# Estate Court Filing Fees - Shock



## ttibsen (Sep 27, 2015)

Check out the following note from the lawyer in the process of probating my mom's estate - this is taking place in the province of Ontario

<< Once I have received your sworn application and original will, I will prepare the court filing. In order to file the application with the court, we will need to pay the estate court filing fees which are based on the value of the estate. The filing fees are $50 / 1000 for the first $50,000 of any estate and $15 / 1000 for any remaining value of the estate all rounded up to the next highest thousand dollars >>

In her case the estate consists solely of 600,000 left in a bank account so if you do the math the estate court filing fees come out to $10,750. Now I have never gone through this process but just offhand these fees seem awfully high to me. Could it be that this figure is the estate tax as well or are the two - estate tax and court filing fees - distinct entities? If they are separate, how much am I looking at in estate taxes?


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## ttibsen (Sep 27, 2015)

I forgot to mention another concern. At the time of her death there was 600,000 in the account. By the time we cover all the costs - funeral, clearing out contents of her apartment, final payment on the apartment, final tax preparation, the items mentioned above (estate court filing fees and possibly estate taxes), lawyer's fees - we will be down closer to 500,000. Shouldn't the estate court filing fees be based on this lesser amount as it is the figure that really represents the value of the estate after all the bills have been paid.


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## Spudd (Oct 11, 2011)

Those are the probate fees aka estate taxes. 
https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=probate fees ontario

I don't know the answers to your other questions but the lawyer should be able to tell you.


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## wendi1 (Oct 2, 2013)

Sounds about right, actually. I think what he is calling "estate taxes" are in fact the probate fees. 

Calling them probate fees implies that you are receiving a service, but in fact Ontario is just grabbing some off the top. You can remove the probate fees from the estate bank account.

You will still have to pay the income tax for the last year of the deceased, as well as income tax for as long as it takes to wind down the estate (assuming the estate makes any income).


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## ttibsen (Sep 27, 2015)

Well, it's good to know that the estate court filing fees and estate taxes are one and the same. As to the valuation, common sense tells me that it should be done as I have posited above but you never know so until I do ask the lawyer I'd be most interested in hearing from those who have been through this process.


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## fatcat (Nov 11, 2009)

plan on eating about 5-10% of her total assets in lawyers, probate and tax prep


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## fraser (May 15, 2010)

It is a tax. We paid a similar amount in BC. The tax is Provincial. In Alberta, my understanding is that there is no tax. We pay something like a $165 probate fee. Not certain if ther is an admin fee at the fron end. In BC we paid approx $175 in admin fees, another 100 or so for notorizes forms, and the tax on top. We did it ourselves so there were no legal fees. It took me less than 2 hours all told to prepare, complete the forms, and submit them to the court. Three weeks later we had the release.


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## ttibsen (Sep 27, 2015)

Thanks for all the great responses but I still would like to be clear on the value of the estate. At the time of death it was 600,000. As I said above, by the time we settle all the bills, let's, for the sake of argument, using the high end of the (5 - 10)% quoted above, the value will have shrunk to 540,000. So which of the two figures should the estate tax be paid on?


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## heyjude (May 16, 2009)

ttibsen said:


> Thanks for all the great responses but I still would like to be clear on the value of the estate. At the time of death it was 600,000. As I said above, by the time we settle all the bills, let's, for the sake of argument, using the high end of the (5 - 10)% quoted above, the value will have shrunk to 540,000. So which of the two figures should the estate tax be paid on?


Below is a link to the Ontario Department of Finance, where you will find a definition of "estate". It appears to be the gross figure, assets. 

http://www.fin.gov.on.ca/en/tax/eat/index.html


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## jargey3000 (Jan 25, 2011)

I'm glad this topic came up. Although i've never been involved wills, estates etc. I have heard others talk about how you should take measures "to avoid probate fees". What I'd like to know is - how do you do this (avoid it, that is)?


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## fraser (May 15, 2010)

It is very easy to avoid probate.

You simply ensure that each asset has a joint owner. So, when my mother passed away her bank accounts were in joint names with my sister. These accounts did not have to go to probate. The only item that we probated was a term deposit that was in her name alone.

All of our assets have been either set up as joint or have beneficiaries. Our RRSP's, stock trading accounts, even my stock options from my former employer had my spouse listed as the beneficiary. This would preclude any of these assets from being included in probate. When my father passed away Probate was no required because he he set everything up to be joint ownership/clear beneficiary. This can save a great deal of angst-not to mention the estate tax and laypwyers fees.

We also had joints signatures on the safety deposit box. My mother's bank did not freeze the accounts, the safety deposit box, or cancel the cards until we actually provided the death certificate several days after she died. After that nothing got touched until we provide the bank with the probate release from the court.


