When an Ontario resident dies, his estate is usually subject to probate. That's simply the court process of estate settlement. It includes paying the decedent's creditors and transferring assets to the heirs.
Probate isn't necessary in Ontario if all of the decedent's property was held in joint tenancy with another person. Spouses often hold real estate and financial accounts in this matter. If the person had life insurance policies or retirement accounts, these include named beneficiaries and therefore avoid the probate process.
Certificates of Appointment
As of January 1, 2015, new laws in Ontario changed the application for probate into an application to "certificate of appointment of estate trustee with a will." The estate representative should file this application, along with the decedent's will, at the Superior Court of Justice of the county in which the decedent lived. The court will issue a formal appointment of the estate trustee -- the position formerly known as executor -- within 15 business days.
Unless the estate is relatively uncomplicated, it is wise to hire a lawyer to help estate administration. Legal fees, and other professional services such as accountants, are payable out of estate funds. Court employees are not permitted to help estate trustees with the filling out of forms or give any legal advice.
Estate Administration Tax
The estate administration tax must be paid to the Ministry of Finance at the time of the application for estate trustee application. The estate administration return must be filed by the estate trustee within 90 days after the issuance of the appointment. This return must include all of the decedent's probate assets and their value at the time of death. These include:
- Ontario real estate -- real estate outside the province is not included
- motor vehicles
- non-registered, non-retirement investments.
If the estate trustee fails to file the estate administration return, he is personally liable for fines up to twice the amount of the tax, or two years in prison.
As of the time of publication, the tax rate -- on the entire probate value of the estate -- was $5 for each $1,000 of the initial $50,000 of the estate value, and $15 for each $1,000, of the estate value above $50,000. An estate valued at $240,00 would owe $3,100 in administration tax.
The basic functions of estate probate include:
- Accounting for liabilities and assets
- Protecting estate property
- Paying estate debts
- Paying any taxes due, both the decedent's final tax filing and estate taxes
- Determining entitlement of those sharing in the estate
- Distributing assets to beneficiaries.
The Clearance Certificate
After the decedent's creditors and all taxes are paid, the estate trustee should get a clearance certificate from the Canadian Department of Revenue before distributing the assets to beneficiaries and closing the estate. When sending in Form TX19, "Asking for a Clearance Certificate," attach a copy of the will and relevant probate documents. Without the clearance certificate, the estate trustee could be liable for any monies still owed by the decedent.