How Do Multiple Wills Reduce Estate Administration Tax in Ontario?

You are an executor, and the deceased left more than one will, often a primary will and a secondary will. You want to know how that arrangement can affect the tax on probate, which assets belong where, and what can go wrong if only one will is probated.

This article explains the general rules for Estate Administration Tax in Ontario and how a limited certificate fits in. Multiple wills need careful drafting and court steps, so a lawyer should confirm how they apply to your estate before you rely on them.

How the tax connects to the certificate

Ontario's Estate Administration Tax is charged only when an estate certificate (probate) is applied for and issued. If no certificate is applied for or issued, no tax is owed.

The tax is paid as a deposit when the probate application is filed with the court. Once the certificate is issued, the deposit becomes the Estate Administration Tax. The estate pays it, not you personally as estate representative.

That link is why multiple wills matter. The tax is worked out on the value of the assets covered by the certificate, so what the certificate covers affects the tax.

Which assets count when the certificate is limited

If the court issues a certificate limited to the assets in a specific will, only the assets in that will count toward the estate's value. Assets in the other will are not part of that calculation.

Which assets can safely sit in which will depends on the wording of the wills and how the assets are held, so confirm this with a lawyer.

Real estate outside Ontario is also left out of the estate's value. A tenant in common's share does not pass automatically, so it counts if probate is sought.

How the tax is calculated on what is left

For certificates applied for on or after January 1, 2020, no tax is payable on an estate worth $50,000 or less. Above $50,000, the tax is $15 for every $1,000 (or part thereof) of value over $50,000. The estate's value is rounded up to the nearest thousand dollars.

Assets are valued at fair market value at the time of death. Ontario real estate is valued at its appraised value on the date of death, less encumbrances such as mortgages or liens. Only encumbrances on real property can be deducted. Funeral expenses, lawyer's fees, credit card debt and similar items do not reduce the value.

Risks when only one will is probated

Probating only one will does not remove your reporting duties. The estate representative must file an Estate Information Return with the Ministry of Finance within 180 calendar days after the certificate is issued. This is required even when the estate is worth $50,000 or less and no tax is owed.

The main audit risks are these.

• Undervaluing assets. You must be able to support values with documents such as statements or an appraiser's opinion of value.
• Late or missing returns. A representative who fails to file, or who makes false or misleading statements, may be fined at least $1,000 and up to twice the tax payable, imprisoned for up to two years, or both.
• Reassessment. The Ministry may assess or reassess within four years after the day the tax was due. If a return was not filed on time or a misrepresentation was made, there is no four-year limit.
• Incorrect information. If a filed return turns out to be incorrect or incomplete, an amended return must be filed within 60 days of becoming aware of it, within four years of the certificate being issued.

The records supporting the return must be kept for four years at the representative's principal place of business or residence. If the Ministry assesses additional tax, you can dispute it by filing a Notice of Objection within 180 days from the day the Notice of Assessment was issued.

What to do next

• Get copies of every will and note which assets each one covers.
• List each asset, how it is held and whether it has a named beneficiary or survivor.
• Collect statements and appraisals that support the value of each asset at the date of death.
• Ask a lawyer how the limited certificate should be applied for and whether your wills suit that approach.
• Diarize the Estate Information Return deadline and keep your records for the required period.

An accountant or lawyer can also help you decide how the return should describe assets that sit outside the certificate.

Frequently asked questions