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HOW LONG DOES PROBATE TAKE IN ONTARIO? 7 QUESTIONS NEWBIE ONTARIO ESTATE TRUSTEES ARE EMBARRASSED TO ASK

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

How long does probate take in Ontario introduction

If you are handling property that was left by the deceased, either in a will or without a will, the legal procedure to deal with it is called probate. There is even more to the procedure of probate than simply doling out what the person wanted his or her beneficiaries to have.

There are regulations on:

  • Who can fulfill the role of Estate Trustee?
  • The process of the court of probate.
  • The rules determining how estate assets to be separated between property that must be probated and property that does not need to go through probate.
  • How to deal with property and claims after probate has been granted.
  • Dealing with claims against the Estate, especially competing claims.
  • Completing the necessary final personal income tax return and any other outstanding returns, the Estate tax return and dealing with Canada Revenue Agency (CRA) on various personal income tax and estate tax issues.
  • Understanding the terms of any life insurance policy or policies on the life of the deceased, advising the insurer of the death and determining who the life insurance proceeds should be paid to depending on the beneficiary designations.
  • The overall duties of the Estate Trustee.
  • Knowing how long does probate take in Ontario?

There are many questions about probate applications and more about the whole probate process that arise when someone dies and their financial situation needs to be understood, dealt with and their property distributed in accordance with their wishes as laid out in their will. It becomes even more of a challenge when the person dies without a will, which is called dying intestate.

Many times the named Estate Trustee is a close relative or trusted friend. They may have zero experience in acting as an Ontario Estate Trustee. They take on the role out of a sense of love for and obligation to the deceased. Many times they are either embarrassed to ask the estate lawyer questions because they believe they are too rudimentary and they should already know the answer. Sometimes they don’t ask the questions because they do not wish to incur the legal fees each time.

The purpose of this Brandon Blog is to answer the question, how long does probate take in Ontario and the 6 other most frequently asked questions we find people ask us in our role as Estate Trustee in our Smith Estate Trustee Ontario business.

how long does probate take in ontario
how long does probate take in ontario

What is probate in Ontario?

This is a very common question. It is actually the first question; the second one is how long does probate take in Ontario? Probate in Ontario is a legal process asking the court to:

  • give an individual or company the authority to work as the Estate Trustee of an estate.
  • Verify the authority of a person or company identified in the deceased’s will as the Estate Trustee.
  • Formally approve that the deceased’s will is their valid last will.

How long does probate take in Ontario: What you will need to apply

To make probate applications to the court for probate you will require to submit documents needed as set by the Estates court regulations. It includes:

  • A certified true copy of the deceased’s original will if any.
  • If it exists, any addition or supplement that describes modifies or withdraws a will in whole or in part
  • Proof of Death by a copy of the Death Certificate.
  • the fully completed court forms which amongst other things, provide details regarding the nature, extent and valuation of the assets of the deceased at the date of death and calculates the probate fees, otherwise known in Ontario as Estate Administration Taxes. You have probably heard names like death tax or probate fees. In Ontario, the proper name is Estate Administration Tax.

This is the beginning of the probate process.

how long does probate take in ontario
how long does probate take in ontario

What is a Probate Certificate? Is a Probate Certificate Required?

Here are two probate Ontario FAQs in one! A person could make an application to the Estates court for a Probate Certificate if the:

  • Deceased individual passed away without a will.
  • Deceased’s will does not name an Estate Trustee.
  • Financial institutions or other 3rd party wants evidence of a person’s legal authority to deal with the financial assets of the deceased which does not automatically pass to one more person by right of survivorship. Joint bank accounts, as long as the other name(s) on the accounts were not minors, would automatically pass to the other joint owners without having to through the application for probate through the Estates Court, otherwise known as the Probate Court.
  • List of assets includes real estate where the real property does not automatically pass to one or more individuals because of joint ownership.
  • Stakeholders disagree concerning the appointment of the Estate Trustee or any claim that the named Estate Trustee has a conflict or is otherwise not capable or qualified to act.
  • Parties disagree or there may very well be a prospective disagreement regarding the legitimacy of the deceased person‘s will or some beneficiaries called in the will are not able to supply lawful authorization.

May times just being able to comb through the documents of the deceased to get the necessary information extends how long does probate take in Ontario.

How long does probate take in Ontario? Is a probate certificate always required?

