News & Views
The 2019 Ontario budget announced two changes to estate administration that are effective January 1, 2020:
1) The Ontario Estate Administration Tax (more commonly known as probate fees) will be reduced to 0% (previously 0.5%) on the first $50,000 of an estate’s asset value. What does this change mean? For estates with asset values of $50,000 or less, no Estate Administration Tax will be payable. For estates with larger estate values, this will equate to $250 of savings.
Additionally, for estates with asset values greater than $50,000, the Estate Administration Tax will continue to be 1.5% of the estate’s asset value in excess of $50,000.
It is also important to note that for exempt estates (i.e., those with no Estate Administration Tax owing), there is still a requirement to file an Estate Information Return within the prescribed time period (more on this below).
2) Executors are required to file the Estate Information Return for applications for probate, as of January 1, 2015. Beginning January 1, 2020, an Estate Information Return must be received by the Ministry of Finance within 180 days (previously 90 days) after a Certificate of Appointment of Estate Trustee has been issued — in other words, from the date the will has been probated by the courts. Further to this, the time period for submitting an amended Estate Information Return for subsequently discovered property has been extended to 60 days (previously 30 days).
The Estate Information Return can be filed online, by mail, by fax, in person, or by courier. For further details, there is an abundance of helpful information available on the Ontario Ministry of Finance’s website.
Now, although these changes are welcome, they are small and likely do not have a material impact. With that in mind, advisors should be reviewing estate plans put in place for their clients. The ability to name a beneficiary directly on a segregated fund contract will have the death benefit bypass the estate while also providing significant other benefits, such as avoiding estate administration tax altogether and negating the requirement to report the amount on the Estate Information Return.
The commentary in this publication is for general information only and should not be considered investment or tax advice to any party. Individuals should seek the advice of professionals to ensure that any action taken with respect to this information is appropriate to their specific situation.