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Valuing Small Estates for Taxes

Valuing Small Estates for Taxes

Probate makes it legal for you to act on behalf of a Will maker. It’s the first step in executing a Will you’ve been given to disburse after death.

You apply for consent to act on the Will maker’s behalf. The court decides if it will:

  • make you estate trustee
  • select someone else
  • or appoint an administrator of its choice.

Only Ontario probate court can decide who acts for the deceased and formally confirm a Will is legally valid. Axess Law has a cheap probate lawyer near you who can file the legal documents you require. 

You Need a Probate Certificate When

  • You’ve been named estate trustee, executor or personal representative in a Will.
  • A loved one dies without a Will.
  • The deceased left Ontario real estate not held in a joint tenancy.
  • Investments, bank accounts, insurance, corporate shares or business interests are willed to the estate.
  • You are disposing of vehicles or vessels like snowmobiles, boats, ATVs or bikes.
  • Household contents like art, jewelry or cash are at stake.
  • The deceased was coerced or unduly influenced when they made their Will.
  • You suspect fraud or bad faith dealing. 

What’s In for Estate Taxes

Cash or Investments

Almost any financial asset left to the estate can be probated. That includes Canada Savings Bonds, GICs, Treasury bills, mutual funds, stocks, bonds and securities, options or futures contracts. 

Private Mortgages and Loans

As estate trustee, you’re expected to collect money the deceased lent to others. Likewise, intellectual property such as copyrights, patents or trademarks must be tallied up for estate administration taxes. 

Debts and Obligations

Debts on credit cards, vehicle or unregistered loans, lines of credit and interest payments are not deductible for estate administration purposes. You’ll pay taxes on the outstanding amounts.

What’s Out, No Taxes Due

Named Beneficiaries

Assets left to named beneficiaries, such as RRSPs, Canada Pension Plan benefits or life insurance policies, are left off the estate valuation. Beneficiaries receive these without going through probate. 

Matrimonial Homes

Spouses or adult children with survivorship rights to matrimonial homes can apply to have the deceased’s name dropped from titles to properties. Matrimonial homes pass outside of probate court, directly to the recipient. No tax is owed.

Legal and Other Fees

Expenses like Axess Law’s fees, funeral costs or real estate commissions are taxable. 

Mortgages and Liens

But outstanding mortgages and property liens the deceased owed can be deducted from the total value of the estate.

Distributing Small Estates

Most Will makers plan investments and real estate purchases to make loved ones financially safe and secure when they’re gone. Yet you could pay way too much for estate administration taxes unless you use new simplified small estate procedures to only probate those assets that need it.

April 2021 changes to Ontario estate law and Rules of Civil Procedure make it much easier for small estates under $150,000 to be probated. Getting a small estate certificate takes about five days. Court registry staff search their records for the deceased’s last Will and testament and verify your application as estate trustee is valid.

A small estate certificate authorizes you to distribute just those assets listed in the certificate (and no more). You avoid long delays in distributing bequests and if a mistake is made in a valuation, Axess Law helps fix it.

Calculate Estate Taxes

No tax is due at all for estates worth $50,000 or less. For estates valued between $50,001 and $150,000, deduct the first $50,000. Taxes are $15 per $1,000 for the balance. 

It pays to ask the court for a certificate of small estate if the deceased was frugal. 

For example, an estate worth $150,000 pays:

$0 on the first $50,000

and $15 per $1,000 on the remaining $100,000

for a total of $1,500

Compare that to $1 million for a professional couple with a single family home, new SUV and healthy mutual funds:

$0 on the first $50,000

and $15 per 1,000 on the remaining $950,000

for a total of $14,250. 

Completing Estate Information Returns

Axess Law assesses the deceased’s assets to figure out which ones need to be probated and can go directly to beneficiaries. If the deceased had business interests, we review what their intentions were to ensure shares or ownership pass to the rightful beneficiaries or are dissolved.

We calculate the estate administration taxes and can complete estate information returns for you. We submit the return to probate court for you, along with your cheque payable to the Minister of Finance.

Courts give you time to sell assets like collectibles or real estate before gifts and bequests in the deceased’s Wills are distributed. Ask us if you need more time.

Legal Advice on Probating Estates

Don’t fall down on your probate obligations when Axess Law’s probate lawyers (Toronto area and Ottawa) can help you prevent costly mistakes. Bring a copy of the Will (if applicable), proof of death from a funeral provider or Service Ontario and government-issued photo I.D. to get started. We give quotes on probating Ontario Wills — no hidden or extra charges are billed to your account. And your first probate consultation is free.  

Online Booking Form — Make Appointments Anytime 

Axess Law makes online virtual video calls to your home or office 7 days a week, day or evening. Dial toll free to 1-877-402-4277 or, in Greater Toronto, call our 647-479-0118 lawyer line. Make appointments any time, anywhere, with our easy online booking form
Axess Law has onsite parking and easy transit access, with law offices near you in Greater Toronto Area or Ottawa. Call today for your appointment.

Testimonials

It was a pleasure working with Patricia from Axess Law. It was my first time purchasing a home, and was very nervous about every step in the process. I called and emailed Patricia several times with the silliest questions. She answered them all promptly, and provided the best customer service I could ask for. I would recommend Axess Law and particularly Patricia to everyone.

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In the past I had to make appointments and waited for days to see a lawyer. Now conveniently this office is at my neighborhood supermarket. I was able to walk in and get my documents signed in less than 30 minutes The staff are courteous and professional. I would recommend anyone. Prompt service.

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I am writing this review on behalf of my daughter who completed her first Real Estate condo transaction with AxessLaw. Besides just helping my daughter as a client, they helped her understand every single step involved in the process and the whole process was completed without any problems. I would recommend them to anyone looking for hassle free real estate transaction without thinking twice.

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