How to Reduce Probate Fees in Ontario (Legitimately)

If you've ever wondered how to avoid probate in Ontario, you're not alone. Estate administration tax (commonly called a probate fee) is charged on the value of assets that flow through your estate when a Certificate of Appointment of Estate Trustee is granted by the court. With Ontario real estate values what they are, that tax can run into thousands of dollars — sometimes tens of thousands.

The good news: there are several well-recognized, legitimate strategies to reduce or sidestep estate administration tax entirely on certain assets. The bad news: every strategy comes with trade-offs. Done carelessly, the cure can be worse than the disease. This article explains how each approach works and what to watch out for.

What Is the Estate Administration Tax?

In Ontario, when your estate trustee (executor) applies to the court for a Certificate of Appointment, they must pay estate administration tax based on the value of assets that pass through your estate. The rate (as of writing — always verify with a lawyer or the Ontario Ministry of Finance) is applied on a sliding scale: there is no tax on the first portion of the estate, a lower rate on the next bracket, and a higher rate on the remainder above a threshold. For a large estate, the amount adds up quickly.

Assets that do not pass through your estate — because they transfer directly to a named beneficiary or a joint owner — are generally not subject to this tax. That is the core logic behind most probate-reduction strategies.

Strategy 1: Name Beneficiaries on Registered Accounts and Insurance

Registered accounts such as RRSPs, RRIFs, TFSAs, and life insurance policies allow you to name a beneficiary directly on the contract. When you die, those assets pass directly to the named beneficiary and bypass your estate entirely — no Certificate of Appointment required, no estate administration tax charged.

The risk: If your named beneficiary predeceases you and you haven't updated the designation, the funds may fall back into your estate anyway. Naming a minor child as beneficiary can also create complications, since minors cannot legally receive large sums directly. Using a trust or designating a trustee in that case makes more sense.

Action step: Review beneficiary designations regularly, especially after marriage, divorce, or the birth of a child.

Strategy 2: Joint Tenancy with Right of Survivorship

When you hold property as joint tenants with another person, your interest automatically passes to the surviving joint tenant on your death — entirely outside your estate.

This is most commonly used between spouses for the matrimonial home. It works smoothly in that context. But adding an adult child as joint tenant to avoid probate is a strategy that has generated significant litigation in Ontario.

The risks include:

• Resulting trust claims. Courts have held that when a parent gratuitously adds a child to title, the child may hold the property in trust for the estate — meaning probate is not actually avoided.
• Loss of control. Once someone is on title, you need their consent to sell or mortgage.
• Capital gains exposure. The property becomes partly owned by someone for whom it is not a principal residence, potentially triggering capital gains tax on death or on a future sale.
• Creditor exposure. The joint owner's creditors could potentially claim against the property.

Joint tenancy can be a sound strategy in the right circumstances, but "add my kids to the house to skip probate" is a plan that deserves careful legal review before execution.

Strategy 3: Multiple Wills

This is one of the most widely used and court-validated strategies in Ontario. A primary will covers assets that require a Certificate of Appointment (for example, real estate held in your name alone, bank accounts, publicly traded investments). A secondary will covers assets that do not require probate — most commonly shares in a private corporation.

Because the executor can deal with the secondary-will assets without going to court, no Certificate of Appointment is needed for those assets, and no estate administration tax is paid on their value.

The cautions:

• The two wills must be carefully drafted so they do not accidentally revoke each other.
• The assets covered by each will must be clearly defined.
• Not all assets qualify for a secondary will; legal advice is essential to determine which assets can safely be excluded from probate.

Multiple wills are discussed in more depth in our companion article on this topic (see below).

Strategy 4: Designating Beneficiaries in a Will (for Corporations)

Rather than naming the estate as the recipient of private company shares, some estate plans use a corporate will or secondary will to transfer those shares directly. Combined with a properly structured shareholders' agreement, this can keep significant value out of the probated estate.

Strategy 5: Inter Vivos Gifts and Trusts

Giving assets away while you are alive removes them from your estate. A gift made today does not attract estate administration tax because it never forms part of your estate at death.

The risks:

• You lose the asset and the income it produces — permanently.
• Large gifts can trigger immediate capital gains tax (for assets other than cash).
• Gifts to a spouse may not trigger immediate tax, but the attribution rules in the Income Tax Act can be complicated.
• An alter ego trust or a joint partner trust (available to those 65 and older) allows you to transfer assets to a trust while retaining an interest, and those assets pass outside the estate on death.

Trusts are powerful tools but carry setup and ongoing administrative costs. They are generally worth considering only for larger estates.

Strategy 6: Segregated Funds

Unlike mutual funds, segregated fund contracts (insurance-based investments) allow you to name a beneficiary. On death, the proceeds pass directly to that beneficiary and bypass probate. For investors who were going to hold these types of funds anyway, the beneficiary designation feature is a meaningful side benefit.

What Not to Do

Some people try to avoid probate by removing assets from their estate in ways that create more problems than they solve — undisclosed transfers, poorly documented gifts, or joint tenancy arrangements made without proper legal advice. Courts have unwound many of these arrangements, and the resulting litigation can cost far more than the probate fees that were being avoided.

A legitimate probate-planning strategy is documented, tax-considered, and reviewed by a lawyer who understands how each piece interacts.

Frequently asked questions