How to Avoid Probate in Ontario: Strategies to Minimize Fees
You can avoid or reduce probate in Ontario by using strategies like joint ownership, beneficiary designations, trusts, and gifting assets during your lifetime.
We'll explore how probate fees are calculated. We'll also walk you through proven methods to keep your assets out of the probate process. Understanding when joint ownership makes sense and properly setting up beneficiary designations can save your family significant time and money.
The key is knowing which approach works best for your situation. Implement these strategies before they're needed. We'll also cover the estate settlement process without probate. This way, you understand how these methods protect your beneficiaries from unnecessary delays and costs.
Understanding Probate in Ontario
Probate in Ontario is a legal process where the court validates a person's will after they die. The process involves paying estate administration tax and can cost up to 1.5% of the estate's total value.
What is Probate?
Probate confirms a will is valid and legally binding. When someone dies, their estate trustee must apply to the Ontario Superior Court of Justice for a Certificate of Appointment of Estate Trustee.
This certificate proves the estate trustee has legal authority to manage the deceased person's assets. Without it, banks and other institutions often refuse to release funds or transfer property.
Not all estates need probate. The requirement depends on the types of assets involved and their value.
Some financial institutions have their own rules about when they require probate documents.
Read our in-depth guide on what is probate in Ontario, then find out how you can avoid probate and save on fees.
Why Probate Is Required
We need probate when institutions holding the deceased person's assets demand proof of authority. Banks typically require probate for accounts over certain amounts, usually between $25,000 and $50,000.
Assets that usually require probate include:
Bank accounts in the deceased person's name only
Investment accounts without named beneficiaries
Real estate owned solely by the deceased
Vehicles and other personal property
Assets that avoid probate include:
Joint bank accounts with right of survivorship
Life insurance with named beneficiaries
RRSPs and TFSAs with designated beneficiaries
Assets held in trust
Probate Fees and Estate Administration Tax
Ontario charges estate administration tax on estates going through probate. We pay this tax based on the total value of all assets requiring probate.
Estate Administration Tax Rates:
First $50,000: No tax
Amount over $50,000: $15 per $1,000 (1.5%)
For example, an estate worth $500,000 pays $6,750 in estate administration tax. This makes Ontario one of the most expensive provinces for probate fees in Canada.
The estate trustee must pay this tax before receiving the Certificate of Appointment. Additional costs include legal fees, court filing fees, and other administrative expenses during the probate process.
How Probate Fees are Calculated
Ontario's Estate Administration Tax uses a simple tiered system based on your estate's total value on the date of death. The calculation includes all assets that must pass through probate, with specific rates applied to different value thresholds.
Value of the Estate
We determine probate fees in Ontario by calculating the fair market value of all estate assets on the date of death. This includes real estate, bank accounts, investments, and personal property.
The estate's total value gets rounded up to the nearest thousand dollars for fee calculation purposes. For example, an estate worth $150,500 is treated as $151,000 when we calculate the Estate Administration Tax.
Current fee structure:
Estates under $50,000: $0
Estates over $50,000: $15 per $1,000 (or 1.5%)
This tiered system means smaller estates face no probate tax burden. Only the portion above $50,000 gets taxed at the standard rate.
Assets Subject to Probate
Not all assets in your estate are subject to probate fees. We only include assets that must pass through the probate process in our calculation.
Assets typically included:
Real estate solely owned by the deceased
Bank accounts without beneficiary designations
Investment accounts in the deceased's name only
Personal property and household items
Assets that avoid probate:
Jointly owned property with right of survivorship
RRSPs, RRIFs, and TFSAs with named beneficiaries
Life insurance policies with designated beneficiaries
Assets held in living trusts
Current Rates and Examples
Ontario charges $15 for every $1,000 of estate value above the $50,000 threshold. This equals 1.5% of the estate value over $50,000.
Calculation examples:
| Estate Value | Taxable Amount | Probate Fee |
|---|---|---|
| $40,000 | $0 | $0 |
| $100,000 | $50,000 | $750 |
| $250,000 | $200,000 | $3,000 |
| $500,000 | $450,000 | $6,750 |
For a $200,000 estate, the first $50,000 is exempt. The remaining $150,000 gets taxed at $15 per $1,000, resulting in $2,250 in probate fees.
Understanding this calculation helps us plan effective strategies to minimize the Estate Administration Tax burden on your beneficiaries.
Read our complete guide on probate fees in Ontario to understand how costs are calculated and learn practical ways to reduce or avoid them.
