When it comes to estates, there are 2 main types of taxes/fees that come up. These are income taxes and inheritance fees. These are not the same, but the two taxes come at the same time, after someone’s death. This article does not deal with the income tax portion of the estate; this must be taken into account before making any decisions about the estate, as income and estate taxes are related. What are probate fees? These are fees charged by the government to read your will and make sure the instructions in the will are carried out. The court reading your will is supposed to be there to ensure assets are transferred between people fairly. Fees charged for letters testamentary depend on the value of the assets found in the will. If something is not in the will, it will not be included in the probate fee. Despite the title of this article, your estate does not have to include probate fees, but in most cases, there would be a probate fee unless the estate is very small or all assets are distributed outside of the will.
This last statement raises some tax planning questions: How could something not be included in the will? Distributing an asset outside of the will means giving someone access to your bank accounts by making them joint, jointly owning a house or property, designating someone as the beneficiary of a registered account or insurance policy, transferring assets to a corporation, or giving money to a charity in the event of death through life insurance or by giving someone a gift. Keep in mind that each of these strategies may have drawbacks depending on your situation, so seek professional advice before making decisions about who should receive your assets. The whole purpose of a will is to make sure assets are handled fairly because there have been many disputes and difficulties in the past dealing with assets due to trust issues, theft, or communication issues.
The value of the estate at the time of death is very important to ensure that the probate fee calculation is correct. This means that someone’s asset records must be up to date and readily available for the executor/executor to access. The executor/executor is the person appointed by the deceased person (the decedent) to ensure that the instructions of the will are carried out and that the assets are distributed to the intended parties.
Note that probate fees are also called estate management taxes, or EAT. Probate fees depend on the provincial jurisdiction, so they will be read in the Ontario court or another provincial court if necessary. In the case of assets located in different provinces, the regulations of each province should be consulted when determining succession rights.
How much are these probate fees?
It depends on the value of the inheritance on the day of death. The numbers given below are for an estate based in Ontario. If the day of death is before January 1, 2020, an estate worth $1,000 or less will have no probate fees. An inheritance worth more than this would be calculated as follows:
If a Certificate of Appointment of Trustee of Estate is requested before January 1, 2020, the tax rates are:
$5 for each $1,000, or part thereof, of the first $50,000 of the value of the estate, and
$15 for each $1,000, or portion thereof, of estate value in excess of $50,000.
Note: There is no estate administration tax payable if the value of the estate is $1,000 or less.
After January 1, 2020, an estate valued at $50,000 or less would not have probate fees.
If a Certificate of Appointment of Trustee of the Estate is requested on or after January 1, 2020:
There is no estate administration tax due if the value of the estate is $50,000 or less. However, exempt estates must continue to file an Estate Information Statement within the prescribed time.
For estates valued at more than $50,000, the estate administration tax will be assessed at $15 per $1,000 (or part thereof) of the value of the estate over $50,000.
