When an individual dies, all property, assets, and interests left behind constitute the estate. Estates may include bank accounts, investments, real property, business shares, personal possessions, cryptocurrency or NFTs, and other holdings. Partial interests in assets are included proportionally.
Estate administration is the legal process of identifying, safeguarding, managing, and distributing the deceased's assets while ensuring that all debts and taxes are settled. Procedures vary across provinces and territories—including Ontario, British Columbia, Alberta, Quebec, Manitoba, Nova Scotia, Saskatchewan, New Brunswick, Newfoundland and Labrador, Prince Edward Island, Yukon, Northwest Territories, and Nunavut—but the overall principles remain similar.
1. Verifying the Existence of a Will
The initial task in estate administration is to determine whether the deceased left a valid will. If a will exists, it should be located, and the appointed executor should be notified. In the absence of a will, or if the appointed executor is unable or unwilling to act, a close relative or other interested person may apply to the court to be appointed as estate administrator. The executor or administrator is responsible for collecting and managing the estate, settling debts and tax obligations, and distributing remaining assets in accordance with the will or, if there is no will, under the relevant provincial intestacy laws.
2. Inventorying and Securing Estate Assets
The executor or administrator must identify and secure all estate property, which may include bank accounts, securities, real estate, crypto assets, private corporations, and personal property. To access and manage these assets, proof of death and proof of authority as the estate representative, by way of a probated will or a court appointment, must be provided to financial institutions, government bodies, and other relevant entities.
3. Settling Debts and Tax Liabilities
The executor or estate administrator will be responsible for settling all outstanding debts and liabilities of the deceased, including mortgages, loans, and any taxes owed. This includes filing the deceased's final income tax return, also referred to as a 'terminal return,' and addressing tax obligations arising from the estate.
Executors must obtain a clearance certificate from the Canada Revenue Agency confirming that all required taxes have been paid before making any distributions to beneficiaries. If assets are distributed prior to receiving the clearance certificate, the executor becomes personally liable for any unpaid taxes or other amounts owed by the deceased or the estate, up to the value of the assets distributed.
For example, in Muth Estate v. Liesch, 2019 ABQB 922, the executor distributed estate gifts before the tax liability was confirmed and became personally responsible for $60,000 owed to CRA.
4. Distributing Estate Assets
Once all debts and taxes have been satisfied, the executor or administrator must distribute the balance of the estate. This may involve transferring title to real property, liquidating and distributing investments, or disbursing cash to beneficiaries.
Where no will exists, assets are distributed to the deceased's next of kin in accordance with provincial succession law. Disputes may occasionally arise among beneficiaries or creditors during this stage. In such circumstances, legal guidance from an experienced Canadian tax lawyer may be required to ensure compliance with provincial and federal laws.
5. Navigating the Probate Process
Probate is the legal process by which a court confirms the validity of a will and formally appoints an executor or estate administrator. Probate is not required for every estate; however, it is often necessary where the deceased held certain assets in their name alone, such as real property or investments.
To obtain probate, the executor or estate administrator must file an application for a Certificate of Appointment of Estate Trustee with the court, together with the original will and supporting documentation. If the court is satisfied, it will issue the certificate, authorizing the estate trustee to administer the estate.
Probate is generally required where:
- Court approval is needed to validate the will or confirm the executor appointment;
- There is uncertainty or potential dispute regarding the identity of the executor;
- Beneficiaries are unable to consent to the appointment (minors or persons under legal disability);
- An authority, such as a bank or land registry office, requires proof of inheritance.
Probate may not be required for jointly held property with right of survivorship or very modest or insolvent estates.
6. Estate Administration Tax and Probate Fees Across Canada
Most provinces and territories charge a form of estate administration tax or probate fee on assets subject to probate. While Ontario uses the term Estate Administration Tax (EAT), other provinces have their own terminology and fee structures:
- Ontario (EAT): $15 per $1,000 of estate assets above $50,000; first $50,000 exempt.
- British Columbia: 1.4% of the estate value above $25,000.
- Alberta: Maximum probate fee of $400; estates under $25,000 may have minimal fees.
- Nova Scotia: $100 plus $7 per $1,000 over $25,000.
- Saskatchewan: $7 per $1,000 over $10,000.
- Manitoba: No probate fees.
- Quebec: Probate (homologation of will) has no probate fees under the civil law system.
