There are cases where a person will name an authorized representative, or executor, in their Will. The executor is responsible for carrying out the directions in the Will right after the Will is read and giving an accounting when instructed by the testator—the person who made the Will.
This document serves as proof of the authorized representative’s authority to represent the deceased. Each province has a similar probate process.
In Ontario, any estate with a net value over $500,000 must register with the provincial Ministry of Finance within 180 days of the estate’s executor receiving a certificate of appointment.
The executors must then file an Estate Information Return with the Ministry detailing all of the information necessary to compute taxes payable to the government.
Do All Wills Need to Be Probated?
No. Probate is required for assets located in Canada and for Canadian residents. A Will does not need to be probated if the deceased did not own any real estate in Canada.
Assets located outside of Canada need not be probated if the deceased did not own assets in Canada. For example, if a deceased held a bank account in France, the Will would not need to be probated in Canada.
Does Probate of a Will Affect the Estate?
A Will is a legal document that must be probated before validation. Right after an estate has been probated, assets in the estate no longer belong to the deceased but are now under the control of the estate’s Executor. The assets must be distributed per the Will.
If a person dies without leaving a Will, a form of distribution called intestacy is applied. This is often less than optimal for the heirs entitled to inherit from the deceased.
What Are the Costs of Probate?
The probate process is a demanding one. There are many costs involved in probate. In addition to the $500 filing fee, legal fees are to be paid to lawyers and Notaries and court fees to the Court Registry. There are also costs associated with public notices in the paper and transfer tax on real estate.
If the estate is of significant value, the estate will most likely be subject to taxes payable to the Federal and Provincial governments. It may also be subject to federal and provincial estate duties.
For real property, transfer taxes must be paid to the government at the time of purchase. The government sets the transfer tax, and there is often no way to avoid it. For real estate estates valued at $20,000 or less, the transfer tax is $2.00.
For estate values between $20,000.01 and $400,000, the tax is set at $4.00 for every $1,000. For estates valued at $400,000 and higher, the transfer tax is $6.00 for every $1,000.
If the estate is over $500,000 in value, the estate will most likely be subject to an inheritance tax payable to the Federal and Provincial governments of between 20 and 30 percent. In addition, there are provincial and municipal estate duties that may be payable, depending on the province.
Whether or not to probate a Will is a serious decision. There are many factors to consider when making this decision, and the consequences are often costly. For example, if a person dies without a will or a valid Will, they will be subject to provincial distribution called intestacy. This can result in a less than optimal allocation of their assets.
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