Special to Cornwall Newswatch
So you’ve been a law abiding, tax paying citizen your entire life and this might lead you to believe that when you pass away your tax paying days would come to an end. Not so fast. The old adage goes there are only two things certain in life – death and taxes. It just so happens that upon your death both are true and occur at the same time. Pure joy.
Generally speaking, when you pass away your estate will pay taxes on the value of your assets that you own at the time of your death. These are what were formerly known as probate fees, but are now called estate administration taxes.
To be clear this is not an inheritance tax, income tax, or capital gains tax imposed on your estate. Probate fees will be paid in addition to any possible other taxes (i.e. income taxes or capital gains tax, etc.). Inheritance taxes do not exist in Ontario.
Probate fees are payable to the Minister of Finance in Ontario and are payable as follows:
- $5 for each $1,000 for the first $50,000 of the value of your estate; and
- $15 for each $1,000 for the value of the estate exceeding $50,000.
If your estate is less than $1,000 there is no estate administration tax to pay.
Let’s illustrate by way of an example:
John Doe dies leaving $250,000 of assets in his estate. These include a home for $150,000 in his name alone, mutual funds for $50,000 and cash in a bank account for $50,000.
The estate administration tax payable by his executor, on behalf of his estate, would be the following:
- $5 for each $1,000 for the first $50,000 of his estate – thus: $50,000/$1,000 = $50 x $5 = $250
- $15 for each $1,000 for the next $200,000 of his estate – thus: $200,000/$1,000 = $200 x $15 = $3,000
- Total probate fees payable: $250 + $3,000 = $3,250
To calculate the amount of probate taxes owing you can also use the Ministry of Attorney General estate administration tax calculator.
However, not all assets are subject to probate fees and there are techniques and ways to minimize this tax exposure. Jonathan R. Huza is a Wills and Estates lawyer at Maurice Gatien Law Office. To discuss an estate matter and to learn more about probate fees contact at 613-936-2100 or by email at firstname.lastname@example.org.