Ontario’s new probate process for small estates is easier

This article appears in the June 2021 issue of Advisor’s Edge magazine. Subscribe to the print edition, read the digital edition or read the articles online.

The Ontario government’s simplified probate process for estates valued at $150,000 or less will make administering small estates less costly and easier for estate trustees (as executors are known in Ontario), estate practitioners say.

Probate, known as estate administration tax in Ontario, is the process whereby a court validates a will and confirms the executor’s authority to administer the estate. While not all wills need to be probated, banks and other financial institutions generally don’t release money held in the deceased’s accounts until the executor obtains probate.

Ontario’s new procedure for small estates, which came into effect on April 1, involves a simpler application form and removes the requirement for certain supporting documents.

The new process will make applying for probate “more accessible to people without a legal background so that they can do this themselves,” said Matthew Urback, partner with Shibley Righton LLP in Toronto.

Legal fees, which start at $1,500 for even “a very simple estate,” can deter executors from applying for probate, said Krystyne Rusek, an estate lawyer with Pallett Valo LLP in Mississauga, Ont. The standard probate procedure is time-consuming and challenging for laypeople to navigate on their own, she said.

According to the Ontario government, about one in four probate applications in 2020 were for estates valued at $150,000 or less. The new process won’t affect the province’s estate administration tax, which remains set at $15 of every $1,000 of estate assets above $50,000. (In 2019, Ontario eliminated probate fees on estate assets below $50,000.)

The simplified process also means executors won’t have to post a bond when there are no minors or vulnerable individuals who might have a financial interest in the estate. The posting of a bond acts as a form of insurance for interested parties against the executor’s misadministration of estate assets.

Executors will be issued a Small Estate Certificate with the same legal effect as a Certificate of Appointment of Estate Trustee issued under the standard process, but the executor’s authority will be limited to the estate assets listed in the application. If other assets are discovered, the executor may have to file an amended application to deal with those assets, as long as the estate’s total value remains below $150,000. If the newly discovered assets push the value above that threshold, the executor would have to apply for a standard certificate.

Executors for small estates may choose to apply for probate under either the small estate or the standard process.

While the new procedure has many benefits, it could expose estate trustees to risk — if, for example, an interested party commences litigation against the estate or if it is later discovered that the deceased held foreign assets.

“[An executor] should investigate and determine the assets and liabilities of the estate before applying for this [simplified probate procedure],” said Sanjana Bhatia, director of tax and insurance planning with Sun Life Financial in Waterloo, Ont.

If estate assets — whether foreign or domestic — are discovered after probate has been granted, then the regular probate process gives the estate trustee more authority to deal with those assets and any litigation that arises with respect to them, Bhatia said.

Urback said he hopes the streamlined probate process will encourage more people to take on the role of executor, particularly in cases where the primary person originally named in the will can’t or won’t accept the role. In those cases, it can be difficult to find someone to take on the job if the estate is small. “It’s too onerous and they feel it’s not worth it,” Urback said.

However, Rusek wonders whether beneficiaries of small estates will begin to expect executors to apply for probate themselves rather than seek legal advice now that a simplified process exists.

Executors may have “to make a decision as to whether to do this alone without any legal guidance or whether they’re going to seek representation and legal assistance where they could be later questioned by beneficiaries about that expense,” Rusek said.

She said she expects estate lawyers could use the simplified probate application process on behalf of clients when administering small estates, where appropriate. “That’s going to be a cost saving to clients,” she said.