Assets that are automatically excluded from needing Probate in Ontario when you die are:
- real estate that is registered as Joint Tenants;
- some other – but not all – assets that are registered in joint names;
- real estate that is located outside of Ontario;
- life insurance payable to a named beneficiary;
- RRSP’s payable to a named beneficiary;
- TFSA’s payable to a named beneficiary;
- RRIF’s payable to a named beneficiary.
If you have only one will and some of your assets require probate, then the value of ALL of your assets – except for the above-listed assets – must be included in the calculation of Probate Tax, even if some of your assets do not need probate.
There is a way to possibly reduce the amount of Probate Tax that your estate will have to pay upon your death. Ontario law allows a person to have more than one will. We usually refer to these separate wills as the Probate Will and the Non-Probate Will.
None of the following Assets will likely require Probate provided that they are included in your Non-Probate Will (rather than in your Probate Will)
- real estate – land and buildings – that has been owned by you since before the Registry Office converted your real estate to Land Titles. There were no conversions of real estate in Huron County, for example, prior to 2000. So if you live in Huron County and have owned your real estate since before 2000 and still own it when you die, the value of your real estate – land and buildings – does not have to be included in the value of your assets provided that the real estate is included in your Non-Probate Will. You will see from the chart below that that can represent a substantial savings in Probate Tax.
- houses, cottages and mobile homes that sit on leased land.
- bank accounts where the bank does not require Probate before giving the money in the account to the Estate Trustee – Executor.
- assets – such as bank accounts, land, and investments – that you hold jointly with someone else but where the asset really belongs to you – example – parent/child have joint bank account where the money really belongs to the parent and the child is on the account for convenience only.
- life insurance where the proceeds are payable to your estate (instead of to a named beneficiary). (This will happen if the named beneficiary of your life insurance policy predeceases you and you have not named a new beneficiary.)
- shares that you own in a private corporation (as opposed to a publicly traded company).
- farm machinery
- farm crops
- farm quota (if within-family transfer)
- most (if not all) farm animals.
- automobiles
- recreational vehicles (including snow mobiles, trailers, motorhomes), boats and airplanes.
- assets which are held by someone else in trust for you.
- Canada Pension Death Benefit.
- jewellery.
- furniture (including antiques).
- art work.
- other household items and personal effects.
- money owed to you by anyone (including a family member or a private corporation).
- cash on hand at death
Probate Tax is calculated at the rate of $ 15.00 per $ 1,000.00 of value after the first $ 50,000.00 of assets. Assuming that the above assets are in the higher rate category (ie. $ 15 per $ 1,000) for Probate Tax, the savings in Tax by including these assets in a Non-Probate Will would be as follows:
Asset Value $$ Savings in Probate Tax
100,000 1,500
150,000 2,250
200,000 3,000
250,000 3,750
300,000 4,500
400,000 6,000
500,000 7,500
600,000 9,000
700,000 10,500
750,000 11,250
800,000 12,000
1,000,000 15,000
1,500,000 22,500
2,000,000 30,000
2,500,000 37,500
3,000,000 45,000
4,000,000 60,000
5,000,000 75,000
6,000,000 90,000
7,000,000 105,000
10,000,000 150,000
If you would like to learn more about Probate and Non-Probate Wills, and whether they could be beneficial for you, please contact us.