Who Pays Probate Fees in Ontario: The Estate or Beneficiaries?

Probate fees in Ontario are called Estate Administration Tax. If you are a beneficiary, the practical question is whether you will be billed for it, or whether it simply comes out of what you were going to receive.

The short answer is that the estate pays it, which means the money comes off the estate before it is shared. This article explains how that works and what is left out of the calculation.

The estate pays, not you

Estate Administration Tax is paid by the estate, not by the beneficiaries or the estate representative. You will not normally write a cheque yourself. The tax is a cost of the estate, so it reduces the total available to distribute.

For applications on or after January 1, 2020, no tax is payable on estates of $50,000 or less. Above that, the tax is $15 for every $1,000 of the estate's value, or part of $1,000. Earlier applications used a different rate, so the date of the application matters.

How the tax affects what is shared

The tax is worked out on the estate's value in steps of $1,000, and any part of a $1,000 step is counted as a full step. Because the tax is paid by the estate, whatever it comes to is taken off before the estate is shared, so each beneficiary's share is slightly smaller. Ask the trustee to show you the calculation, including the value used.

Estate Administration Tax is paid by the estate rather than by individual beneficiaries. How the cost affects each person's share depends on the will and on how the estate is divided, so it is worth confirming with a lawyer if the amounts are significant.

What counts toward the estate's value

Not every asset is included. Jointly owned assets that pass automatically to the surviving owner or owners are excluded from the estate value for this tax. So are RPPs, RRSPs, RRIFs and TFSAs that have a beneficiary designation.

• Property in the deceased's sole name usually counts.
• Jointly owned assets that pass by survivorship are excluded.
• Registered plans and TFSAs with a named beneficiary are excluded.
• Whether other assets, such as life insurance, affect the estate's value for this tax depends on how they are held, so it is worth confirming with a lawyer or accountant.

If the deceased had life insurance, check exactly how the beneficiary was named. Under the Insurance Act, a life insurance designation of heirs or estate is deemed to designate the insured's personal representative. How that affects the estate's value for this tax depends on your situation, so it is worth confirming with a lawyer.

When no tax is due, and the filing after probate

If no probate certificate is applied for and issued, no Estate Administration Tax is due. Whether probate is needed depends on the assets and on what institutions require, so ask before assuming it can be skipped.

When probate is issued, an Estate Information Return must be filed within 180 calendar days after the estate certificate is issued, even if the estate value is $0. An amended return is generally due within 60 calendar days, for example when new assets are discovered.

Beneficiaries also have notice rights. A person applying for probate must send or give a copy of the application form to everyone entitled to a share of the estate, before filing with the court. For a Small Estate Certificate, the signed application must reach everyone entitled to a share 30 days before filing, and Form 74.1B confirms that notice was given.

Estate trustees carry out the wishes in the will. Their duties include winding up the deceased's affairs, paying taxes, bills and other debts, and then distributing the estate according to the will. Estates are still presumed to be wrapped up within one year of death, although for a complex estate that expectation may be unreasonable.

A legal representative who distributes assets before getting a CRA clearance certificate (Form TX19) is personally liable for unpaid amounts, up to the value of the assets distributed. That is one reason a trustee may wait before paying out. Separately, the CRA lists most gifts and inheritances among amounts that are not reported or taxed.

What to do next

• Ask the trustee for the estimated estate value used for the tax and which assets are included.
• Ask which assets pass outside the estate and whether that affects your share.
• Check that you received the probate application before it was filed.
• Ask when the Estate Information Return will be filed.
• Keep the figures so you can see how your share was calculated.

If the trustee will not explain the numbers, any person who appears to have a financial interest may move for an order requiring the trustee to pass accounts. A lawyer can tell you whether that is worth considering.

Frequently asked questions