The Certificate of Appointment of Estate Trustee (the “Certificate”) (formerly Letters Probate) is required by some third parties dealing with the executors and trustees in order to confirm the date of death and the executors’ and trustees’ authority to act. It is issued in both cases where there is or is not a will. Before the Court issues a Certificate, the estate administration tax (EAT) must be paid. In Ontario, it is currently set by regulation at $5 per thousand for the first $50,000 in the estate’s value and $15 per thousand for all value over $50,000. The tax must be paid at the time the application is made with few exceptions.
If there are assets that do not require this formal notice to third parties, EAT may be avoided. It is also avoided when property passes outside of the estate. For example, assets passing to a surviving joint owner, real estate situated outside of Ontario and insurance proceeds or registered funds naming a beneficiary pass outside of the estate and thus are not included when calculating the value of assets for the EAT. One might also consider:
- transferring assets without a Certificate (e.g., motor vehicles, personal effects, household goods, jewelery and similar articles, which do not have a registered title, shares in private corporations under some circumstances, and real property under the registry system), by a separate will, or without a Certificate if there are no other assets which require it; and
- using various trusts established during the owner’s lifetime for holding different assets. As EAT planning is “asset-specific”,it must be reviewed regularly, preferably with a lawyer, to ensure it continues to reflect the actual asset mix. The benefits and risks of joint ownership for avoiding EAT are discussed in the Fall 2009 issue of Concepts Newsletter.
Download the PDF: Concepts Newsletter – Fall 2010