Deemed Disposition and Probate

Some years ago when I had to perform the tasks of executor for my wife's will, I was caught in a very unusual unusual situation. Since the the tax rules specify that all of a deceased taxpayer's assets are deemed to be sold as of the date of death, capital gains are liable to be paid on that deemed disposition. That's exactly what happened with Nortel at the time, which only begun its slide by the time of death at the end of September 2000.

By the time the will was probated in December 2000, the stock price had dropped by close to 40%. The capital gains tax payable almost exceeded the value of the stock holding. By the time the estate was ready to be distributed some months later, it did by a good margin. The only way to avoid a huge tax hit was to avail myself of a provision that allows a spouse, and only a spouse, who is to inherit some or all of an estate, to receive his/her share at the original cost of the deceased taxpayer and to avoid deemed disposition of those specific assets. At least the executor, unless the will states otherwise, is at liberty to decide who will receive which specific assets.

This incident revealed to me some interesting characteristics of having a will probated. Financial institutions seemingly will generally (except for things like funeral expenses) refuse to accept instructions of the executor (e.g. liquidating assets) until the will is probated unless the amounts are quite small. This appears to be a matter of the financial institution showing proper care to avoid getting sued later by disgruntled inheritors. Same goes for the executor. There does not seem to be any law that requires a will to have received probate from a court before it can be carried out.

However, even when a will has been probated, if another later will is found and can be shown to be valid then the original probated will does not stand and the executor would have to start all over again. What does all the money paid for probate actually give one then? It can cost a lot of money ($5 per thousand on the first $50k of assets and $15 per thousand on the excess in Ontario). Certainly it doesn't happen very quickly - a matter of months at best.
Does the court check for existence of other wills - no! how could it in practical terms? Does the court even check the accuracy of assets listed in the estate - again, no, unless some lawyers out there can correct me ... some dishonest people might be tempted to understate the total assets, n'est-ce pas? The bottom line is that the probate fee is not a fee for a service, it is a tax on wealth. Why not a flat fee of $150 or some such amount that reflects the actual work involved by the court?