The Ontario Government has recently introduced a simplified probate procedure for estates valued up to $150,000, which will come into effect on April 1, 2021.1
To ease the burden of Ontario families to manage small value estates, amendments were made to the Estates Act2 through the Smarter and Stronger Justice Act.3 The key changes to the Estates Act are discussed below.
A "Small Estate" is Set at $150,000
A "small estate" will mean an estate that does not exceed $150,000 in value. It should be noted that the introduction of small estates will have no impact on the calculation of the Estate Administration Tax (often called, "probate fees") under the Estate Administration Tax Act4 and the filing requirement of an Estate Information Return within 180 days following the grant of probate.
Simplified Probate Process for Small Estates
A new probate proceeding for small estates will be available to Estate Trustees. The new procedures under the Rule 74.15 will include a new simpler application form, removing requirements for certain supporting documents to be filed, and giving guidance to applicants on filing of small estate probate applications. Under this process, the court will issue a "Small Estate Certificate" with the equivalent legal effect to a Certificate of Appointment of Estate Trustee, but the Estate Trustee's authority under the Small Estate Certificate will be limited to the estate assets specifically listed in the application.
Easing the Bond Requirement for Small Estates
The filing of a bond will not be required for small estates if there is no minor or incapable beneficiary.
A bond is intended to protect the interests of creditors and beneficiaries of an estate and guard against Estate Trustee's mismanagement of the estate. Under the current Estates Act, the filing of a bond is required under many circumstances6. While a bond ensures the administration of an estate, obtaining a bond is, in fact, an onerous process for Estate Trustees and it often causes complexity, delay and additional costs in the probate proceeding.
Before Choosing the Probate Procedure for Small Estates
It should be noted that the new probate process for small estates will be optional and the existing probate proceeding will remain available to estates valued under $150,000. As a Small Estate Certificate will list the estate assets to be administered thereunder, it is critical for Estate Trustees to properly investigate and determine assets and liabilities of the estate. Further, because of the limitations on the authority of an Estate Trustee under a Certificates of Appointment in the small estate process, it will be important for Estate Trustees to get good advice about the appropriate process to use. There will undoubtedly be instances where the assets and value of the estate for Ontario probate are below the small estate amount, but other issues, such as foreign assets and litigation, will require the Estate Trustee to have more fulsome authority.
We hope that the new probate process for small estates will enhance access to justice for Ontarians to administer estates and will be easier to navigate than the current process.
4. Under the Estate Administration Tax Act, no probate fees are payable for the first $50,000 of the value of the estate, and probate fees will be calculated as $15 for every $1,000 of the value of the estate.
6. Examples include situations where the deceased left no Will and a Certificate of Appointment of Estate Trustee Without a Will is being applied for; the deceased left a Will, but an applicant is not named as an Estate Trustee in the deceased's Will; and the deceased left a Will, but an applicant does not reside in Ontario or elsewhere in the Commonwealth.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.