Many people do not realize that a probate certificate is not always required in the Province of Ontario. For example, it is not required if all Estate assets are being transferred to another person through the right of survivorship because they were owned jointly or the beneficiary was a designated beneficiary under an insurance policy. In this case, probate is not required.

Examples of when probate is required, even if the deceased has a valid will are:

  • It does not name an Estate Trustee (formerly called an Executor or Executrix) and a personal representative cannot be found.
  • An Estate Trustee is named but that person has recused themselves and refuses to act.
  • There is Estate property that will not automatically flow to another person due to the right of survivorship or being named as the designated beneficiary in a life insurance policy.
  • It will be necessary to gain control over financial assets or real property and be able to convey them.
  • A vesting order from the Court may be required to transfer ownership upon the sale of Estate assets.

What Happens After Probate is Granted?

After the grant of probate is when the fun really starts. That is when most of the activities of the Estate Trustee really happen like:

  • Putting parties on notice regarding estate assets, property before probate that the Estate Trustee identified.
  • Collection of the property or making sure that jointly owned property is properly transferred.
  • Identifying and paying all rightful claims against the Estate before making any distribution to the beneficiaries.
  • Making sure that no beneficiary or 3rd party is contesting the will or the actions of the Estate Trustee.
  • Final tax return preparation and filing.
  • Dealing with insurance companies.
  • Making sure the correct probate fees have been paid.
  • Understanding the Estate law issues or going to the Estate lawyer for advice when unsure.
  • Handling the entire Estate administration process properly.
  • Estate tax return preparation and filing and all the other activities I have already mentioned above.

All of this is before coming up with a scheme of distribution to the beneficiaries and getting either their unanimous approval or if opposed, an Order from the court approving the proposed distribution. It is important for an Estate Trustee to make sure that they have the proper authority to take the actions they need to and that nobody is opposing the Estate Trustee’s actions.

If an Estate Trustee oversteps their powers or is challenged and found to have been in the wrong, they have a personal liability to the Estate and the stakeholders. As you can see, it helps to have experience in the administration of estates.

So the Estate Trustee better get it right! In smaller Estates, this can be done relatively quickly. In larger Estates, especially if there are many contentious issues, how long does probate take in Ontario can be very elongated.

how long does probate take in ontario
how long does probate take in ontario

How long does probate take in Ontario for a large estate vs a small estate?

How long does it take to prepare a probate application? Once all of the facts are properly collected, it is a matter of hours to prepare and finalize all of the necessary documentation. The probate application can all be submitted online.

How long does it take to grant probate? The delay between filing the application and grant of probate varies greatly from Court registry to Court registry. In smaller regions, it does not take long at all. Historically in the Toronto region, without a court order requesting the court to expedite the issuance of the Certificate of Appointment of Estate Trustee, it could take many long months.

The probate process in Ontario can be either a larger or smaller legal process experience, depending on each unique situation. Estates in Canada that are valued at over $150,000 are covered by the larger probate process. The larger process is really the one that historically was in place in Ontario.

Since April 1, 2021, the province of Ontario has a new estate designation, a “small estate“. A small estate is for the probate legal process when it is valued at $150,000 or less. You can use a streamlined procedure if you are requesting probate of an estate that fits this definition.

If your application meets the requirements, is properly completed and all necessary documents are attached, the court will provide a probate certificate for a small estate. This certificate is referred to as a Small Estate Certificate. The certificate will provide you with the authority to take care of the estate assets that are listed in the certificate.

As this provision just went into place, I don’t have any statistics yet to report on whether or not this will positively affect how long does probate take in Ontario. If the deceased owned a house in their name only in the Greater Toronto Area with equity of at least $150,001, it will not speed things up.

How long does probate take in Ontario? Ontario allows probate applications by e-mail

What is the modification? The court has chosen to permit electronic submissions which are suggested to address the relentless stockpile issues. It also is part of a bigger campaign by the government to update the probate process in Ontario.

As I have stated above, the application for a Certificate of Appointment of Estate Trustee is part of the wider probate process. Allowing applications via email, which started in October 2020, is a reaction to both the backlog and the new truths forced upon the Ontario Superior Court of Justice Estates List section due to the new realities on how the court must adapt to operate in the COVID-19 pandemic era.

With any luck, this will quicken how long does probate take in Ontario.

How long does probate take in Ontario summary

I hope you found how long does probate take in Ontario Brandon Blog post helpful. If you are concerned because there is an Estate that needs a professional Estate Trustee, Smith Estate Trustee Ontario can help you. Since we are also a licensed insolvency trustee firm, we can also help if the deceased Estate is insolvent. We can also help if you or your business have debt problems.

