Probate is a legal process in which a court examines a person's Last Will and Testament to determine its validity and authenticity, as well as ensuring that the proper estate trustees are appointed and beneficiaries notified.

This process takes place after one has died and its primary reason is to prove the validity of the will. Although it is the responsibility of the estate administration to identify the deceased's property, ascertain its values, pay its debts, and distribute funds, the court is there to oversee this process and collect th­­e payment of Estate Administration Tax.

In most cases, a Certificate of Appointment of Estate Trustee is required in order to sell, encumber, or otherwise convey real property in Ontario. One exception, however, is the First Dealings Exemption.

In Ontario, Estate Trustees must obtain a Certificate of Appointment of Estate Trustee in order to deal with the estate's real estate if they have a property with a value of over $50,000. Estate Administration Tax is required to be paid on all property valued over $50,000. Thankfully, in Ontario, there is a possibility for Estate Administration Tax to be avoided, through what is called the First Dealings Exemption.

There is a large benefit to Estate Trustees who are able to apply for the First Dealings Exemption without requiring probate. If the Estate Trustee was required to apply for probate, they would be required to pay Estate Administration Tax. Although the tax is only 1.5% of the value of the estate's real estate above $50,000, considering the prices of houses in today's market, that could be a very dramatic cost for the Estate Trustee. Entirely, the largest benefit to the First Dealings Exemption is being able to avoid paying the Estate Administration Tax.

Thankfully, there is the possibility of using the First Dealings Exemption. The First Dealings Exemption applies to properties that have not been conveyed since their conversion from Registry to Land titles, thus allowing there to be a First Dealings Exemption to allow the Estate Trustee to avoid paying probate taxes entirely.

For the First Dealings Exemption to apply, the following conditions must be met:

  • The property is a Ministry conversion from Registry to Land Titles
  • The transaction would be the "first dealing" of the property since the date of conversion
  • The deceased died testate and the will is valid
  • No Certificate of Appointment has been applied for (for the will in which the subject property is dealt with)

The Land Titles Assurance fund is a fund that is established to assist people with compensation for financial losses they have incurred from any omissions or errors in the land registry system. This is an important factor to mention as the Estate Trustee is also required to indemnify the Land Titles Assurance fund from any claims.

Although this process may seem like a difficult one to tackle, this is what our estate and real estate lawyers specialize in at Devry Smith Frank LLP. It is our goal to ensure that a smooth transition between the transfer of title is possible and that all of the benefits of saving probate fees that can be applied, are applied and you and your family are able to receive the estate as smoothly as possible.

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.