Do Shares and Investment Accounts Need Probate in Ontario?

When someone dies holding shares, mutual funds or a brokerage account, the institution will usually freeze the account and ask for documents. Families are often told they need probate and are unsure whether that is true.

This article explains how Ontario treats different kinds of investment accounts, which ones fall outside the estate for tax purposes, and what to ask a brokerage. Each firm has its own internal requirements, so confirm them directly.

The general rule for investments

Probate is the court procedure that gives someone authority to act as estate trustee. In Ontario the court issues a Certificate of Appointment of Estate Trustee.

An estate normally must be probated if the deceased owned real property, or assets held by a financial institution, in their own name. Investments are included in the value used to calculate Estate Administration Tax.

Accounts that may not need the estate at all

Some accounts pass outside the estate, and they are not counted in the estate value.

• Assets held jointly that automatically become the property of the other owner or owners on death are not included in the estate value.
• Registered Pension Plans, RRSPs, RRIFs and TFSAs with a beneficiary designation or beneficiary declaration are not included.
• If there is no such designation, those plans are included in the estate value.

Joint accounts can be more complicated than they look. When a parent puts money in a joint account with an adult child without payment, the law presumes the child holds it in trust for the parent's estate. That presumption can be rebutted by evidence, on a balance of probabilities, that the parent intended the child to have the right of survivorship. For transfers to a minor child, the starting point is instead that the transfer is presumed to be a gift. If ownership is unclear, get legal advice.

Estate tax and smaller estates

No Estate Administration Tax is charged on the first $50,000 of an estate's value for certificates applied for on or after January 1, 2020. Above $50,000 the tax is $15 for every $1,000, or part of $1,000. The tax is paid as a deposit when the application is filed with the Superior Court of Justice.

An estate valued at $150,000 or less can use the simplified Small Estate Certificate process. Estates over that limit must apply for a Certificate of Appointment of Estate Trustee. Applications are usually processed within 15 business days, and longer if documents are missing or a judge must decide an issue.

After the certificate: clearing tax and distributing

Once the trustee has authority, they collect the assets, pay taxes, bills and debts, and distribute the residue to those entitled to it. A deceased person is considered to have sold all capital property just before death, which can create a capital gain on the final return. Capital property left to a surviving spouse or common-law partner (or spousal trust) who lived in Canada can roll over tax-deferred, as long as the property generally vests in the spouse within 36 months of death. The legal representative can also elect not to use the rollover.

Before distributing, the legal representative should get a CRA clearance certificate. A representative who distributes first is personally liable for any tax debt, up to the value of the assets distributed.

What to do next

• List each account, who is named as owner and whether there is a joint owner.
• Check each registered plan for a beneficiary designation or declaration.
• Ask each brokerage in writing what documents it needs for that account type.
• Gather the original will and proof of death.
• Keep statements showing date-of-death values.
• Speak with a lawyer about the application and an accountant about the final return.

Frequently asked questions