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## naysmitj (Sep 16, 2014)

I believe the only way to completely avoid probate fees is to die asset free. I am well on the way to achieving this final goal.


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## LBCfan (Jan 13, 2011)

naysmitj said:


> I believe the only way to completely avoid probate fees is to die asset free. I am well on the way to achieving this final goal.


Me too, if I can arrange to die next Thursday.


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## OnlyMyOpinion (Sep 1, 2013)

ttibsen said:


> Check out the following note from the lawyer in the process of probating my mom's estate - this is taking place in the province of Ontario
> << Once I have received your sworn application and original will, I will prepare the court filing. In order to file the application with the court, we will need to pay the estate court filing fees which are based on the value of the estate. The filing fees are *$50 / 1000 for the first $50,000* of any estate and $15 / 1000 for any remaining value of the estate all rounded up to the next highest thousand dollars >>
> In her case the estate consists solely of 600,000 left in a bank account so if you do the math the estate court filing fees come out to $10,750. Now I have never gone through this process but just offhand these fees seem awfully high to me. Could it be that this figure is the estate tax as well or are the two - estate tax and court filing fees - distinct entities? If they are separate, how much am I looking at in estate taxes?


Note that the fee is *$5 / 1000 for the first $50,000* - not $50. So the probate fees on $600k should be $8,500.


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## jargey3000 (Jan 25, 2011)

fraser - thanks for info. that's kinda what i thought - re joint ownership. i suppose one could also "gift" away most,or all, one's assets before one kicks the bucket? trouble with that is timing, i guess?


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## heyjude (May 16, 2009)

jargey3000 said:


> I'm glad this topic came up. Although i've never been involved wills, estates etc. I have heard others talk about how you should take measures "to avoid probate fees". What I'd like to know is - how do you do this (avoid it, that is)?


The only way to avoid probate fees is to minimize the value of your estate. You could put your assets in a trust or establish joint ownership with your beneficiary. Or you could go on a spending spree, assuming you know you have a terminal illness.


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## OnlyMyOpinion (Sep 1, 2013)

Just be aware that there are risks setting up accounts, property, etc. to be jointly owned by a surviving parent and child just to try to avoid probate fees. 
There are lots of articles about this. See for example: http://www.moneysense.ca/columns/side-stepping-probate-can-be-dangerous/, or:
http://retirehappy.ca/joint-ownership-of-bank-accounts-and-investment-accounts/


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## Jaberwock (Aug 22, 2012)

The court filing fees to which you refer are what is commonly known as "probate fees". They are collected by the province, and Ontario's are one of the highest in the country. There is no Estate Tax.
You cannot disburse any funds to beneficiaries until the will has been probated, but the banks will usually allow you to pay funeral and incidental expenses out of the estate.

You will need to file the following tax returns:

1. A tax return for the deceased for 2015. 
Include all income up to the date of death. Any RRSP's are assumed to be fully withdrawn on the date of death and are treated as income in 2015 (unfortunately, that may put the deceased into the higher tax brackets). Any investments held at the time of death are assumed to have been sold at fair market value and any capital gains or losses have to be included in the tax return. However, it is not necessary to physically sell the assets, they can pass to the estate and eventually to the beneficiaries in kind. Capital gains on the principal residence are not taxable. Have the house valued, a high valuation is to your advantage because that value becomes the Cost Base against which you have to calculate any future gains or losses.

2. A rights and things return (optional)
This includes any money accrued to the deceased at the time of death, but not paid. It might include for example dividends declared prior to the date of death but not paid until after the date of death. Most people won't need to bother with this.

3. Tax returns for the estate
Any income earned after death, but before the distribution of the funds to the beneficiaries is taxable in the estate. This is an opportunity for you to get some of your money back in some cases. The estate return does not get any personal tax credits, but it does have the same progressive tax brackets as an individual. If you personally are in a high tax bracket, then the estate will pay less tax than you will on invested funds. Take your time winding up the estate, open a bank account for the estate, leave the income producing assets in the estate, fill in tax returns for the estate for a couple of years. You can save enough tax to pay for the probate fees and more.

I paid a lawyer about $2,000 to do the probate and felt I was being ripped off. I did the taxes myself. It is no more difficult than doing a personal tax return. However, if you don't feel comfortable then hire an accountant. There is no reason to pay the extortionate fees quoted by the banks to handle this stuff.

Don't forget to claim the $2500 death benefit from CPP.


