How to avoid or reduce probate fees in Ontario – MoneySense

What is Estate Administration Tax in Ontario?

Estate Administration Tax, commonly known as probate fees, is a mandatory tax imposed by the Ontario provincial government. It is placed on the estate of a deceased individual and is calculated based on the fair market value of the deceased’s estate, including all assets, property and investments on the date of death. It’s important to note that Estate Administration Tax is only triggered and payable when the estate goes through the probate process, which is a legal procedure that happens in two circumstances.

Firstly, it verifies and validates the last will and testament of a deceased individual in Ontario, ensuring authenticity of the will, and appointing an executor to manage the distribution of assets.

Secondly, when an Ontario resident passes away without a will, probate is necessary to establish a legal executor for asset distribution. And it ensures that the process follows legal guidelines while safeguarding the interests of the beneficiaries.

Calculating probate fees in Ontario

The calculation of Estate Administration Tax in Ontario is relatively straightforward, and can be found on Ontario.ca, if you are looking to play around with the numbers yourself. Like marginal income tax brackets, the tax rate is determined by a tiered system that corresponds to the total value of the estate on the date of death. Here’s a breakdown of the current rates:

Estates Valued Under $50,000

If the estate’s total value is less than $50,000, no Estate Administration Tax is payable.

Estates Valued Over $50,000

Estates valued above $50,000 are subject to a tax rate of $15 per $1,000 or part thereof.

For example, if an estate is valued at $200,000, the calculation would be as follows:
The first $50,000: = $0
The remaining $150,000: ($200,000-$50,000=$150,000) x $15 per $1,000 = $2,250

So, the total estate administration tax for an estate valued at $200,000 would be $2,250.