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Settling an estate involves various legal and financial steps, one of the most important being probate. In Ontario, probate is the court process that confirms the legal authority of a person to act as the estate trustee of a deceased estate. When a person dies with a Will, probate certifies that the Will is their valid last Will and testament and grants the executor the authority to manage and distribute the estate. If there is no Will, probate determines who will administer the estate and ensure that assets are distributed according to Ontario’s intestacy laws.
Probate is often required when an estate holds assets that financial institutions, land registries, or other third parties will not transfer without legal confirmation of the executor’s authority. The need for probate depends on the nature of the assets, the institutions holding them, and whether there are disputes over the estate. Real estate, bank accounts, investments and shares in private companies often necessitate probate. Disputes over the Will, such as claims of invalidity or challenges by beneficiaries, can also make probate necessary. Not all estates require probate. If assets pass directly to joint owners or named beneficiaries probate may not be necessary.
What is Estate Administration Tax?
Probate is not just a legal process, it also has financial implications. One of the key costs is the Estate Administration Tax (also know as probate fees), which must be paid before the probate application can proceed. This tax is calculated based on the value of assets that require probate.
The current Estate Administration Tax rate in Ontario is $0 for the first $50,000 of the estate’s value and 1.5% on the amount exceeding $50,000. The Ontario Ministry of Finance has an Estate Administration Tax calculator that you can use to determine what the probate fees might be. Understanding how this tax applies and which assets are subject to it is essential for executors managing an estate.
Applying for Probate
The probate process involves submitting an application to the Ontario Superior Court of Justice. The application includes the original Will (if one exists), a death certificate, an inventory of assets, and court forms.
Once the application is filed and the Estate Administration Tax is paid, the court reviews the submission. The time it takes for the court tp process applications will depend on the workload of that court, but it typically takes between 1-6 months.
If everything is in order, the court issues a Certificate of Appointment of Estate Trustee, granting the executor the legal authority to manage the estate. This certificate allows the executor to sell or transfer assets, settle debts, and distribute inheritances. Within 180 calendar days of receiving a certificate, you must file an Estate Information Return, which lists the value of the deceased’s assets at the time of death with the Ministry of Finance.
Probate is often time consuming and estate issues can be complicated. I strongly encourage you to seek the assistance of an estate lawyer to discuss legal risks, whether a probate application is needed, or even facilitate the probate process for you.
Reducing the Need for Probate
While probate is often necessary, there are steps you can take to minimize impact:
Joint Ownership with Right of Survivorship allows assets to pass directly to the surviving owner.
Naming Beneficiaries on life insurance policies, RRSPs, RRIFs, and TFSAs ensures these assets can pass outside of the estate.
Using Multiple Wills can exclude certain assets from probate, such as private company shares.
Gifting Assets when Alive reduces the estate’s value and thus probate fees.
Establishing a Trust allows assets to be held and transferred outside of probate.
Probate is an essential legal process in Ontario that ensures estates are administered correctly. Understanding how probate works, when it is required, and the associated costs can help executors and beneficiaries navigate the process more efficiently. If you need guidance on probate the team at E is for Estates can provide tailored advice to meet your needs.
This article is intended for informational purposes only. For personalized advice tailored to your specific circumstance, please reach out to the E is for Estates team.
Erin L. Watson, B.A., JD
Lawyer & Notary Public
E is for Estates
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