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## carverman (Nov 8, 2010)

ttibsen said:


> Check out the following note from the lawyer in the process of probating my mom's estate - this is taking place in the province of Ontario
> 
> << Once I have received your sworn application and original will, I will prepare the court filing. In order to file the application with the court, we will need to pay the estate court filing fees which are based on the value of the estate. The filing fees are $50 _/ 1000_  for the first $50,000 of any estate and $15 / 1000 for any remaining value of the estate all rounded up to the next highest thousand dollars .If that were true them the probate fee would be ridiculously high.
> The other number of $15/$1000 above the first $50,000 of the estate is correct.


And he is supposed to be a lawyer? I would check up on this!

The first number ($50) used to be the SMALL ESTATE probate fee (which was almost a flat fee), but it has now increased to 
*$250 for the first $50,000 of the estate*.

The probate fee for the remainder of the value of the estate above $50,000, still remains unchanged. 



> So what is probate and probate fees? Probate is the process by which a court confirms that a will is valid. The process involves fees. In Ontario the fees are $250 for the first $50,000 of your estate and $15 for each additional $1,000 with no upper limit.





> Since June of 1992 when Ontario tripled its probate fees, people have been looking for ways to avoid paying them. And no wonder - this quiet tax can set you back almost $15,000 on a $1 million estate


http://www.banksandstarkman.com/Publications/Avoiding-Probate.shtml



> In her case the estate consists solely of 600,000 left in a bank account so if you do the math the estate court filing fees come out to $10,750. Now I have never gone through this process but just offhand these fees seem awfully high to me. Could it be that this figure is the estate tax as well or are the two - estate tax and court filing fees - distinct entities?


There are no "estate taxes" in Ontario, but the gov't gets a share of the deceased estate by PROBATE FEES based on the value of the estate after death which is still a cash grab.
The best thing would to have a will that distributes the estate to beneficiaries before death (tenants in common, or right of survivorship in case of property) and that along with
Funds held in RRSP and life insurance policies escape probate fees as these would be considered outside the decease'd estate.


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## Davis (Nov 11, 2014)

Carverman, if you read the thread, you will see that in Ontario, what used to be the probate fee is now the *Estate Administration Tax*. The EAT replaced the probate fee retroactively when the probate fee was ruled to be unconstitutional in the Eurig case. So it is no longer a fee for a service, but a tax that goes into general revenues. 

Many people still call the EAT a probate fee, but that is not the correct name. 

Since we know that the biggest users by far of our publicly-funded health care system are people in their last two years of life, you can call a tax a "cash grab" if you like, but I bet the people lying in those hospital beds are very glad that taxes are paying for their health care.


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## carverman (Nov 8, 2010)

ttibsen said:


> Thanks for all the great responses but I still would like to be clear on the value of the estate. At the time of death it was 600,000. As I said above, by the time we settle all the bills, let's, for the sake of argument, using the high end of the (5 - 10)% quoted above, the value will have shrunk to 540,000. So which of the two figures should the estate tax be paid on?


The value of the estate at time of death would be $600,000. That is what the probate fees will be based on. The fact that the executor takes funds out of the estate for settling bills/funeral expenses is still considered (early) disbursement of the estate, but still subject to probate fees based on current probate fee formula.

$250 for the first $50K of the estate and $15/$1000 for the remainder UNLESS special arrangements were made by the deceased to transfer some of the estate PRIOR to their death. 
This is why a proper will is required. To minimize the gov't cash grab. After you are dead, you are not going to need any of the assets of your estate in the future,
so bequeathing these as gifts reduces the Probate fees (aka 'tax') payable.

Things like real estate owned, should have new titles (legal paperwork) to transfer these kind of assets, owned by the testator to somebody that can inherit the real estate as a relative. If not, the real estate owned by the testator in their will, is appraised at FMV, and that amount is added to the estate. 
This is the way I understand it.


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## Joe Black (Aug 3, 2015)

Davis said:


> Since we know that the biggest users by far of our publicly-funded health care system are people in their last two years of life, you can call a tax a "cash grab" if you like, but I bet the people lying in those hospital beds are very glad that taxes are paying for their health care.


Do those fees actually go directly to health care? I thought it went to general revenue.

Also, I thought those "last two years of life" was paid for through my taxes when I was in my twenties and thirties and virtually never used health care.


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## AltaRed (Jun 8, 2009)

Caverman has it right. It is the value of the estate (assets - liabilities = residual value) that is used in Probate. Anything that has named beneficiaries (rather than the estate) such as insurance, registered accounts like RRSP and TFSA, is excluded. Also excluded is anything held in joint title 'with right of survivorship'. 

But none of these mechanisms to avoid probate should be taken lightly. The owner of these assets needs to understand this can cause severe unintended inequities in who gets what out of the estate if there is more than one beneficiary and different beneficiaries are party to these arrangements. Also, the joint owner of these assets has the ability to access these assets at any time without consent of the owner and/or can assign these assets to cover debts and/or be seized by creditors. There are too many horror stories out there where joint owners, yes, even children and siblings of the owner, have ripped off the owner of these assets. 