It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

how long does probate take in ontario
how long does probate take in ontario
Categories
Brandon Blog Post

RRSP BENEFICIARY: OUR REMARKABLE PLAN ON HOW THE INCOME TAX BILL ON DEATH FROM AN RRSP CAN BE REDUCED

rrsp beneficiary
rrsp beneficiary

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. and Smith Estate Trustee Ontario are absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to the audio version of this Brandon Blog, please scroll to the very bottom and click play on the podcast.

RRSP beneficiary: Death of an RRSP annuitant

As I have written before, in addition to insolvency work, we also act as an independent Estate Trustee through our business Smith Estate Trustee Ontario. In our work as Estate Trustee of a deceased estate, we have come across an interesting topic when it comes to the will of the deceased and the inheritance of an RRSP beneficiary.

Understanding the tax implications of a beneficiary entitled to an RRSP inheritance can save or cost you thousands of dollars depending on how the RRSP is administered. The Canada Revenue Agency (CRA) has specific rules regarding what happens to an RRSP when its owner dies. Did you know that there are a number of tax implications that come with inheriting RRSPs? This is especially true when you are inheriting from distant relatives like grandparents, aunts, uncles, or cousins. As an assignee of a Registered Retirement Savings Plan (RRSP), you are entitled to all of the funds in the plan, but it is possible that the account balance could be taxable.

In this Brandon Blog, I discuss the income tax ramifications on an RRSP beneficiary. By definition, since it is an RRSP available to be inherited, rather than a Registered Retirement Income Fund (RRIF) or an annuity, I am talking about:

  • someone who died before turning 72 years old; and
  • never had the opportunity to enjoy retirement.

I remind you that I am not an income tax practitioner, but rather, I am a licensed insolvency trustee. So this Brandon Blog is not meant as income tax advice and should not replace the advice of your qualified income tax advisor.

RRSP beneficiary designation: Designating your estate or other beneficiaries

Setting up an RRSP is a great way to save for retirement. You contributed to your plan each year and got a tax break from the government. This is a fantastic deal, so many people take advantage of it. If you only name the heir or heiress in your will, that should be sufficient. However, a will can be challenged. If you don’t name one at all for your plan, or if you are not a special type of grantee, there can be some serious tax implications.

The inheritor you name for your RRSP during your lifetime is the person who will receive the asset after your death. You can appoint a recipient directly in your RRSP plan document much in the way that you name one for your life insurance policy. I recommend that you do this. Do not just name your estate and then maybe name the real RRSP beneficiary in your will.

The CRA has adopted a special policy regarding the tax treatment of RRSPs. This policy is referred to as the deemed disposition rule. The deemed disposition rule applies to RRSPs. When the holder of an unmatured RRSP passes away, CRA deems that the RRSP was disposed of and the funds received, right before their death.

The calculation of the funds received is an amount equal to the reasonable market price of all the property kept in the RRSP at the time of death. This amount and any other balances the deceased got from the RRSP in the year of death need to be reported on the deceased’s year of death income tax return.

rrsp beneficiary
rrsp beneficiary

RRSP beneficiary tax implications: How can the income tax bill on death be reduced?

Understanding the tax implications of an RRSP beneficiary entitled to an RRSP inheritance can save or cost you thousands of dollars depending on how the RRSP is administered. The CRA has specific rules regarding what happens to an RRSP when its owner dies.

When a person passes away and leaves an RRSP, their estate has to pay the income tax liability on the RRSP when it’s paid to the RRSP beneficiary. However, you should first ask who is a qualified beneficiary? Eligible individuals who can qualify for such beneficiary designations are a spouse, a common-law partner, or a financially dependent (infirm) child or grandchild, they can utilize the “qualified beneficiary” RRSP exemption to reduce or remove the tax obligation. If there is no qualified beneficiary, the Estate Trustee will have to pay income tax calculated based on the entire amount of the RRSP.

So the challenges for beneficiaries, in general, are twofold: 1. Are you a qualified beneficiary? 2. Can a qualified beneficiary reduce their income tax bill?

If you inherit an RRSP, is that someone will face a tax bill from CRA on the deemed disposition on death. The RRSP value will be taxed as income. Now, there are some situations in which you can reduce or eliminate the taxes. If the RRSP beneficiary is a qualified beneficiary, then the value of the RRSP can be taxed in the hands of the RRSP beneficiary, not the deceased’s estate.

