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Probate in Ontario: Five Things That Often Surprise Executors
When someone passes away, families often hear the word "probate" almost immediately. It quickly becomes the focus of conversations with banks, financial advisors, lawyers, and beneficiaries. Executors want to know whether probate is required, how long it will take, and when the estate can be distributed.
What often comes as a surprise is that probate is only one part of the estate administration process. While obtaining probate is an important step, it is rarely the only challenge an executor will face. In many cases, the work involved in administering an estate continues long after the court has issued a Certificate of Appointment of Estate Trustee (also known as probate).
Over the years, I have found that executors are often surprised by many of the same issues. Understanding these realities in advance can help families set realistic expectations and feel more confident as they navigate the process.
Probate Is Only One Step in the Process
Many people assume that probate and estate administration are essentially the same thing. In reality, probate is simply the court process that confirms an executor's authority to deal with estate assets.
Financial institutions and other third parties often want proof that the person named in the Will has the legal authority to act on behalf of the deceased. Probate provides that confirmation and allows the executor to move forward with administering the estate.
Obtaining probate does not mean the executor's responsibilities are complete. They may still need to identify and value assets, settle outstanding debts, close accounts, transfer property, communicate with beneficiaries, and address tax obligations.
Depending on the nature and complexity of the estate, these responsibilities often continue for many months after probate has been granted. Most estates take a year or more to complete administration as submitting final income tax and obtaining a Certificate of Clearance from the Canada Revenue Agency takes time.
Probate is an important milestone, but it is rarely the finish line.
Not Every Asset Requires Probate
Another common surprise is that not all assets form part of the probate application.
People often assume that every asset owned by the deceased must pass through probate before it can be transferred. While that is true for many assets held solely in the deceased's name, other assets may pass outside the estate entirely.
For example, a home, bank account, or investment account owned solely by the deceased will often require probate before the institution holding the asset will release funds or transfer ownership. By contrast, assets that are jointly owned with a right of survivorship may pass directly to the surviving owner. There are however significant risks and possible financial implications you should consider before adding a child or a sibling to a proper title or bank account. Life insurance proceeds and registered accounts (eg. RRSP/RRIF/TFSA) with designated beneficiaries listed at a financial institution may also pass directly to the named recipient without forming part of the estate.
Understanding this distinction is important because it can affect both the administration of the estate and the amount of Estate Administration Tax that may be payable. For a broader discussion of beneficiary designations and estate planning considerations, see my article on estate planning in Ontario.
Because every estate is different, determining whether probate is required is rarely a simple yes or no question. Each asset must be considered individually, taking into account how it is owned and the requirements of the institution involved.
The Timeline Is Often Longer Than Expected
Families are understandably eager to move forward after the loss of a loved one. Beneficiaries often want certainty about when they will receive their inheritance, while executors may feel pressure to settle matters as efficiently as possible.
In practice, the probate timeline in Ontario is often longer than people expect and it varies in length depending on how busy the courts are at the time.
Before a probate application can even be submitted, the executor must gather information about assets and liabilities, obtain date of death values, locate the original Will, and prepare the necessary court materials. Once the application is filed, the court review process takes additional time.
Even after probate has been granted, significant work often remains. Assets may need to be transferred or sold, creditors must be paid, financial accounts closed, and tax filings completed. Executors also have a duty to ensure the estate's obligations have been addressed before distributing funds to beneficiaries.
As a result, beneficiaries are often surprised to learn that receiving probate does not automatically mean an inheritance cheque will follow shortly afterward. The timing of distributions depends on much more than the court application alone.
Estate Administration Tax Is Only One Part of the Picture
When probate is discussed, the conversation often turns to Ontario's Estate Administration Tax, commonly referred to as probate tax.
Because the tax is calculated based on the value of assets included in the probate application, many families focus on how much will need to be paid to obtain probate. At this time, probate tax is 1.5% of the value of your estate assets (with the first $50,000 being exempt from probate tax). The Ontario government provides additional information about how the tax is calculated and administered.
While the Estate Administration Tax is an important consideration, it is often not the only financial issue affecting an estate. Focusing exclusively on probate tax can cause families to overlook other obligations that may have a greater impact on the estate's overall value.
Executors are often surprised to learn that understanding the estate's tax position involves much more than calculating the probate application fee.
Capital Gains Tax Can Have a Significant Impact
One of the most commonly overlooked aspects of estate administration is capital gains tax.
Under Canadian tax rules, certain assets are generally treated as though they were sold immediately before death at their fair market value. This is known as a deemed disposition. Although the asset may not actually be sold, the increase in value can still create a taxable capital gain.
This issue often arises with cottages, rental properties, vacant land, investment portfolios, and other assets that have appreciated over time. A property purchased decades ago for a relatively modest amount may now be worth several times its original value. When that increase in value is reported for tax purposes, the resulting liability can be substantial.
Families are sometimes surprised to discover that taxes may need to be paid before beneficiaries receive their inheritance. In certain situations, estate assets may even need to be sold to satisfy those obligations. While exemptions, deferrals, and planning opportunities may be available depending on the circumstances, tax considerations are often a much larger part of estate administration than many people initially expect.
By the time an executor reaches this stage, they often realize that settling an estate involves far more than obtaining probate. Managing the estate's tax obligations is a critical part of protecting its value and ensuring beneficiaries receive what they are entitled to receive.
Probate is one of the most talked about aspects of estate administration, but it is rarely the whole story. Executors are responsible for far more than obtaining a court certificate. They must identify and manage assets, satisfy liabilities, navigate tax obligations, and ensure the estate is ultimately administered according to the Will or the applicable law.
For many families, the biggest surprises involve understanding which assets require probate, how long the process can take, and how taxes may affect what beneficiaries ultimately receive. Having a clear understanding of these issues from the outset can help reduce uncertainty and make the administration process smoother for everyone involved.
This article is intended for informational purposes only. For personalized advice tailored to your specific circumstance, please reach out to the E is for Estates team.
Erin L. Watson, B.A., JD
Lawyer & Notary Public
E is for Estates
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