Ontario raises small estate limit to $150,000

Small estates in Ontario will soon be defined as those worth up to $150,000, instead of $50,000.

The move, announced Friday, takes effect Apr. 1. The change follows a stakeholder consultation that began in August 2020.

“Right now, the process to apply to manage an estate in Ontario is the same, whether the estate is worth $10,000 or $10 million. The process can be time-consuming and costly, deterring people from claiming smaller estates — and that isn’t right,” said Ontario Attorney General Doug Downey in a release.

Raising the small-estate limit means more estates will be able to access a simplified probate process. Probate fees — known as the estate administration tax — are still due on the portion of the estate worth more than $50,000, however.

Also as of Apr. 1, the province is removing the requirement to post bond in small-estate probate applications unless a beneficiary is a minor or deemed incapable.

Keith Masterman, vice-president of tax, retirement and estate planning with CI Investments Inc. in Toronto, said in an interview before today’s announcement that speeding up the probate process for small estates would be a positive step — but that the province should improve the process for all estates.

“Technically the banks and investment companies can take the position — and they often do — that they can’t take instructions from the executor until probate is obtained. Meanwhile those assets are fluctuating,” he said. “Larger estates are out there with fluctuations in the value of assets that are costing people real money.”

Krystyne Rusek, an estate lawyer with Pallett Valo LLP in Mississauga, Ont., said in an interview before the announcement that the threshold for a small estate in areas with higher costs of living could be set higher.

“In Toronto, a small estate would be $500,000; that’s not a small estate anywhere else [in the province],” she said.

Other issues outstanding

Last August, Downey sent a letter to legal stakeholders and estate lawyers “to seek feedback on ways to advance estates law in Ontario,” a Ministry of the Attorney General spokesperson said at the time. A question about the small estate limit was included.

Downey’s letter requested comment on six other issues, including when the emergency order allowing wills and powers of attorney to be signed virtually should be lifted, or whether such provisions should be made permanent; whether to repeal the section of law that revokes a will upon marriage; and whether courts should be granted more latitude in validating or rectifying an improper will.

Today’s announcement did not address the other issues. (Editor’s note: the Ontario government introduced a bill on Tues., Feb. 16 that would permanently permit virtual witnessing and repeal the statute that revokes a will upon marriage.)

Regarding will signing, Rusek said her firm has been using the practice as a “last resort.” Instead, the firm has been meeting with clients outdoors when possible.

“Litigation on the estate side is going to increase because of these virtually witnessed wills,” she said. “The lawyers can’t see who is in that room.”

However, Rusek has not heard of any wills being challenged yet, saying that “everyone is staying on top of [the issue].” She added that virtual witnessing would have benefits outside of a pandemic, including for older clients who find it difficult to access law offices.

“If it’s done properly, [virtual will witnessing] should go forward,” Rusek said.

Rudy Mezzetta

Rudy is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on tax, estate planning, industry news and more since 2005. Reach him at rudy@newcom.ca.

Melissa Shin

Melissa is the editorial director of Advisor.ca and leads Newcom Media Inc.’s group of financial publications. She has been with the team since 2011 and been recognized by PMAC and CFA Society Toronto for her reporting. Reach her at mshin@newcom.ca. You may also call or text 416-847-8038 to provide a confidential tip.