What is “Probate”?

Probate and Estate Administration

Probate is when the Court verifies that a will is valid and indeed is the Last Will & Testament of an individual.

Probate also has the effect of appointing an estate trustee and granting he/she or them the authority to administer an estate, by issuing a Certificate of Appointment of Estate Trustee.

Probate is an essential part of the estate administration process as it gives the trustee the authority to handle estate assets and officially begin the administration process.

Probate is necessary in certain situations and if the does not occur in a timely manner the estate administration could be delayed (for example some institutions such as banks may refuse to release funds held in bank accounts to the executor or trustee for distribution until probate takes place) or there may be financial consequences for example, there may be interest on any outstanding debts or liabilities of the estate.

Probate also acts as a shield, protecting the estate trustee(s) who is administering the estate from personal liability for their actions (or inaction as the case may be).

Estate Administration and Estate Administration Tax

Estate administration tax, formerly known as probate fees, is charged on the total value of the deceased’s estate. The total value of the estate is the value of all assets owned by the deceased at the time of death.

Encumbrances against any assets other than real estate cannot be deducted from the value of the assets.

The current tax rates are found in the Estate Administration Tax Act and are as follows:

• $5 for each $1,000, or part thereof, of the first $50,000 of the value of the estate and
• $15 for each $1,000, or part thereof, of the value of the estate exceeding $50,000.

Assets that the deceased had before death but not at the time of death, such as insurance payable to a named beneficiary, assets where there is joint ownership with right of survivorship and real estate outside of Ontario are not included in the value of the estate.

However, in the case of Pecore v. Pecore, 2007 SCC 17 from the Supreme Court of Canada held that there is a presumption that all joint bank accounts held between parent and an adult child do not automatically pass to the child when the parent dies. The presumption is that the account is being held in trust for the beneficiaries of the estate. This applies unless adequate evidence is presented to rebut the presumption. If that happens, the account will go to the child by way of survivorship.

Estate administration and estate planning require advice from an experienced estate lawyer. There are many situations where mistakes during the estate administration process may lead to estate litigation. Estate litigation lawyers are able to assist you with complicated estate law issues in order to ensure your rights are protected.