically pass to the surviving joint owner without requiring an estate grant. Similarly, assets placed in a trust and those that can transfer via beneficiary designations—like Tax-Free Savings Accounts (TFSAs), Registered Retirement Income Funds (RRIFs), and segregated funds—are excluded from the probate process.
If all your registered assets seamlessly transition to your chosen beneficiaries without needing an estate grant, then probate becomes unnecessary. And with no probate comes no associated fees or legal costs for applying for the estate grant.
This is where it gets interesting: the value of your unregistered assets, such as gold bars, cryptocurrencies, electric bicycles, valuable furniture, and jewelry, does not factor into the probate equation.
For instance, you could have $5 million worth of gold bars stashed under your $15,000 bed. As long as there aren’t any registered assets requiring an estate grant, probate is off the table.
However, let’s say you inadvertently bought a vehicle valued at $50,000 that’s solely registered in your name without adding your spouse as a joint owner. In this scenario, your executor—who I assume would be your wife—will need to obtain an estate grant to transfer the vehicle into her name.
When applying for an estate grant, part of the process involves submitting a sworn document where your wife must list all estate assets along with their values. Your gold bars, along with the bed and other furniture and jewelry, all qualify as estate assets and must be accounted for. Even if only the vehicle necessitates the estate grant, probate fees will still apply to the entire estate.
I welcome your questions and thoughts on this subject. There might be enough material here for another article, where I could discuss an intriguing estate planning strategy involving the use of two wills—one for registered assets and another for unregistered ones. Would that pique your interest? Let's get the conversation started!
