Probate Process in Ontario
Updated on
February 8, 2025
Probate in Ontario is a legal process following an individual’s death. It involves court approval of the will and authorizing the executor(s) to distribute the estate according to the will’s directives. This article provides an overview of the process for legal professionals, executors and beneficiaries.
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What is Probate?
Probate, also known as the Certificate of Appointment of Estate Trustee in Ontario, is a legal process involving getting a will validated by the court. This process authorizes the executor named in the will to manage the deceased’s estate. You must apply to the Ontario Superior Court of Justice to start the process. The application also requires you to provide the deceased’s last will and testament, a detailed inventory of the estate’s assets, and other necessary documents.
The Certificate of Appointment confirms the validity of the will and the executor’s authority to distribute the estate’s assets according to the deceased’s wishes. The primary purpose of probate is to ensure that the interests of those entitled to the estate are protected, debts and taxes are paid, and any disputes that arise regarding the will’s validity or the distribution of assets are resolved through a formal mechanism.
When is Probate Required?
Probate is required in Ontario when the deceased person’s estate includes assets that are not jointly owned or do not have a designated beneficiary. This typically includes real estate, bank accounts, investments, and other assets solely in the deceased person’s name. Additionally, probate is necessary if the deceased person has outstanding debts or taxes that need to be settled.
Initiating the Probate Process If There is a Will
When there is a will present, administering an estate in Ontario involves several steps to ensure that the deceased’s assets are distributed according to their wishes in a legally recognized manner. This process, while complex, provides a pathway for executors to follow. Here’s an overview of the main steps involved when there is a will:
Step 1: Locating the Will
The first step in the process is locating the original will, which is essential for the probate application. The will specifies the executor, who is responsible for carrying out the instructions in the document.
Step 2: Notifying Beneficiaries and Others
Ontario law requires that beneficiaries and other parties be notified of the probate application. This ensures transparency and allows any contests or claims against the will or estate to be brought forward.
Step 3: Applying for Certificate of Appointment of Estate Trustee with a Will
The executor in the will must apply for a Certificate of Appointment of Estate Trustee with a Will (formerly known as probate) to be legally authorized to manage and distribute the estate’s assets. This involves submitting the original will, a death certificate, a detailed inventory of the deceased’s assets and liabilities, and the completed application forms to the Ontario Superior Court of Justice. Estate Forms under Rule 74, 74.1 and 75 of the Rules of Civil Procedure are used in this process.
If your probate application is granted, you will receive a Certificate of Appointment of Estate Trustee. This certificate gives the executor the power to manage the assets in the estate and pay off any debts owed by the estate. In simpler terms, they will be able to start distributing assets to the beneficiaries of the estate. If there are any issues, the court may review the application to determine next steps. If there is incomplete or incorrect information, you will have the opportunity to submit revised or additional materials.
Step 4: Valuing the Estate
The executor needs to accurately value the estate’s assets and liabilities as of the date of death. This valuation is essential for several reasons, including the calculation of estate administration tax and the equitable distribution of assets to beneficiaries.
Step 5: Pay Estate Administration Tax
Based on the total value of the estate’s assets, the executor must calculate and pay the estate administration tax to the Ontario Ministry of Finance. This payment is generally required at the time of submitting the probate application. To calculate the Estate Administration Tax, you can use the calculator here.
| Estate Value | Estate Administration Tax |
|---|---|
| Under $50,000 | $0 |
| Over $50,000 | $15 for every $1,000 |
Fees are valid as of February 2025, as per Ontario Estate Administration Tax Website.
Step 6: Pay Debts
Before distributing the estate’s assets, the Estate Trustee must ensure that all outstanding debts, including taxes and funeral expenses, are paid. This may involve selling assets to cover liabilities.
Step 7: Manage and Protect Estate Assets
While the probate application is being processed, the executor has a duty to manage and protect the estate’s assets. This may involve securing property, managing investments, and ensuring assets are properly managed.
Step 8: Distribute the Assets
Once the Certificate of Appointment of Estate Trustee with a Will is granted and all debts and taxes have been paid, the executor can proceed with the distribution of the estate assets according to the will’s instructions. This may also involve the sale of assets to facilitate distributions.
Step 9: Finalize the Estate
The final step involves preparing final accounts detailing all income received, expenses paid, and distributions made by the estate. These accounts may need to be passed by the beneficiaries or, in some cases, approved by the court.
Challenges and Considerations With a Will
- Contests and Disputes: Wills can be contested, and disputes among beneficiaries can arise, potentially complicating the probate process.
