When it comes to inheritances, 2 main types of taxes / fees arise. These are income taxes and probate fees. They are not the same, but the two taxes come at the same time, when someone dies. This article does not deal with the income tax portion of the estate; This should be considered before making any probate decisions, since inheritance and income taxes are related. What are probate fees? These are fees the government charges to read your will and ensure that the instructions in the will are followed. The court that reads your will is supposed to be there to ensure that assets are transferred between people fairly. The fees charged for letters of succession depend on the value of the assets that are in the will. If something is not in the will, it would not be included in the probate fee. Despite the title of this article, your estate does not have to include probate fees, but in most cases, there would be a probate fee unless the estate is very small or all assets are distributed outside of the will.
This last statement raises some tax planning questions: How would something not be included in the will? Distributing an asset out of the will means giving someone access to your bank accounts by making them joint, having joint ownership of a home or property, designating someone as the beneficiary of a registered account or insurance policy, transferring assets to a corporation, or giving money to a charity in the event of death through life insurance or by giving someone a gift. Be aware that each of these strategies may have drawbacks depending on your situation, so you should seek professional advice before making decisions about who should receive your assets. The purpose of a will is to make sure property is handled fairly because there have been many disputes and difficulties in the past when it comes to property due to trust issues, theft, or communication problems.
The value of the estate at the time of death is very important to ensure that the calculation of the probate fee is correct. This means that someone’s asset records must be up-to-date and readily available for the executor / executor to access. The executor / executor is the person appointed by the person who died (the deceased) to ensure that the instructions in the will are followed and that the assets are distributed to the intended parties.
Note that probate fees are also called estate management taxes, or EATs. The probate fees depend on the provincial jurisdiction, so the will will be read in the Ontario court or another provincial court if necessary. For assets located in different provinces, the rules of each province should be consulted when determining succession rates.
How much are these probate fees?
It depends on the value of the inheritance on the day of death. The numbers given below are for an Ontario-based farm. If the day of death is before January 1, 2020, an estate worth $ 1,000 or less will have no probate fees. An estate worth more than this would be calculated as follows:
If a Certificate of Appointment of Patrimonial Trustee is requested before January 1, 2020, the tax rates are:
$ 5 for every $ 1,000, or part thereof, of the first $ 50,000 of the equity value, and
$ 15 for every $ 1,000, or part thereof, of the value of the estate that exceeds $ 50,000.
Note: There is no estate administration tax payable if the value of the estate is $ 1,000 or less.
After January 1, 2020, an estate valued at $ 50,000 or less would have no probate fees.
If a Certificate of Appointment of Patrimonial Trustee is requested as of January 1, 2020:
There is no estate administration tax payable if the value of the estate is $ 50,000 or less. However, exempt estates must continue to file an Asset Information Statement within the prescribed time.
For estates valued at more than $ 50,000, the estate administration tax will be calculated as $ 15 for every $ 1,000 (or part thereof) of the estate value that exceeds $ 50,000.