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Apr

13

Probate | Estate Administration | Wills and Estates (Part 5): Estate Administration Taxes

Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. It may not be up to date. Laws change often and without notice. If you need legal advice with respect to Wills and Estates matters, you should seek professional assistance (e.g. make a post on Dynamic Legal Forms). We have Toronto, Ottawa, Hamilton, Brampton, Mississauga and other Ontario lawyers registered to help you. You can also contact me directly.

This is the fifth of a series of MANY blog posts about Estate Administration in Ontario. Be sure to check them all out! Here, I’ll be talking about estate administration tax (formerly called probate taxes).

Estate Administration Tax
Estate Administration Tax must be paid at the time the application for a certificate of appointment of estate trustee (with or without a Will) is filed. So says rule 74.13 of the Rules of Civil Procedure and 2. 2(1) of the Estate Administration Tax Act, 1998.

The amount of estate administration tax payable is based on the value of the assets of the deceased’s estate at the time of his or her death. It’s calculated as follows: $5 per $1,000 or part thereof, for the first $50,000, then $15 per $1,000 or part thereof by which the value exceeds $50,000 (s. 3, 2(6) of the Estate Administration Tax Act, 1998). No tax is payable if the value of the estate is $1,000 or less.

So here’s an example: if the assets of the deceased’s estate at the time of death is $25,000, then the estate administration tax will be $5/$1,000 x 25,000 = $125. If the assets were valued at $25,001, then the estate administration tax will be $5 more, or $130 because that $1 is part of the next $1000.

Worth mentioning is that no tax is payable where the application is for a certificate of appointment of SUCCEEDING estate trustee with or without a will or a certificate of appointment of estate trustee during litigation. In these cases, the legislation prescribes a certain fee which is payable.

Undertaking Regarding Payment of Estate Administration Tax
The applicant can file with the court an AFFIDAVIT respecting the estimated value of the estate at the time of the application and pay estate administration tax calculated (as above). Where an estimated value is stated, the applicant must ALSO provide an UNDERTAKING that, within 6 months of signing the undertaking, the applicant will:

  • File a sworn statement of the actual total value of the estate; and
  • Pay the additional tax owing, if any

Estimated Value Greater than Actual Value
If the estimated value stated is greater than the actual value, then the difference can be refunded (the applicant must provide an affidavit with proof of why the actual value is less than the estimated value).

Process when Undertaking Regarding Payment of Estate Administration Tax Not Fulfilled
Where the applicant has filed with the court an affidavit as to the estimated value of the estate administration tax, the registrar will:

  1. 6 months after the undertaking is signed, mail a letter to the applicant reminding him or her to fulfill the outstanding undertaking;
  2. Where the applicant requests a further 6 months to fulfill the undertaking, an affidavit is required to explain why;
  3. Where the applicant has not replied to the reminder letter within 10 business days, another reminder letter and phone call will be made;
  4. Where the applicant has not replied, then the registrar may swear or affirm an Affidavit Regarding Undertaking that the undertaking remains outstanding;
  5. Prepare a draft Order for Compliance and forward the order and the Affidavit Regarding Undertaking to a judge. The court may make an order for compliance under s. 4(4) of the Estates Administration Tax Act, 1998.

Deferring Payment of Estate Administration Tax
The court may make an order deferring payment of the estate administration tax and allowing a certificate of appointment of estate trustee to be issued where:

  • The certificate of appointment is required urgently;
  • Financial hardship would result if the certificate were not issued; AND
  • Sufficient security is posted

All of these criteria must be met under s. 4(2) of the Estate Administration Tax Act, 1998.

The court order will state that the estate administration tax must be paid on or before a specific date and will address the amount of the bond. The applicant can (by affidavit) apply to a judge for the order. No fee is payable.

By the way, if you need a Will and want to leave everything to your surviving spouse, you’ve come to the right place:

Last Will and Testament (Ontario): Outright Distribution to Spouse

This legal form can be used by a Testator or Testatrix (i.e. a person who is making a Will) to appoint an Estate Trustee to manage their final wishes, transfer the residue of their estate (i.e. their leftover assets after debts have been paid off) to their surviving spouse, and appoint a guardian / custodian for their minor children. This Last Will and Testament also comes with affidavits for witnesses to swear / affirm (great for probate!). Best of all, this Last Will and Testament comes with a FREE VIDEO GUIDE (watch a useful example of how this legal form can be customized), a FREE DL GUIDE (read helpful information about this legal form), and another FREE DL GUIDE that offers valuable insight into how contracts can be challenged) What are you waiting for? Go to Dynamic Legal Forms. And if you DO need a lawyer and need some legal advice, simply make a post and get FREE quotes from Ontario lawyers focusing on the area of law you require!

This information and this sample video guide is NOT legal advice and is provided for informational purposes only. If you need an Ontario lawyer, go to Dynamic Legal Forms and make a post.

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