- Accuracy of the Will: Ensuring the will is the most recent version and accurately reflects the deceased’s wishes is crucial.
- Professional Advice: Executors often seek legal and financial advice to navigate the complexities of estate administration, including tax implications and legal obligations.
The process of administering an estate with a will in Ontario is designed to ensure that the deceased’s wishes are respected and that beneficiaries receive their entitlements fairly and legally. Executors play a crucial role in this process, and their duties require careful attention to detail and adherence to legal requirements.
Initiating the Probate Process If There is no Will
When an individual dies without a will in Ontario, the estate is considered “intestate,” and the distribution of the estate’s assets is governed by the rules set out in the Succession Law Reform Act (SLRA). The process for administering an intestate estate is much more complex and involves several steps to ensure that the assets are distributed according to provincial laws. Since there is no will to name an executor, an interested party (usually a close relative of the deceased) must apply to the Ontario Superior Court of Justice for a Certificate of Appointment of Estate Trustee Without a Will. This person, once appointed, functions similarly to an executor and is responsible for managing and distributing the estate’s assets.
Challenges and Considerations Without a Will
- No Guidance: Without a will, there is no guidance from the deceased on how they wanted their assets distributed, leading to potential family disputes.
- Legal Complexity: The process can be more legally complex and time-consuming, as the court must appoint an Estate Trustee, and the distribution follows statutory rules rather than personal wishes.
- Potential for Increased Costs: The lack of a will may result in increased legal and administrative costs and a longer timeline to settle the estate.
The administration of an intestate estate in Ontario requires careful navigation of legal requirements and a thorough understanding of the SLRA. Individuals involved in such processes should seek legal counsel to ensure compliance with the law and help manage the complexities of estate administration without a will.
Do I Need a Lawyer For Probate?
You are not required to hire a lawyer to probate an estate in Ontario, but it is highly recommended. While you can file the application yourself, the process involves complex court procedures and detailed paperwork, which can be overwhelming. Self-filed applications can be rejected at due to errors, leading to delays. A properly prepared application can streamline the process, reduce delays, and potentially save time and money for the beneficiaries.
Summary
Probate in Ontario formally transfers assets from the deceased to beneficiaries according to the will. Seek legal advice to navigate this process efficiently and honour the wishes. Executors and beneficiaries must understand probate complexities for smooth estate administration and asset transition.
If you are seeking legal assistance in probate due to your unique circumstances and needs, contact us today to find out how we can help.
The information provided above is of a general nature and should not be considered legal advice. Every transaction or circumstance is unique, and obtaining specific legal advice is necessary to address your particular requirements. Therefore, if you have any legal questions, it is recommended that you consult with a lawyer.
About the Author
Demet Altunbulakli is the owner and founding lawyer of Insight Law Professional Corporation with 10+ years of experience spanning real estate law, business law, estate planning, litigation, strategic consultations, and customer service. Throughout the years, she has gained a verifiable track record in overseeing the delivery of legal services including commercial & residential real estate purchases & sales and corporate & commercial transactions. With many accomplishments and demonstrated ability in managing multi-client portfolios, promoting quality service delivery, encouraging referrals, leading client consultations, assessing needs, and providing solutions. Demet is looking forward to enabling clients to achieve their objectives, establishing strong relationships with stakeholders, and boosting client satisfaction. Demet obtained her LL.B. from the prestigious Galatasaray University in Istanbul, Turkey. Her studies were in French and Turkish, except for the period when she was an exchange student at the University of Florence. There, she studied law in English and Italian. Mrs. Altunbulakli attended the University of Alberta Faculty of Law for her training in Canada.
Understanding Section 86 Rollover
Updated on
April 3, 2025
The Section 86 rollover is a provision in Canadian tax law that offers a pathway for taxpayers to defer tax liabilities during the exchange of shares within a corporation. This mechanism facilitates the restructuring of corporate ownership without the immediate tax consequences typically associated with such transactions. The article will review the legal framework, eligibility criteria, and practical implications of Section 86 rollover.
Insight Law Professional Corporation is a business law firm located in Toronto. If you are seeking guidance from a corporate lawyer for your section 86 rollover, contact us to see how our firm can help you.
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What is Section 86 Rollover?
A Section 86 Rollover in Ontario is a tax rule that helps business owners change their company’s share structure without triggering immediate taxes. It allows a shareholder to exchange old shares for new ones in the same company without paying capital gains tax right away.
This is useful when reorganizing a business, bringing in new investors, or passing a company to family members. The tax is deferred until the new shares are sold in the future. To qualify, the exchange must be fair market value, and the new shares must replace the old ones. This strategy helps businesses grow and transition smoothly while avoiding unnecessary tax burdens.