Key Strategies to Avoid Probate in Ontario
Several methods can help reduce or eliminate probate requirements for your estate. Joint ownership, beneficiary designations, and living trusts offer effective ways to transfer assets directly to your intended recipients.
Joint Ownership and Rights of Survivorship
When we hold assets in joint ownership with rights of survivorship, these assets automatically pass to the surviving owner without going through probate. This strategy works well for bank accounts, real estate, and investment accounts.
The key benefit is immediate transfer upon death. No court approval is needed, and no probate fees apply to jointly held assets.
Common jointly owned assets include:
Joint bank accounts
Real estate properties
Investment accounts
Vehicles
We must ensure the joint ownership is intentional for estate planning purposes, not just for convenience. The surviving owner gains full control of the asset, which could create disputes among other beneficiaries.
This approach works best when we trust the joint owner completely. They will have access to the assets while we're alive and complete ownership after our death.
Designating Beneficiaries on Accounts
We can name beneficiaries directly on certain registered accounts. These assets then bypass probate and transfer directly to the named beneficiaries upon our death.
Accounts that allow beneficiary designations:
RRSPs (Registered Retirement Savings Plans)
RRIFs (Registered Retirement Income Funds)
TFSAs (Tax-Free Savings Accounts)
Life insurance policies
Pension plans
This method is simple and cost-effective. We just completed the beneficiary forms provided by our financial institutions.
We should review and update our beneficiary designations regularly. Life changes like marriage, divorce, or births may require updates to keep our estate plan current.
Outdated designations can cause delays and legal disputes for our families. Keep beneficiary forms current with your financial institutions.
Establishing a Living Trust
A living trust holds our assets outside of our estate, preventing them from going through probate. We transfer ownership of assets to the trust while maintaining control during our lifetime.
Living trusts provide more control over asset distribution compared to joint ownership. We can set specific terms for when and how beneficiaries receive their inheritance.
Assets we can place in a living trust:
Real estate
Investment accounts
Business interests
Personal property
The trust requires a legal setup and ongoing management. We'll need to transfer asset titles to the trust name and maintain proper records.
Trusts involve upfront legal costs and administrative responsibilities. However, they offer greater flexibility in our estate planning and can provide tax benefits in certain situations.
We should work with an estate lawyer to ensure the trust is properly structured for our specific needs and Ontario's legal requirements.
Utilizing Joint Ownership
Joint ownership with rights of survivorship lets assets pass directly to the surviving owner without going through probate. This strategy works well for real estate and bank accounts but comes with important risks we need to consider.
Real Estate and Joint Tenancy
Joint tenancy with rights of survivorship is one of the most effective ways to transfer real estate without probate fees. When one owner dies, the surviving joint tenant automatically receives full ownership.
Key benefits include:
No probate required for transfer
Avoids Estate Administration Tax on the property
Quick transfer to surviving owner
However, we must be careful about tax implications. Adding a child or other family member as joint owner creates a deemed disposition of 50% ownership.
This means the original owner must report this as a taxable event on their income tax return. The transfer only works smoothly between spouses.
For other family relationships, the joint tenancy may not hold up in court if challenged by other beneficiaries.
Joint Bank Accounts
Joint bank accounts can help avoid probate, but only in specific situations. When spouses own accounts jointly, the funds transfer to the surviving spouse without probate or Estate Administration Tax.
Important limitations:
Joint accounts between non-spouses are always subject to Estate Administration Tax
The joint owner gets full legal access to all funds immediately
Courts often view these arrangements with suspicion
Banks and financial advisors often suggest joint accounts. But this creates immediate ownership rights for the joint holder, not just access after death.
We recommend using a Power of Attorney for financial matters instead. This gives someone access to help manage accounts without creating joint ownership problems.
Potential Risks of Joint Ownership
Joint ownership creates several serious risks that can outweigh the probate savings. The joint owner gains full, unrestricted access to the funds or property right away.
Major risks include:
Joint owner's creditors can claim the assets
Assets become part of joint owner's divorce settlement
If joint owner dies first, assets may go through their estate instead
The Ministry of Finance can audit joint ownership arrangements. They look at who contributed the original funds, who pays taxes on investment gains, and who actually uses the money.
Courts often call joint accounts between non-spouses "litigation goldmines" because family members frequently challenge these arrangements. The surviving joint owner must prove the arrangement was legitimate, which can be difficult and expensive.
