Starting on April 1st, 2021, small estate applications became available in Ontario – this applies to any estate that have less than $150,000 in total assets and funds. This is great news for estate applicants as it significantly reduces the complexities and processing time for probate applications. Today, Sabrina, principal lawyer of Varity Law, will walk everyone through the essentials of this new probate path.
Perks of the Small Estate System
The Small Estate system is a welcoming change for many reasons. Its perks include:
- A lot less Court forms that must be submitted;
- Way faster processing time by the Estate Courts;
- Much simpler process.
What to Watch Out For
However, one must be aware of the following common errors when filing for small estate:
- The estate is more than $150,000, but one mistakenly chose to file under the Small Estates anyways; this will result in the small estate application being rejected, or if this came to light after the certificate was issued, it will render the small estate certificate invalid à one must then begin the whole probate process all over again under the normal estate procedures;
- Only $50,000 of the estate is exempt from probate fee (formally called estate administration tax); thus, it’s not the case that the entire small estate is automatically exempt from estate tax if it’s more than $50,000
- In calculating the amount of estate asset, one may exclude assets that are not required to go through probate, including:
- Any assets held as joint tenants or in a joint account (e.g. real estate held as joint tenants or joint bank accounts), provided there is at least one surviving owner to those assets;
- Any insurance policies with a specifically named beneficiary (e.g. life insurance);
- Any shares held in private corporations;
- Any registered savings or investments plans with a named beneficiary (e.g. TFSA, RRSP).
But other type of estate assets are not exempt and would be subject to estate tax. More details regarding this can be found on the Estate Information Return Guide
- One still must file the Estate Information Return to the Ministry of Finance within 180 days of receiving the Small Estates Certificate
Conclusion
The Small Estate applications that came into effect on April 1st, 2021 is a welcome change for many, creating a much simpler probate path with significantly faster processing time. Nevertheless, (as shown above) there are still many areas where the applicant may make mistakes, leading to delayed, inaccurate, or rejected estate filings. At Varity Law, we have successfully applied for and received Small Estate certificates for our clients, and we welcome you to book a free initial consultation with us by calling 905-597-9357.
