Applying for Probate
Applying for probate is the process of registering the deceased’s Will with the Ontario Superior Court of Justice and applying for a “Certificate of Appointment of the Estate Trustee” (the executor). Probate also requires the payment of the estate administration tax.
A Will must be probated in order to formally pass assets from the deceased person to his/her beneficiary. Banks, trust companies and other financial institutions will often require that a Will has been probated to release funds to the estate executor so that the estate executor can administer the estate. Learn more about the consequences of dying without a Will.
The Estate Administration Tax
The estate administration tax (“EAT”) (formerly known as “probate fees”) is a tax charged on the total value of the deceased’s estate. The value of the estate is the value of all assets owned by the deceased at the time and includes:
- Real estate in Ontario;
- Amounts in bank accounts;
- All property which was beneficially owned by the deceased (ie, the property may have been in someone else’s name); and
- All other property, wherever situated.
Encumbrances (eg, a mortgage, loan or other secured interest) against any assets other than real estate cannot be deducted from the value of the assets.
Assets that the deceased may have had before death, but not at the time of death (eg, insurance payable to a named beneficiary [and not payable to the deceased’s estate], jointly held property and real estate not in Ontario) are not included in the value of the estate.
The current EAT rates are:
- $5.00 for each $1,000 of the first $50,000 of the value of the estate, and
- $15 for each $1,000 of the value of the estate exceeding $50,000.
The EAT on a $1,000,000 estate would be $14,500. The EAT on a $15,000,000 estate would be $224,500.
Are all of a Deceased’s Assets Subject to EAT?
Not all Wills are subject to probate and where probate is not required, the EAT can be avoided. In Ontario, multiple Wills are used as an effective estate planning strategy by business owners and professionals to avoid or reduce the EAT.
Usually, a business owner (and other high net worth individuals) will have two Wills prepared: a primary Will and a secondary Wills. The primary Will would include assets which must be probated (see the list above). The secondary Will would include assets that are not required to be probated, most significantly, private company shares, antiques, jewelry and other private valuables.
Where there are two Will, the estate trustee will apply for a “Certificate of Appointment of Estate Trustee with a Will Limited to the Assets Referred to in the Will” and will submit for probate the primary Will.
Example of Probate Savings
John Doe, when he was young, started a company, ACME Inc., which was tremendously successful at manufacturing and selling widgets. John’s wife, Jane, predeceased him. They had children. At the time of John’s death, ACME’s value had grown to $5,000,000. John’s success allowed him to collect antiques (valued at $500,000) and paintings (valued at $250,000). John had a house ($1,500,000), a cottage ($1,000,000) (both properties were in Ontario) and a bank account ($900,000).
If John had one Will prepared, on his death, his EAT would have been $136,750 (his estate would have been valued at $9,150,000).
John, however, consulted a lawyer who prepared two Wills. The primary Will included the assets which would have to be probated to pass to John’s beneficiaries (the properties and bank account). The secondary Will included the assets that are not required to be probated (the ACME shares, the antiques and paintings. The EAT on his primary estate ($3,400,000) would be $50,500, which allowed John to save $86,250 in EAT.
 There is no EAT payable if the value of the estate is $1,000 or less.
 See the Ontario Ministry of the Attorney General’s EAT calculator at: https://www.attorneygeneral.jus.gov.on.ca/english/estates/calculate.php.