“Probate fees” (properly known in Ontario as ‘estate administration tax’) must be paid to the government of Ontario when an estate is probated.
Probate fees (“estate administration tax”) are paid from the estate, and are not borne by the trustee/executor.
Use this calculator to estimate the ‘estate administration tax’ payable for an estate.
How Estate Administration Tax is calculated
Probate fees are calculated on the value of the estate probated:
- $nil on estate assets up to $50,000, and
- $15 per $1,000 of estate assets over $50,000.
Note that EAT is an ‘asset’ tax, not an income tax as is the norm in Canada.
Note: the ‘no EAT on the first $50,000’ rule is different from the ‘simpler process for small estates under $250,000’ for probate.
What must be included in estate assets
When paying EAT, all assets owned by the deceased which form part of the deceased’s estate that is subject to probate must be included (see below for exclusions). This includes:
- All real estate in Ontario, minus the value of any encumbrances on that real estate (encumbrance = mortgage or lien). Thus, you deduct the outstanding value of any mortgage, HELOC, or lien or charge registered against land in Ontario. You do not include real estate that was owned in ‘joint tenancy with a right of survivorship’ (see below). You do include the proportionate value of real estate owned ‘as tenants-in-common’
- All personal property of the deceased including
- All investments (except items that had named beneficiaries, such as pensions, RRSPs, TFSAs and RRIFs with beneficiaries other than the estate)
- All bank accounts (except those held in joint ownership)
- All vehicles including recreational vehicles.
- Collections (coins, cards, …)
There is no deduction for any debts that are not secured by ‘encumbrances’ against Ontario real estate. There is no deduction for credit card debt, car loans, student debt, margin debt, investment loans, tax arrears or personal debt, unless the debt is secured by a charge against Ontario real estate. There is no deduction for mortgages or other charges registered against property outside Ontario. If the debt is secured by a lien or charge against land (for instance, when tax debt is secured by a tax lien) then, you do deduct the amount secured.
EAT is assessed on the fair market value of the assets of the deceased subject to probate on the date of death. No deduction is made for selling costs (eg. real estate commissions). The estate trustee should document and retain copies of the basis for their assessment of the value of the estate, including estimates where received by experts or appraisers. This is particularly important if the asset in question will not be sold to a purchaser at arms length to the estate (for instance, real estate or art that passes to a beneficiary).
If there are multiple wills, and one will is subject to probate and another is not, include only the assets covered by the will subject to probate.
What is not included in probated estate assets
The following items are not ‘assets of the estate’ for EAT purposes, do not attract EAT and are not disclosed on the EAT return:
- Real estate outside Ontario
- Real estate owned ‘in joint tenancy with a right of survivorship’ (technically, upon the death of one owner, there is no transfer of title as the deceased simply ceases to be an owner, and the surviving co-owner remains the sole owner of the property)
- Life insurance that passes to a named individual
- RRSPs/TFSAs/RRIFs that pass to a named individual
- Bank accounts held jointly with another person
Paying the EAT
Generally, EAT must be paid in full by certified cheque or money order when the probate application is filed. Uncertified personal cheques are not acceptable.
Sometimes the EAT is advanced as a loan to the estate by the estate trustee or a beneficiary. This loan is repaid by the estate trustee after probate from assets of the estate.
If the EAT is a large amount, and none of the estate trustees or beneficiaries has sufficient funds to lend to the estate, it may be possible to get funds to pay EAT from the cash or investments of the deceased. This is done by requesting that the financial institution provide a bank draft payable to the Ministry of Finance for the probate. A formal request from the lawyer assisting the estate trustee with the probate application is usually best.
A deferral of EAT may be granted upon special application to the Court. These are not automatic and require care. Generally, these require proof that the estate does not have liquid assets, but does have real estate in Ontario. Deferrals are often for a limited period of time (for example 90 days), and require a personal undertaking from the estate trustee to pay.
The EAT Return
The estate trustee must file the EAT return within 90 days of receipt of the Certificate of Appointment of Estate Trustee. The return requires a detailed listing of all assets of value of the estate to which EAT is applicable.
It is a serious offence to file a false EAT return.
We have grave concerns about assets that were held ‘in joint tenancy’ with one adult child of the deceased, but are the proceeds are intended to be distributed to ‘all beneficiaries of the will’. This seems a transparent attempt to avoid Estate Administration Tax for assets that, in fact, are part of the estate.
Estimates, updates and refunds
It is possible to file a probate application based on an ‘estimated’ value. This should be employed if values are truly unknowable to the estate trustee prior to probate.
An estate trustee has a duty to file and update EAT application, and pay any additional EAT due in a timely fashion when the change in value becomes reasonably known to the estate trustee. Recall, however, that this is applicable where the value of the estate on death was under-valued; if estate assets (such as real estate) appreciate after death but before sale, this post-death gain will result in taxable income for the estate but does not result in a need to re-file or pay more EAT.
While in theory it is possible to obtain a refund of an over-payment of EAT, in practice this is difficult, slow, and not always successful.