RRSP beneficiary tax: Reduce the tax by rolling over

This first step of the rollover procedure is described as a “refund of premiums”. The second step is the tax-deferral portion. Where a qualified beneficiary adds the number of assets from the deceased’s RRSP in the year received (or within the first 60 days of the next year), the qualified beneficiary can declare a tax deduction under section 60(l) of the Income Tax Act (Canada) to eliminate the RRSP amount added to their income. This manoeuvre does not require the RRSP beneficiary to have sufficient RRSP contribution room. The result? This heir or heiress becomes a successor annuitant and gets a tax-deferred rollover.

To eliminate the tax on receipt of the RRSP funds, the RRSP assets are directly moved to the qualified beneficiary‘s RRSP. At tax time, the qualified beneficiary gets a T4RSP tax slip. The qualified RRSP beneficiary then includes the date-of-death RRSP amount in their taxable income but offsets it with a section 60(l) tax reduction.

The above rollover is typically seen when a qualified beneficiary is marked as the RRSP recipient. When this happens, the RRSP proceeds generally bypass the deceased’s estate, lowering probate fees (where applicable) and side-stepping the estate creditors as well as the need for complicated estate settlements.

rrsp beneficiary
rrsp beneficiary

CRA RRSP beneficiary rules: Who pays tax on inherited RRSP if the beneficiary is not a spouse, common-law partner or financially dependent children or grandchild – but is the Estate?

One of the most common errors made when determining the recipient for the RRSP is to assign the estate itself. This requires the RRSP asset to go through probate. The estate receives the tax-deferred growth that has actually been earned by the RRSP up to the date of death. However, it would additionally mean that the estate would be responsible for shouldering the tax burden on the distribution of the RRSP. This is not necessarily wrong, but from an estate planning perspective, it is the most expensive route to choose. Estate planners certainly would not choose this way unless for some reason there was no other choice.

The RRSP beneficiary problem we are dealing with or how to destroy an inheritance

The issue we are dealing with on a particular deceased estate file blends insolvency work with the work of an Estate Trustee. The deceased did not file income tax returns for the last few years of her life. We now have a pretty good handle on her income taxes and what her liability is for the years of unfiled tax returns, as well as the tax liability that will arise from the Estate trust tax return.

Based on what I have already told you about the taxation possibilities for an RRSP beneficiary, and what I am about to tell you, there is a huge problem for an RRSP beneficiary.

For confidentiality reasons, I cannot provide names and amounts, but I will explain the problem. The deceased maintained a self-directed RRSP contract through Royal Bank of Canada at Royal Bank Dominion Securities. The named beneficiary in the Registered Retirement Savings Plan document was a relative. This relative does not meet the definition of a qualified beneficiary.

So in the normal course, the Estate Trustee would work with the RRSP beneficiary to understand if there was going to be no taxable income inclusion because an RRSP rollover was taking place. If not, the estate should pay the tax, but the beneficiary obtains 100% of the value of the RRSP.

Another option is that the Estate Trustee would get the tax payable on the registered retirement income from the RRSP beneficiary and pay the income tax. The beneficiary would be left with the net amount and the tax would be paid. So everyone is square.

Which option is picked depends on if there are more assets and more beneficiaries or not.

In the situation I am acting in, the Estate is insolvent. There will not be enough money in the Estate to pay all the income tax owing, regardless of the source of the taxable income. The RRSP beneficiary also as I understand it, did not elect an RRSP rollover.

So now, in this case, where the Estate has insufficient funds to pay the taxes payable in full and the RRSP beneficiary:

  • is not a qualified beneficiary; and
  • did not do an RRSP rollover

the RRSP beneficiary will be liable for the income tax payable from the RRSP plan assets received. The real problem is that the year death, and therefore the year the RRSP beneficiary received their inheritance was 2018. We were appointed late in 2019 and we just now have been able to quantify the income tax payable.

So it will be 2021 or later that CRA may go to the RRSP beneficiary with their hand out. I don’t know if the RRSP beneficiary invested it all, spent it all, or a combination of the two. This my readers is how to destroy an inheritance.

RRSP beneficiary summary

I hope you enjoyed the RRSP beneficiary Brandon Blog post. If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. and Smith Estate Trustee Ontario are absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

 

Call a Trustee Now!