Helping Clients to Avoid and Minimize Probate Fees and Estate Administration Tax
In 1992, Ontario raised its probate fees (known as Ontario Estate Administration Tax) to approximately 1.5 percent. This rate may sound minimal. However, it is one of the highest rates in North America and, for high net worth individuals and families, equals approximately:
- A $75,000 fee for an estate of $5 million
- A $150,000 fee for an estate of $10 million
- A $300,000 fee for an estate of $20 million
It makes sense to take steps to mitigate this tax, which is paid at the time a will is submitted to the court for probate. At the Toronto, Ontario, law firm of O'Sullivan Estate Lawyers, we have helped many clients minimize probate fees through a range of effective methods, which include:
- Transferring assets to a trust. On death, assets in the trust do not form part of the estate. Probate fees are thus avoided
- Using multiple wills
- Transferring assets to Alberta or other low-probate fee jurisdictions in conjunction with using a separate will for those assets
- Titling assets to "joint with right of survivorship" so that when one party dies, the other automatically becomes sole owner
- Effectively using beneficiary designations for RRSPs, RRIFs and life insurance
Inter vivos gifts, multiple wills, and other legal strategies and tools can also be used to avoid Ontario's sizeable probate fees.
In addition to the payment of probate fees, Regulations enacted under the Estate Administration Tax Act which came into force on 1 January 2015 implemented a new reporting regime in Ontario that is triggered by applying for and receiving a certificate of appointment of estate trustee. Estate representatives must now also give certain information to the Ministry of Finance within 90 calendar days of the court issuing the certificate of appointment. Most significantly the information (which is given on an estate information return available from the Ministry) must include detailed information about each estate asset and its fair market date of death value. Penalties include fines and even imprisonment for failing to provide this information or if the information given was false or misleading.
To further discuss cost-effective options regarding probate fee minimization and minimizing the impact of the new onerous reporting requirements, contact our firm. Margaret O'Sullivan is a founding member of the Society of Trust and Estate Practitioners (Canada), is recognized in International, European and Canadian directories as a leading estate planning lawyer and has practiced in the area of estate planning since being called to the bar in 1983.
Ms. Roth has practiced trust and estate law since being called to the bar in 2002, has spoken and written on various subject areas in trust and estate law, and is a past chair of the Ontario Bar Association Trusts and Estates Executive Committee and a past member of Council of the Ontario Bar Association.
Mr. Kostoff was called to the bar in 2011 after graduating, with distinction, from the University of Western Ontario, where he received several awards for academic excellence. He has authored articles and presented on trust and estate topics, as well as co-authored articles on the taxation of partnerships.
To contact an Ontario estate administration tax lawyer at our firm, call 888-365-6235.