When Can an Executor Skip Probate in Ontario? Assets and Risks

When the estate looks simple, it is tempting to ask whether you can avoid probate altogether. A modest estate, a clear will and a cooperative family can make the court process feel like an unnecessary step.

Sometimes it is. Some assets never become part of the estate. But others cannot be dealt with easily without a certificate, and skipping a step that was needed can create bigger problems later. This article explains the difference in plain terms. It is general information, and a lawyer can confirm what applies to your estate.

Assets that pass outside the estate

Some assets pass outside the estate and need no certificate, such as joint bank accounts and accounts with a designated beneficiary. For the Estate Administration Tax, jointly owned assets that pass to the survivor and registered plans with a named beneficiary are also left out of the estate value.

Ontario also advises checking whether the institution holding an asset requires a certificate or a small estate certificate. In other words, even where you think an asset is simple, the institution has the final practical say on what paperwork it needs.

It helps to sort the assets into two lists: those that pass directly to someone, and those that were owned by the deceased alone with no named beneficiary. The second list is the one that usually matters for probate.

When probate is normally needed

Ontario treats probate as normally necessary when the deceased owned real property or assets held by a financial institution. It is also typically needed when there is no will, no named estate trustee, or a dispute about the trustee or will.

These are general patterns. A particular bank or other institution may set its own requirements, so ask each one directly.

The small estate option

Skipping the full process is not the same as skipping the court. A small estate for probate purposes is one valued at $150,000 or less (as of April 1, 2021). It uses Form 74.1A and a draft certificate (Form 74.1C). Estates over $150,000 need a Certificate of Appointment of Estate Trustee.

An Amended Small Estate Certificate is available only if all assets together stay at or under $150,000. A bond may be required in some cases, such as when the applicant is not a resident of Ontario, Canada or a Commonwealth country, or when minor or incapable adult beneficiaries are involved.

On cost, there is no Estate Administration Tax on the first $50,000 of estate value for a certificate applied for on or after January 1, 2020. Above that, the rate is $15 per $1,000 or part of $1,000. The tax is based on assets the deceased owned, such as Ontario real estate (less mortgages and liens), bank accounts and investments. Jointly owned assets passing to the survivor, real estate outside Ontario and registered plans with a named beneficiary are excluded.

The risks of avoiding probate

Avoiding probate can look like a way to save time and tax, but it carries risks that are easy to overlook.

• An institution may simply refuse to release assets without a certificate.
• Distributing estate assets before a CRA clearance certificate makes the representative personally liable for unpaid tax up to the value of assets distributed.
• The deceased's final tax return still has to be filed, and late filing with a balance owing carries a 5% penalty plus 1% per full month, up to 12 months, and daily compounded interest.
• A dispute among beneficiaries is harder to manage without the court's oversight, and probate is typically needed when the will or trustee is disputed.
• If you do apply for a certificate, an Estate Information Return is due within 180 calendar days after the certificate is issued, even if the estate is $50,000 or less.

If the estate is genuinely made up of assets that pass outside it, the question may not arise. If anything was held in the deceased's name alone, treat probate as likely until a lawyer or the institution tells you otherwise.

What to do next

• List every asset and how it was held: alone, jointly, or with a named beneficiary.
• Call each bank or institution and ask what it requires from an executor.
• Estimate the value of the estate to see whether the $150,000 small estate threshold may apply. How to count particular assets depends on your situation, so it is worth confirming with a lawyer.
• Check whether any real estate was owned alone, since that normally means probate.
• Plan for the final tax return and its due date.
• Do not distribute to beneficiaries until you have advice about CRA clearance.
• Speak with a lawyer if the picture is unclear, if there is a dispute, or if a beneficiary is a minor or incapable adult.

Frequently asked questions