To qualify for the rollover, the shares exchanged must differ in some rights or restrictions, such as voting rights or dividend entitlements. The shareholder and the corporation must adhere to legal and procedural requirements, including completing specific forms to elect this tax-deferred treatment with the Canada Revenue Agency (CRA).
Legal Framework
Section 86 of the Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.)) provides the legislative foundation for the rollover. This section specifically addresses the exchange of shares by a shareholder in a corporation for shares of another class in the same corporation. The provision allows such exchanges to occur on a tax-deferred basis under certain conditions, thereby preventing the immediate realization of a capital gain or loss at the time of the exchange.
What Is The Purpose Of Section 86 Rollover?
Section 86 rollover under the Canadian Income Tax Act primarily facilitates corporate restructuring or estate planning activities by allowing shareholders to exchange their current shares for shares of a different class within the same corporation on a tax-deferred basis. This provision enables shareholders to adjust their investment position or to undertake succession planning without incurring immediate tax liabilities that would typically arise from such a transaction. The rollover is designed to recognize that certain corporate reorganizations or transitions in ownership do not necessarily realize an immediate economic gain for the shareholder, hence deferring the tax implications until the new shares are disposed of.
Section 86 rollover benefits the corporation and its shareholders, providing flexibility in managing and restructuring corporate ownership and capital structure without the immediate tax costs. Section 86 encourages shareholders to engage in strategic planning and restructuring activities necessary for the corporation’s growth, diversification, or succession by allowing the deferral of capital gains tax. It reflects a balance in tax policy between facilitating business development and ensuring tax liabilities are eventually accounted for upon the realization of gains.
Eligibility Criteria
To qualify for a Section 86 rollover, several criteria must be met. Firstly, the individual or entity engaging in the share exchange must be a corporation shareholder. Secondly, the exchange must involve substituting one class of shares for another within the same corporation. This transaction requires the shares to be exchanged on a “rollover basis,” meaning that specific legal documentation and tax elections must be properly executed to effectuate the rollover.
Furthermore, the new shares received in exchange must differ in some rights or restrictions compared to the old shares. This difference could pertain to voting rights, dividends, or redemption features. This requirement ensures that the rollover provision is utilized for genuine corporate restructuring purposes rather than mere tax avoidance.
What Is The Benefit of Section 86 Rollover?
The Section 86 rollover is a tax provision that can benefit shareholders who exchange one class of shares for another within the same corporation. This rollover can defer capital gains tax, an advantage for corporate restructuring and succession planning. It means that shareholders can adjust their investments without paying immediate tax consequences. This provision postpones the tax liability until the new shares are sold, which can enhance liquidity and encourage investment. Overall, it is a vital tool for corporate flexibility and growth.
Section 86 is generally used by:
- Business owners who want to transfer the future growth of their company to a key family member or stakeholder can do so through an estate freeze; or
- Shareholders who wish to bring in additional shareholders or restructure the voting rights of shareholders within a company.
Summary
The Section 86 rollover can help companies restructure by allowing shareholders to defer tax liabilities related to share exchanges. However, meeting the eligibility criteria and procedural requirements is crucial and can only be challenging with proper guidance. Legal professionals and experienced accountants can ensure compliance with the ITA and optimize financial outcomes for their clients. Section 86 rollover is a testament to the delicate balance between facilitating business restructuring and maintaining tax efficiency.
The information provided above is of a general nature and should not be considered legal advice. Every transaction or circumstance is unique, and obtaining specific legal advice is necessary to address your particular requirements. Therefore, if you have any legal questions, it is recommended that you consult with a lawyer.
About the Author
Demet Altunbulakli is the owner and founding lawyer of Insight Law Professional Corporation with 10+ years of experience spanning real estate law, business law, estate planning, litigation, strategic consultations, and customer service. Throughout the years, she has gained a verifiable track record in overseeing the delivery of legal services including commercial & residential real estate purchases & sales and corporate & commercial transactions. With many accomplishments and demonstrated ability in managing multi-client portfolios, promoting quality service delivery, encouraging referrals, leading client consultations, assessing needs, and providing solutions. Demet is looking forward to enabling clients to achieve their objectives, establishing strong relationships with stakeholders, and boosting client satisfaction. Demet obtained her LL.B. from the prestigious Galatasaray University in Istanbul, Turkey. Her studies were in French and Turkish, except for the period when she was an exchange student at the University of Florence. There, she studied law in English and Italian. Mrs. Altunbulakli attended the University of Alberta Faculty of Law for her training in Canada.
