Ontario Estate Administration Tax Without a Certificate of Appointment

A family often finds out that a loved one left only a modest bank account and asks a reasonable question: does the bank have to see a court certificate, or can it simply release the money? If no certificate is issued, is there any tax at all?

There is no single answer, because the bank sets its own requirements. This article explains how the tax is connected to the certificate, what Ontario says about financial institutions, and which assets sit outside the estate altogether. A lawyer can confirm what applies to your situation.

How the tax connects to the certificate

Under the Estate Administration Tax Act, 1998, the tax is payable by the estate immediately upon the issuance of an estate certificate. An estate certificate includes a certificate of appointment of estate trustee, including a small estate certificate.

The amount you deposit when applying becomes the tax once the certificate is issued, and the deposit is refunded if no certificate is issued. In other words, the tax is tied to the court process. Whether you need that process at all is a separate question, and the answer often comes from the institution holding the money.

What Ontario says about banks and other institutions

Ontario says an estate normally must be probated if assets are held by a financial institution, and it advises confirming the requirements with the institution. The same guidance does not set a dollar threshold under which a bank must release funds without a certificate.

That means there is no general rule you can rely on that a small balance will be released automatically. Each institution decides what documents it needs before releasing money. Some account types, such as joint accounts, work differently, as explained below.

• Ask each institution what documents it requires for the type of account involved.
• Ask whether the answer depends on the size of the balance or the type of account.
• Get the answer in writing if you can, and note who you spoke with.
• Do not move or withdraw money from the deceased's account until you know the rules.

Assets that are outside the estate value

Not everything the person owned counts as part of the estate for the tax. The following are excluded from the estate value:

• Jointly owned assets that pass automatically to the other owner or owners.
• RPPs, RRSPs, RRIFs and TFSAs with a beneficiary designation.
• Real estate outside Ontario.
• The CPP death benefit.
• Assets the person owned before death but not at death.

By contrast, bank accounts, investments, TFSAs, RRSPs and RRIFs without a designated beneficiary, and insurance proceeds payable to the estate, are included in the value. The way an account is registered matters, so look at how each account and plan is held before assuming anything.

If a certificate does turn out to be needed

If the bank or another institution will not release funds without a certificate, the estate will need one. A Small Estate Certificate is available for estates valued up to $150,000, and larger estates use a certificate of appointment of estate trustee.

The tax figures then follow the usual rules. For applications on or after January 1, 2020, an estate valued at $50,000 or less is exempt. Above that, the tax is $15 per $1,000, or part thereof, of the value over $50,000. For instance, a $75,000 estate would owe $375.

Even when the estate is $50,000 or less and no tax is payable, the Estate Information Return is still required. It is due within 180 calendar days after the certificate is issued.

What to do next

• List each account and how it is held: sole name, joint, or with a named beneficiary.
• Contact each institution and ask what it requires to release funds.
• Check whether each joint account actually passes automatically to the other owner, and whether each plan has a named beneficiary, since those are among the assets outside the estate value.
• Add up the assets that would be in the estate and compare the total to the $50,000 exemption and the $150,000 Small Estate Certificate limit.
• Keep records of every conversation and document you receive.
• Speak with a lawyer if an institution requires a certificate or if the ownership of an asset is unclear.

Frequently asked questions