- Other provinces/territories (New Brunswick, Newfoundland & Labrador, Prince Edward Island, Yukon, Northwest Territories, Nunavut): Typically $100 plus $5 per $1,000 above $50,000.
These fees apply to estate assets, not income. Thresholds and simplified procedures for small estates vary by province, and planning accordingly can reduce costs.
7. Assets Typically Excluded from Estate Administration Tax
Certain assets are generally excluded from probate or estate administration tax calculations across provinces, though rules vary:
- Jointly held property with right of survivorship: Ownership automatically passes to the surviving owner.
- Life insurance proceeds payable to a named beneficiary: Excluded in Ontario, Alberta, British Columbia, and Quebec.
- Registered plans with a named beneficiary: RRSPs, RRIFs, and TFSAs in provinces like Ontario, Alberta, and Quebec are excluded.
- Pension benefits payable to a specified beneficiary: Typically exempt in Ontario, Alberta, and other provinces.
- Real estate outside the province of administration: Excluded across all provinces.
- Joint bank accounts: Ownership passes automatically to the surviving account holder.
Executors should review each asset against provincial rules to determine exclusions and minimize probate costs.
Provincial Overview of Estate Administration Procedures
| Province/Territory | Probate Term | Probate Fees / EAT | Filing Thresholds | Key Notes |
|---|---|---|---|---|
| Ontario | Estate Trustee Appointment | $15 per $1,000 over $50,000 (first $50,000 exempt) | $50,000 | Requires Estate Information Return within 180 days of certificate issuance. |
| British Columbia | Grant of Probate | 1.4% of estate value over $25,000 | $25,000 | Simplified process for estates under $25,000. |
| Alberta | Grant of Probate | Maximum $400 | N/A | No probate fees for estates under $25,000. |
| Manitoba | Grant of Probate | No probate fees | N/A | Probate fees waived for all estates. |
| Quebec | Homologation of Will | No probate fees | N/A | Distinct civil law system; no probate fees. |
| Nova Scotia | Grant of Probate | $100 + $7 per $1,000 over $25,000 | $25,000 | Simplified process for estates under $25,000. |
| Saskatchewan | Grant of Probate | $7 per $1,000 over $10,000 | $10,000 | Simplified process for estates under $10,000. |
| New Brunswick | Grant of Probate | $100 + $5 per $1,000 over $50,000 | $50,000 | Simplified process for estates under $50,000. |
| Newfoundland & Labrador | Grant of Probate | $100 + $5 per $1,000 over $50,000 | $50,000 | Simplified process for estates under $50,000. |
| Prince Edward Island | Grant of Probate | $100 + $5 per $1,000 over $50,000 | $50,000 | Simplified process for estates under $50,000. |
| Yukon | Grant of Probate | $100 + $5 per $1,000 over $50,000 | $50,000 | Simplified process for estates under $50,000. |
| Northwest Territories | Grant of Probate | $100 + $5 per $1,000 over $50,000 | $50,000 | Simplified process for estates under $50,000. |
| Nunavut | Grant of Probate | $100 + $5 per $1,000 over $50,000 | $50,000 | Simplified process for estates under $50,000. |
Pro Tax Tips
- Never distribute estate assets before obtaining a CRA clearance certificate. Executors will be personally liable otherwise.
- Maintain a complete inventory of all assets, including digital and crypto holdings.
- Seek guidance from an experienced Canadian tax lawyer for filing, probate, and cross-provincial issues.
- Keep detailed records of all financial and legal transactions throughout the administration process.
FAQ
What are the main steps for estate administration?
Locate the will, apply for probate or letters of administration if there is no will, identify and secure assets, pay debts and taxes (including filing the terminal return), obtain a clearance certificate, provide accounting to beneficiaries, and distribute remaining assets according to the will or provincial law.
How are probate fees calculated in Canada?
Fees vary by province. For example, Ontario: $nil on the first $50,000 and $15 per $1,000 over $50,000; British Columbia: 1.4% of estate value; Alberta: capped at $400; Manitoba: no fees.
Can executors distribute assets before a clearance certificate?
No. Executors will be personally liable for any unpaid taxes, penalties, or interest if distributions occur before receiving a clearance certificate.
Why consult an experienced Canadian tax lawyer?
A knowledgeable Canadian tax lawyer ensures compliance with federal and provincial tax rules, protects the executor from personal liability, and advises on optimal administration strategies.