How to Avoid Probate in Ontario

What Is Probate?

In Canada, every Province and Territory has its own unique set of rules and regulations regarding probate. The following information is intended for residents of Ontario only.

When someone dies, everything that they own — real estate, bank accounts, investments, and any other assets — is called their estate. In Ontario, an Estate Trustee (often called the Executor) is the only person with the legal authority to manage or distribute an estate.

Probate is the legal process through which the Estate Trustee disburses the assets of this estate and the Ministry of Finance confirms that all outstanding taxes and debts have been paid. It is important to note that both federal and provincial taxes take precedence and that all debts are required to be settled before any beneficiaries of the estate receive funds or assets.

For any estate with assets more than $50,000, there is an additional tax called the Estate Administration Tax (EAT).

Regardless of the size of the estate, the Estate Trustee is legally obligated to file an Estate Information Return (form 9955E) with the Ministry of Finance, and remit the owed Estate Administration Tax, within 90 days of their appointment as Estate Trustee.

Probate is a matter of "public record" and is completely accessible to the general public, upon request. If you do not wish to have your financial records available to the public upon your death, you will need to take the necessary steps to avoid probate before you pass away and are still healthy enough to do it.

How long does Probate take in Ontario?

Currently the average probated estate takes approximately one year to settle. The length of time has been growing over the years, primarily due to backlogs in the court system. Any complications at all can dramatically extend the time required. Poorly planned estates, even if not complicated, can take several years to settle. Seeking out advice from professionals is often the best way to avoid this scenario.

Is Probate required in Ontario?

Although it is possible to arrange an estate to completely avoid probate, the majority of estates in Ontario will require this process. The requirement to probate an estate can be waived, avoided, or at least greatly reduced, with the utilization of specialized pre-death planning specifically designed to accomplish this.

How to minimize or avoid Probate fees and Estate Administration Tax (EAT)

It is possible to completely avoid probate on most estates, but currently very few estates have done the necessary pre-planning to accomplish this. Typically, this is a moderately complicated process that would require using the services of an experienced Financial Planner who specializes in Estate Planning.

Essentially the process involves determining which assets are subject to probate and, where it is reasonable to do so, transfer these assets into an asset class that is not subject to probate. This process may be fairly simple, but it could take several years, or possibly considerably more, to complete. Depending on the size and complexity of the estate, there may or may not be a fee associated with this planning process.

Accountants and lawyers are usually utilized in the probate stage itself, and not the pre-planning stage. They do not generally have the skill set or tools at their disposal to arrange to bypass or avoid the need for probate and, for most people, would be considered part of the probate fees to the estate.

Estate Administration Tax (EAT)

This is generically referred to as a "Probate Fee" and is one of many fees associated with probating an estate. As all government tax systems are inclined to do, this does change from time to time.

As of January 1, 2020, the Estate Administration Tax is still eliminated for taxable estates with assets of $50,000 or less and reduced by $250 for larger taxable estates. The current tax rate is 1.5%. At that rate, including the $250 reduction, for an estate value of $1,000,000 the Estate Administration Tax payable is $14,250.

This does not include income tax owing or fees charged by accountants, lawyers, courts, or the Estate Trustee.

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