Estate Valuation for Probate in Ontario: What You Must Value

If you are the estate trustee, you must state the estate's value when you apply for a certificate, and later report each asset on a return. Getting the value right matters because the tax depends on it and mistakes can be costly.

This article explains what goes into the value, what stays out, and how to support the numbers for a house, investments, vehicles and a business.

What counts toward the estate's value

The tax is based on the value of all assets the deceased owned at the time of death. That includes:

• Ontario real estate, less mortgages or liens on it
• Bank accounts, including foreign banks
• Investments
• Vehicles and vessels wherever located
• Property held in another person's name
• Business interests
• Insurance paid to the estate

The value matters because it sets the tax. For certificates applied for on or after January 1, 2020, there is no tax on the first $50,000, and above that the tax is $15 for every $1,000, or part of $1,000. The value is rounded up to the nearest $1,000, so for a $240,000 estate the tax is $2,850. Estates worth $50,000 or less pay no tax, but if a certificate is issued an Estate Information Return must still be filed.

What can be left out

Several assets are not part of the value for the tax:

• Assets held jointly that automatically become the property of the other owner or owners on death.
• Registered Pension Plans, RRSPs, RRIFs and TFSAs with a beneficiary designation or declaration. Without one, these plans are included.
• Real estate located outside Ontario.
• Assets the deceased no longer owned at death, and Canada Pension Plan death benefits.

Whether a particular asset is truly joint with survivorship, or has a valid designation, can depend on how it is held and on the paperwork. If it is unclear, a lawyer can confirm.

Some certificates are treated differently. For a certificate limited to the assets covered by one will, or in resealing cases, only the assets within that certificate's scope are counted, and certain property on a Reserve may be exempt. Some certificates, such as a Certificate of Appointment of Estate Trustee During Litigation, require no tax or Estate Information Return.

How to value each type of asset

Assets are valued at fair market value on the date of death. Values must be supported by documents such as account statements or an appraiser's opinion.

Ask each financial institution for statements showing the balance on the date of death, and keep them with your records.

What you cannot deduct

Only mortgages, liens and similar encumbrances on real property can be deducted, and only from that property's value. Funeral expenses, legal fees, loans and interest, vehicle debt, credit card debt, lines of credit, unregistered loans and real estate commissions cannot be deducted from the estate value.

This surprises many trustees. An estate with large debts other than a mortgage can still have a high value for tax purposes.

Reporting, corrections and what to do next

The estate representative must file an Estate Information Return with the Ministry of Finance within 180 calendar days after the certificate is issued. It lists each asset and its date-of-death value, and must be filed even if the estate value is $0.

The tax is paid as a deposit when the application is filed with the Superior Court of Justice, and the estate pays it, not the representative personally. In some cases an applicant can pay on an estimated value that they swear or affirm, and must then file a sworn statement of the total value and pay any balance owing within six months after giving the undertaking.

If you find new assets, or learn the return was incorrect or incomplete, you must file an amended return within 60 days of becoming aware, and any extra tax is then payable. Keep records for four years. Failing to file, or making false or misleading statements, can lead to a fine of at least $1,000 and up to twice the tax payable, and possibly imprisonment.

• List every asset the deceased owned at death, and mark which pass outside the estate.
• Gather date-of-death statements for accounts and investments.
• Arrange an appraisal for real estate, and find out whether a professional appraiser is needed for a complex asset such as a business.
• Record mortgages and liens against the specific property.
• Keep all valuation records for at least four years.
• Speak with a lawyer or accountant about anything unclear.

Frequently asked questions