Giovanniello Bellefeuille

In this world nothing can be said to be certain, except death and taxes.
Benjamin Franklin

 

Truer words have perhaps never been spoken. On January 1, 2015, new legislation came into force to ensure that the government gets what it considers to be its rightful share of your estate following your death.

 

First a little background.

The person who is responsible for overseeing the estate of a deceased is the estate trustee, commonly referred to as the executor. Although the estate trustee’s power is derived from the will, there are many instances where an estate trustee must apply for a certificate of appointment of estate trustee with a will (or certificate of appointment of estate trustee without a will in the case of intestacy), often called probate. This is a legal process that confirms an estate trustee’s authority to deal with the deceased’s property. While not legally required to handle an estate, banks and financial institutions often require the certificate before releasing funds. A certificate of appointment will also be required if there is real estate to be sold. 

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The estate trustee applies for the certificate of appointment at the Superior Court of Justice located in the county or district where the deceased had his or her permanent residence. The fee for processing the application is referred to as the estate administration tax, more commonly referred to as probate fees. The estate administration tax is based solely on the value of the estate, therefore the larger the estate the greater the tax. This is payable to the court and is entirely separate from any income taxes related to the deceased’s estate.

 

The amount of the tax is 
●    $5 per $1,000 on the first $50,000, and
●    $15 per $1,000 on the remainder. 
 
Now to the actual change in the law. Prior to January 1, 2015, when applying for a certificate of appointment the estate trustee had simply to estimate the value of the deceased’s estate. The law now requires that the estate trustee, exercising reasonable diligence, also complete an Estate Information Return and provide a detailed list of the Estate’s property and assets and their fair market value at the date of the death. This may require professional valuations and appraisals. If the total value of the assets is higher than originally estimated, the estate trustee must pay the additional tax out of the proceeds of the estate.

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The Estate Information Return must be filed within 90 days of the certificate of appointment being issued. Failure to do so is considered a provincial offence and could result in a fine and/or jail time. Further, if within the first four years the estate trustee realizes the information regarding the assets is incorrect or incomplete he must file an amended return within 30 days.

 

The Ministry of Finance has been given broad audit powers to review the returns and if necessary the assessment of further tax. 

If the estate trustee does not require a certificate of appointment (often the situation when the deceased is the spouse and the estate trustee is the surviving spouse) then an estate information return is not necessary. 

 

The job of an estate trustee has definitely become more onerous with these changes and the amount of the estate administration tax payable will no doubt go up. There are a number of ways to lessen the impact, at least of the tax.