Do Mortgages and Debts Reduce Probate Fees in BC?

If you are an executor and the deceased had a mortgage, a line of credit or other debts, it is natural to think the probate fee will be calculated on what is left after those debts. Many people assume this, and it can lead to a surprise when the fee is worked out.

This article explains how the fee is calculated in British Columbia, why debts do not generally lower it, and what can lawfully keep an asset out of the calculation. It is general information, so confirm your situation with the court registry or a lawyer.

This article covers the law of British Columbia.

The fee is based on gross value

The Probate Fee Act defines the value of the estate as its gross value, as sworn in a Statement of Assets, Liabilities and Distribution that is attached to the affidavit leading to a grant or resealing. The Act contains no deduction for debts or mortgages in that definition.

That statement is Form P10 for a domiciled estate. If the deceased was not domiciled or ordinarily resident in BC and property outside BC will be administered abroad, the applicant may file Form P11 instead.

So a home that is subject to a mortgage is generally counted at its full value for fee purposes, not at the value of the equity left over. The Act's wording is the basis for this, so it is sensible to confirm the approach with the registry. How real property should be valued for the statement is also something to confirm, because it depends on the facts.

What the fee looks like in dollars

No probate fee is payable if the value of the estate does not exceed $25 000. Above that, the fee is $6 for every $1 000 (or part of $1 000) by which the value exceeds $25 000 up to $50 000, plus $14 for every $1 000 (or part of $1 000) above $50 000.

Any part of $1,000 is charged as a full $1,000. The fee is in addition to the court fees to start the proceeding and file documents.

A $1,000,000 home counts as $1,000,000 even if a mortgage is owing, for a probate fee of $13,450. With the separate $200 court filing fee, the total is $13,650. That $200 is a Supreme Court filing fee, separate from the fee on estate value, and it is not payable if the estate does not exceed $25 000.

Who bears the debt is a different question

Under the Wills, Estates and Succession Act (WESA) s. 47(2), a beneficiary's interest in property that is subject to a purchase money security interest is primarily liable for that debt. That rule decides who bears the debt among beneficiaries. It does not change the fee base, which the Probate Fee Act ties to gross value.

What can lawfully stay out of the fee base

The fee base is limited to property that passes to the personal representative at the date of death. Assets that pass directly to someone else, for example by right of survivorship or a valid beneficiary designation, are outside the definition, so check each asset against it.

• Jointly held land with a right of survivorship passes to the survivor rather than to the personal representative.
• A participant in a benefit plan may name a designated beneficiary under WESA Part 5.
• Real property and tangible personal property, such as vehicles and household goods, count only if situated in British Columbia, so real estate in another province or country is outside the base.
• Intangible property such as bank accounts and securities outside BC counts only if the deceased was ordinarily resident in BC immediately before death, and then it counts wherever situated.
• An estate whose value does not exceed $25 000 owes no probate fee.

There are exceptions. A joint holding that is only a tenancy in common passes to the personal representative, and if joint tenants die simultaneously or cannot be shown to have survived each other, each is deemed to have held the property as a tenant in common. A designation may also fail. If it is invalid, the named beneficiary has died or the estate is named, the benefit may be payable to the estate and form part of the fee base.

Paying, correcting and next steps

The fee must be paid to the government before the grant issues. The personal representative pays it on behalf of the estate, but only in a representative capacity and not personally. The registrar issues the grant once all fees payable, including probate fees, have been paid.

If you later learn of an undisclosed asset or that a value must be revised, you must disclose it to the court and pay the difference between the fee paid and any greater fee that would have been payable. You must also promptly file a supplemental affidavit and pay all related fees.

• List every asset and debt, and note how each one is held.
• Check each asset against the fee base rules, including location and survivorship.
• Ask the registry how values should be shown on the Statement of Assets, Liabilities and Distribution.
• Keep records so you can correct the statement if new assets appear.
• Speak with a lawyer or accountant if joint ownership, designations or out-of-province assets are unclear.

Frequently asked questions