We strongly recommend getting professional estate planning advice before using joint ownership strategies. The risks often exceed the potential probate savings, especially for larger estates.
Want to know how joint tenancy can help you avoid probate in Ontario? Read our guide on tenants in common vs joint tenancy for a clear explanation of how each ownership type impacts the probate process.
Using Beneficiary Designations
Certain financial accounts let you name beneficiaries who receive the assets directly when you die. These accounts skip probate entirely, saving time and the 1.5% estate administration tax on assets over $50,000.
Registered Retirement Savings Plans (RRSPs and RRIFs)
We can name beneficiaries on our RRSPs and RRIFs to avoid probate completely. When we die, these accounts transfer directly to the people we choose.
Our spouse or common-law partner gets the best tax treatment. They can roll the funds into their own RRSP or RRIF without paying immediate taxes.
If we name our children or other beneficiaries, they must pay income tax on the full amount. The tax bill can be large, so we need to plan carefully.
We should update our beneficiary forms regularly. Life changes like marriage, divorce, or new children may require us to change who gets our money.
Some people name "the estate" as the beneficiary by mistake. This forces the accounts through probate and costs extra fees.
Tax-Free Savings Accounts (TFSAs)
Our TFSAs can pass directly to beneficiaries without probate fees or taxes. We have two main options when setting up our accounts.
Naming a beneficiary means they get the money directly. They must withdraw it within a year but pay no taxes on the amount.
Naming a successor holder works only for spouses. They take over our TFSA and keep using our contribution room.
We should check our TFSA paperwork to see which option our bank offers. Not all financial institutions provide both choices.
The money stays tax-free for beneficiaries. This makes TFSAs one of the best accounts to pass to our loved ones.
Life Insurance Policies and Pensions
Life insurance policies avoid probate when we name specific people as beneficiaries. The insurance company pays them directly after we die.
We should never name our estate as the beneficiary. This creates unnecessary probate fees and delays for our family.
Most workplace pension plans also let us choose beneficiaries. Our spouse usually gets the best benefits, including ongoing monthly payments.
We need to keep beneficiary information current. Old forms might still name an ex-spouse or someone who died before us.
Some policies let us name backup beneficiaries. This protects our family if our first choice dies before we do.
Additional Probate Avoidance Methods
Several advanced methods can help reduce or eliminate probate requirements in Ontario. Gifting assets during your lifetime, using dual wills, and working with qualified professionals can provide additional protection for your estate.
Making Gifts During Your Lifetime
We can reduce the size of our estate by gifting assets before we pass away. This strategy removes assets from our estate, so they won't be subject to probate fees.
Cash gifts are the simplest option. We can give money to our beneficiaries while we're alive to see them benefit from it.
There are no gift taxes in Canada, but we need to consider the tax implications for ourselves.
Real estate transfers can be more complex. We can transfer property to our children or other beneficiaries, but this may trigger capital gains taxes.
The recipients will also take on our original cost basis for future tax calculations.
Investment assets like stocks or bonds can be gifted, but we'll need to pay capital gains tax on any appreciation. We should time these gifts carefully to minimize our tax burden.
The key is finding the right balance. We want to reduce our estate size without creating financial hardship for ourselves or unexpected tax bills.
Dual Wills and Advanced Will Planning
A dual will strategy involves creating two separate wills to handle different types of assets. This approach can reduce probate fees on certain assets.
Our primary will covers assets that require probate, such as real estate and investment accounts. Our secondary will handles assets that don't need probate, like private company shares or personal belongings.
The secondary will specifically states that it doesn't revoke the primary will. Only the primary will goes through probate, reducing the total estate value subject to probate fees.
This strategy works well for business owners with private company shares. These shares often don't require probate, so we can exclude their value from probate calculations.
We must ensure both wills are properly drafted and coordinated. Any conflicts between the wills could create legal problems for our executor and beneficiaries.
Engaging Professionals for Estate Planning
Working with qualified professionals is important for complex estate planning. We need experts who understand Ontario's laws and can help us implement the right strategies.
A financial advisor can help us understand the tax implications of different approaches. They can model scenarios to show how gifting assets or other strategies might affect our financial plan.
An estate planning lawyer is crucial for drafting our will and setting up trusts or other legal structures. They ensure our documents comply with Ontario law and work together effectively.
Our accountant can advise on tax strategies and help us time asset transfers to minimize tax impacts. They're important when we're considering gifting assets with significant capital gains.
These professionals work together to create a comprehensive estate plan. The upfront costs are usually much less than the probate fees and complications we might face without proper planning.
