One Less Cost to Estate Administration Tax?

Proposed Budget Recommends Eliminating First Bracket of Estate Administration Tax

This past week the Ford government released its first proposed provincial budget. As is typical with new provincial budget proposals, stakeholders in healthcare, education, childcare, transportation, finance and other sectors have taken note. Less commonly for a provincial budget, this one has made a direct impact on Wills & Estate lawyers, and their clients.

Among the many changes in the proposed budget comes the elimination of a relatively minor fee that is part of the Estate Administration Tax (“EAT”) scheme. By way of context, Estate Administration Tax, often referred to as “Probate Tax”, is a tax payable on making an application for a Certificate of Appointment of Estate Trustee, or “Probate Application.” The EAT is separated into two brackets and described in the relevant legislation in classically convoluted language as:

“…five dollars for each $1,000 or part thereof of the first $50,000 of the value of the estate [and] fifteen dollars for each $1,000 or part thereof by which the value of the estate exceeds $50,000.”

This works out to $250.00 on the first $50,000 of an estate (being 0.5% of the value of the estate), and 1.5% of the value of the estate thereafter.

Changes Could Lead to More Small Estates Being Probated

While the cost of EAT is not prohibitively high, it is enough to cause many people to take steps to plan around it and to prevent some estate trustees from applying for probate. The newly released proposed budget intends to do away with the first bracket of EAT, eliminating the 0.5% payable on the (portion of) value of an estate that is below $50,000. This would mean that estates under $50,000 could obtain probate without any EAT, and for estates with a value over $50,000, a saving of $250.

This is, perhaps, not an earth-shattering change at face value, but there could be some knock-on effects. It is possible that more modest-value estates will be probated now, without the concern that doing so will incur an unwelcome expense. We will be keeping our eyes peeled on a) whether this proposal is adopted into practice and b) what sort of effect this has on the types of estates being probated.  

At Mills & Mills LLP our estate lawyers can assist you in navigating current estate administration procedures, and keep you advised on any changes to the law throughout the process. To learn more about how we may be able to assist you please reach out to us online or by phone at 416-863-0125.