I would never have anyone, other than a trusted spouse, be a joint owner of any of my assets.... no matter how much I believe my children and siblings have their hearts and minds in the right place....AT THIS TIME. No one really knows everything that is going on in people's lives and if I should turn senile or get dementia, I could be cleaned out without my knowledge.


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## fatcat (Nov 11, 2009)

OnlyMyOpinion said:


> Just be aware that there are risks setting up accounts, property, etc. to be jointly owned by a surviving parent and child just to try to avoid probate fees.
> There are lots of articles about this. See for example: http://www.moneysense.ca/columns/side-stepping-probate-can-be-dangerous/, or:
> http://retirehappy.ca/joint-ownership-of-bank-accounts-and-investment-accounts/


+1 from me ... the notion that it is "very easy" to avoid probate is just not true ... joint ownership brings about a whole new bag of worries and potential hurt

besides probate fees are the smaller portion of the estate and should just be paid after all you are talking about 2% where a lawyer can take up to 5% as his fee

legal (especially the executors) and accounting fees is what will eat you up ... do some shopping around and find pros that you like and bargain with them ahead of time to reduce fees

if you are the executor and are willing to assume executors risk, yoiu can just hire lawyers and accountants to do the filings and prepare the taxes and save a lot of money


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## Davis (Nov 11, 2014)

Joe Black said:


> Do those fees actually go directly to health care? I thought it went to general revenue.
> 
> Also, I thought those "last two years of life" was paid for through my taxes when I was in my twenties and thirties and virtually never used health care.


What "general revenues" are used for: 38.5% of Ontario's total spending is on the health sector, 19.1% on the education sector, 5.9% on post-secondary education and training, 11.7% on children's and social services , 3.4% on the justice sector (courts, police, jails), 12.8% on other services, and 8.7% on interest on debt. [Source: Ontario Budget 2015, p.295]

The amount that is set aside for the future health care needs of today's taxpayers: 0%.


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## fraser (May 15, 2010)

We did not have any family issues.

The estate was set up in such a way that we avoided 80 percent of the estate/probate tax and 100 percent of the legal fees.


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## Jaberwock (Aug 22, 2012)

At 1.5% in Ontario, probate fees are annoying but not that big of a deal when compared to other taxes. It is not worth the trouble of trying to avoid probate fees unless the estate value runs into millions of dollars. It is also possible to have a situation where it is better to pay the probate fees.

I will give you an example from my own experience:

My spouse died owning about $700k in shares, mostly in dividend paying corporations. I paid probate fees of about $10k.

The $700k investments passed to the estate and were taxed in a testamentary trust. Because the dividend tax credit on income less than $40k per year is negative, the testamentary trust paid virtually no tax on the income for the two years it took to wind up the estate.

Had the assets been in a joint account, they would have transferred immediately to me without probate, saving me about $10k in probate fees. However, I would have paid about $20k more in income tax over the two years, because the income would have been taxed at my own marginal tax rate, rather than at the low marginal tax rate paid by the estate.

I saved about $10,000 by NOT setting up our accounts in a way that avoided probate fees.


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## AltaRed (Jun 8, 2009)

Good example, but remember that taxation rules change in 2016 for Testamentary Trusts. They go to the 29% federal tax bracket with a few exceptions. http://canadiantaxlaw.ca/post/new-t...tricted-access-to-graduated-income-tax-rates/

The exceptions included GREs (graduated rate estates) but that must be a proactive election to allow an estate to be wrapped up in 3 years - which works in most casees. The new taxation measures are intended to close a tax loophole that was being used to keep the tax bills of beneficiaries down.

I agree with Jaberwock that too many people let the tax (fee) tail wag the dog when it comes to probate (estate administration) fees. These fees are nothing compared to income taxes to be paid. Better yet - die in Alberta with its virtually non-existent probate fees, at least until Notley gets her sticky hands into the till.


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## fraser (May 15, 2010)

Speak to any good lawyer who specializes in family law and/ or wills.

You can avoid a great deal of angst, legal issues, legal fees, and probate fees simply by having a will drawn up properly and a thorough discussion about the issues concerning probate etc. An good accountant can also assist in providing some direction.

This, along with pre planning/ pre arranging your funeral is probably one of the kindest gifts that you can give to your family members post death.

I have done two estates so far. Proper wills, tax returns in order and up to date, organized paperwork, pre planning for probate, and pre arranged funeral arrangements made a very difficult time much easier for me. I did not realize this until after the fact. Our friends are well into year 3 of an estate settlement and are still not finished.


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