Estate Administration Tax: Everything You Need to Know

By Published On: November 11, 2020Categories: Wills & EstatesTags:

The Estate Administration Tax (also known as probate tax/fees), is a fee charged by the Ontario government based on the total value of the property in the estate of a deceased. Payment of the Estate administration Tax is mandatory in order to obtain a Probate from the Court (giving the executor the authority to act on behalf of the deceased). Estate vs. Non-Estate Assets Since the value of the Estate Administration Tax is based exclusively on the value of the estate assets owned by the deceased upon death, it is important to distinguish estate assets from non-estate assets, as it ultimately determines the amount of your estate taxes. Estate Assets • Personal property, such as cars or jewelry; • Financial assets, such as bank accounts or shares (without a beneficiary designation); • Life insurance policies (without a beneficiary designation); and, • Real Estate in Ontario where title is not held jointly. Non-Estate Assets • Jointly owned assets such as joint bank accounts or property; • Assets that are owned by trusts for private companies; • Insurance policies whereby a specific beneficiary is named; and, • RPPs, RRSPs, RRIFs and TFSAs with a beneficiary designation or beneficiary declaration Ways to Reduce Tax Consequences When an asset such as a house or a property, is held jointly with a right of survivorship, the asset goes to the surviving owner and does not form part of the estate hereby allowing you to save on the Estate Administration Tax. Additionally, proper tax planning throughout your life can significantly reduce or even eliminate this tax. Depending on the circumstances after death, it may be possible to reduce probate or avoid it entirely if the estate is reduced before the official proving of a will. For more information about Estate Administration Tax, get in touch with our team at Simard and Associates by calling 613-446-5060 or submit a form online.

The Estate Administration Tax (also known as probate tax/fees), is a fee charged by the Ontario government based on the total value of the property in the estate of a deceased.  Payment of the Estate administration Tax is mandatory in order to obtain a Probate from the Court (giving the executor the authority to act on behalf of the deceased).

Estate vs. Non-Estate Assets

Since the value of the Estate Administration Tax is based exclusively on the value of the estate assets owned by the deceased upon death, it is important to distinguish estate assets from non-estate assets,  as it ultimately determines the amount of your estate taxes.

Estate Assets

  • Personal property, such as cars or jewelry;
  • Financial assets, such as bank accounts or shares (without a beneficiary designation);
  • Life insurance policies (without a beneficiary designation); and,
  • Real Estate in Ontario where title is not held jointly.

Non-Estate Assets

  • Jointly owned assets such as joint bank accounts or property;
  • Assets that are owned by trusts for private companies;
  • Insurance policies whereby a specific beneficiary is named; and,
  • RPPs, RRSPs, RRIFs and TFSAs with a beneficiary designation or beneficiary declaration

Ways to Reduce Tax Consequences

When an asset such as a house or a property, is held jointly with a right of survivorship, the asset goes to the surviving owner and does not form part of the estate hereby allowing you to save on the Estate Administration Tax. Additionally, proper tax planning throughout your life can significantly reduce or even eliminate this tax. Depending on the circumstances after death, it may be possible to reduce probate or avoid it entirely if the estate is reduced before the official proving of a will.

For more information about Estate Administration Tax, get in touch with our team at Simard and Associates by calling 613-446-5060 or submit a form online.

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