The Estate Settlement Process Without Probate
When estates avoid probate, the settlement process becomes faster and more private. Estate trustees have different responsibilities, and beneficiaries receive assets more quickly.
The entire process stays out of public records.
Role of the Estate Trustee
The estate trustee's role changes significantly when probate isn't required. We don't need court approval to begin distributing assets to beneficiaries.
Key responsibilities include:
Collecting and managing estate assets
Paying outstanding debts and taxes
Distributing assets according to the will
Without probate, the estate trustee can start these tasks immediately after death. We can access joint accounts, transfer beneficiary-designated assets, and handle trust distributions right away.
The executor still has a legal duty to act in the beneficiaries' best interests. We must keep detailed records of all transactions and distributions.
Important limitations exist:
Some financial institutions may still request court documents
Complex estates might require legal guidance
Tax obligations remain the same
Impact on Beneficiaries
Beneficiaries receive their inheritance much faster without probate. We can expect to receive assets within weeks rather than months or years.
Direct benefits include:
No probate fees of 1.5% on estate value
Faster access to funds and property
Reduced legal and administrative costs
Joint ownership assets transfer immediately to surviving owners. Registered accounts like RRSPs and TFSAs go directly to named beneficiaries.
Trust assets distribute according to the trust terms. We don't wait for court approval or lengthy legal processes.
Potential challenges:
Disputes between beneficiaries can still arise
Some assets may require additional documentation
Tax implications remain complex
Timeline and Public Record Considerations
Estate settlement without probate typically takes 3-6 months instead of 12-18 months. We can complete most transfers within the first few weeks after death.
Timeline advantages:
Immediate access to joint accounts
Quick beneficiary transfers on registered accounts
Faster real estate transfers
The entire process remains private. We don't file documents with the court, so estate details stay confidential.
Privacy benefits:
Asset values remain private
Beneficiary information stays confidential
Family disputes don't become public record
Some assets still require government registration changes. Real estate transfers need provincial land registry updates, but these happen faster than probate proceedings.
Financial institutions may have their own timelines for processing transfers. We should contact them directly to understand their specific requirements for non-probate assets.
Conclusion
Avoiding probate in Ontario requires careful planning and the right strategies. Joint ownership, beneficiary designations, trusts, gifting assets, and multiple wills can all help reduce or eliminate probate fees. These methods work best when they fit your specific situation and financial goals.
The key is to start planning early and understand which assets need probate. Some assets like jointly owned property and registered accounts with named beneficiaries can bypass probate completely. Others may still require the probate process depending on how they are structured.
At Probate Law Group, we help Ontario families navigate these complex estate planning decisions. Our experienced lawyers can review your assets and recommend the best strategies to minimize probate fees while protecting your beneficiaries' interests.
Frequently Asked Questions
Probate exemptions in Ontario include assets with named beneficiaries, jointly owned property, and gifts made during your lifetime. The process isn't always required, and several legal pathways exist to transfer property without court involvement.
What is exempt from probate in Ontario?
Assets with named beneficiaries, like life insurance policies and registered accounts (RRSPs, RRIFs, TFSAs), usually bypass probate. Property owned jointly with right of survivorship also passes directly to the surviving owner. Assets held in trust are not part of the estate and avoid probate as well.
Is there a way to avoid probate in Ontario?
Yes. You can avoid probate by holding property jointly, naming beneficiaries on accounts and insurance, setting up trusts, and making gifts during your lifetime. Dual wills are sometimes used for certain assets, such as private company shares, to separate those requiring probate from those that don’t.
Is probate always necessary in Ontario?
No. Probate is only required for certain assets—mainly those held solely in the deceased’s name or where institutions demand court approval. Smaller estates or those made up mainly of jointly owned assets and beneficiary-designated accounts may not need probate at all.
Can property be transferred without probate in Ontario?
Yes, in many cases. Jointly owned property with survivorship rights, assets held in trust, and gifts made while the owner was alive can transfer without probate. The First Dealings Exemption may also apply to certain properties, allowing them to transfer outside of probate.
How long does probate take in Ontario when there is no will?
The process is often longer without a will because the court needs to appoint an estate trustee and verify all heirs. This usually takes 4–8 months, but complex cases or disputes can take a year or more.
Who decides if a will needs to be probated in Ontario?
The estate trustee or executor makes the initial decision, but banks and financial institutions often require probate before releasing funds or transferring property. The need for probate usually depends more on the type of asset than its value.