A number of times I have had people ask me about the things that need to be done after a death has occurred. They will often bring up that known, but misunderstood, word “probate." While the funeral home does most of the important government paperwork for you (or at least I believe that should be part of their service) - regarding the SIN, health card cancellation, monthly OAS and CPP benefits, spousal/children support benefit and CPP lump sum death benefit – there will be other things that need to be addressed as far as the individual's estate goes that the funeral home is not involved in. Depending upon a person's assets, that can be a larger or smaller task. But here, we have the basic probate questions and answers.
WHAT IS PROBATE? / In Ontario, an estate trustee is the only person with the legal authority to manage or distribute an estate. Probate is a procedure to ask the court to: give a person the authority to act as the estate trustee of an estate; or confirm the authority of a person named as the estate trustee in the deceased's will. Your estate is everything you owned at the time of your death. The process of paying your bills and distributing what's left is called probate. The executor of your estate, the person responsible for dealing with your will and estate after your death will use your assets to pay off your debts.
WHAT ASSETS ARE INCLUDED FOR PROBATE SERVICES? / Not everything you own will automatically go through probate. Assets that generally do not go through probate are 1) jointly owned assets that transfer to the surviving owner; 2) assets that have a valid beneficiary designation; and 3) assets that are in a trust. Jointly owned assets like joint bank accounts pass to the surviving joint owner by right of survivorship. Designated assets like life insurance, an RRSP, or RRIF pass to the beneficiary and bypass probate, unless payable to the estate. By doing so, the assets will pass on directly to a beneficiary when they die without attracting a hefty probate fee.
WHAT IS THE COST TO PROBATE THE WILL IN ONTARIO? / The change to the tax rate for estate administration tax came into effect on Jan 1, 2020. The result of this change is that in Ontario, there is no estate administration tax payable if the value of the estate is $50,000 or less. If the estate is over $50,000, the estate administration tax will apply at a rate of $15 for every $1,000 (or part thereof) of the value of the estate over $50,000
Ontario (as of Jan 1, 2020) will be the only province in Canada that provides for a full exemption of estate administration tax for estates under $50,000.
IS PROBATE REQUIRED?
Probate is required for most estates in Ontario. In a few, relatively rare cases, the requirement to probate is waived or avoided by pre-death planning. If the estate includes real estate that does not automatically vest in someone like the spouse of the deceased, then probate will almost always be required.
THE “P" WORD
