Do You Need Probate in Ontario? When Banks Release Funds Without It

After a death, a common worry is whether the family must go through probate at all. When the estate is modest, probate can feel like a lot of effort, and many families hope to skip it.

The honest answer is that it depends on what the person owned and who is holding it. This article explains how assets are usually sorted, what the small-estate route looks like, and how to check with each institution before you decide.

Probate is not always required

Probate is the court process that confirms an estate trustee's authority to deal with the deceased's assets. Ontario's guidance says it is not always required, and that the type of assets usually decides the question.

It is normally required if the deceased owned real property or assets held by a financial institution. Before applying, you should check whether the institution holding the assets actually requires a certificate. That check is worth doing for every account and holding, because each institution sets out what it needs.

Assets that often pass outside probate

Some assets go directly to someone else and do not form part of what the estate trustee has to transfer.

• Real property that passes by right of survivorship does not need a probate application.
• Assets with a named beneficiary, such as RRSPs, RRIFs and TFSAs, are generally excluded from the value used for estate administration tax.
• Jointly owned assets that pass by survivorship are also generally excluded from that value.

Be careful with the word generally. Whether an asset really passes by survivorship or to a named beneficiary depends on how it is registered and on the documents behind it. If you are unsure, a lawyer can review the paperwork.

What banks and other institutions will ask for

Banks, investment firms and other institutions decide for themselves what they need before releasing money. Official guidance only tells you to check with the institution that holds each asset. It does not set a dollar amount below which every institution will release funds.

So do not rely on a rule of thumb you heard from a friend. Instead, call each institution, tell them the person has died, and ask in writing what documents they require. Keep a record of who you spoke to and what they said. If they require a certificate, you will need to apply.

If any beneficiary is under 18, the Office of the Children's Lawyer must be served when applying for a certificate. That can affect the planning even for a smaller estate.

Small Estate Certificate and the tax

If you do need a certificate, the size of the estate affects which one you use.

Applications are typically processed within 15 business days, and the tax is payable when the application is filed.

For certificate applications made on or after January 1, 2020, estates valued at $50,000 or less pay no estate administration tax. Larger estates do pay, and the ministry's example is that a $240,000 estate owes $2,850. The exact amount for your estate depends on its value, so confirm the calculation on the ministry's current page or with a lawyer or accountant before you file.

The tax applies only if probate is applied for and issued. If probate is not issued, the deposit is refunded.

How the estate's value is counted

The value used for the tax is based on the deceased's assets at the time of death. It includes Ontario real estate less encumbrances such as mortgages, bank accounts including foreign accounts, investments, vehicles and vessels wherever located, property held in another person's name, business interests, and insurance payable to the estate.

Out-of-Ontario real estate and CPP death benefits are generally excluded. Funeral expenses, legal fees, loans, credit card debt, lines of credit and real estate commissions cannot be deducted, although mortgages on real property can be. A small estate on paper may therefore be larger for tax purposes than the family expects.

An Estate Information Return must be filed with the Ministry of Finance within 180 calendar days of the estate certificate being issued, even if the estate is worth $0.

What to do next

• List every asset and how each is registered: sole name, joint, or with a named beneficiary.
• Contact each institution and ask in writing what it requires before releasing funds.
• Check whether any real property passes by right of survivorship.
• Work out the estate value using the categories above, so you know which certificate and tax would apply.
• If a certificate is needed, note the 180-day deadline for the Estate Information Return.
• Ask a lawyer to confirm if the registrations are unclear or a beneficiary is a minor.

Frequently asked questions