What Are Probate Fees and How Can You Reduce Them?

Understanding Probate in Ontario

Probate is the court process that validates a will and grants your executor the authority to manage your estate. This ensures your assets are correctly distributed, debts and taxes are paid, and your estate is properly managed.

While the process is relatively straightforward, probate can involve hefty fees that reduce a significant portion of what’s left of your estate. That’s why understanding the process is key to reducing costs and ensuring your loved ones receive the most from your estate.

What Are Probate Fees?

Probate fees, also known as estate administration tax, are government charges applied when settling an estate after someone’s death. These fees are calculated based on the total value of the deceased’s estate. The larger the estate, the higher the probate fees—that means reducing the assets that go through probate can lower these fees.

In Ontario, probate fees are $15 for every $1,000 of assets over $50,000. For example, an estate worth $100,000 would incur $750 in probate fees. These fees are paid directly from the estate, reducing the total funds available for distribution to beneficiaries or charitable organizations named in the will.

To better understand the financial impact, you can use the government’s estate administration tax calculator to calculate the approximate fees you are looking at, based on the current value of your estate.

What Assets Are Included in Your Estate

Understanding which assets are subject to probate fees is essential when planning your estate. Any property that you own solely in your name will generally be included in the calculation. Here’s a breakdown of what is typically subject to these probate fees:

• Real Property: This includes land and buildings registered solely in your name, minus any outstanding mortgages.
• Financial Holdings: Cash, bank accounts, stocks, bonds, TFSAs, RRSPs, or RRIFs held in your name.
• Personal Property: Items such as vehicles, jewellery, furniture, and valuable collections.
• Business Interests: Ownership stakes in businesses or commercial properties.

These assets are assessed based on their fair market value at the time of death. However, it’s important to know that not all assets form part of your estate. Jointly owned property accounts with designated beneficiaries (e.g., RRSP, TFSA), life insurance payable on death to named beneficiaries, and real estate located outside Ontario do generally not form part of the estate.

Tips to Reduce Probate Fees

Here are some effective strategies to simplify the probate process and minimize probate fees:

1.  Joint Ownership with Right of Survivorship

Joint ownership with the right of survivorship is a simple way to avoid probate fees in Ontario. This allows two or more people to co-own property, and when one owner passes away, their share automatically transfers to the other owner(s)—no probate required. It saves both time and money. It’s especially effective for spouses or common-law partners.

2.  Joint Bank Accounts

Opening a joint bank account can be a helpful way to reduce probate fees and simplify financial management. By adding an account holder, you can decide whether your share of the account passes directly to them or forms part of your estate at your death. If it transfers directly to them at your death, the assets will avoid probate altogether. Sharing an account can make it easier to manage finances, especially for couples or when supporting aging parents.

However, this strategy comes with risks including, for example:

• Any account holder can withdraw money without your permission. This can lead to disputes or misuse of funds.
• If one account holder has financial problems, creditors may target the account.
• In the event of a divorce, the account may be subject to the division of matrimonial assets.

If you are considering adding an adult child to manage finances (due to aging or disability), ensure your intentions are documented with the bank and in your will. Under the “presumption of resulting trust,” joint accounts with adult children are assumed to belong to the estate unless it can be proven that the account was a gift. Without proper documentation, this can lead to family disputes.

Before adding a joint account holder, it’s important to carefully consider the benefits and risks. While joint accounts can provide simplicity and cost savings, they also come with legal and financial risks. It is important to carefully consider your options. Consult with a legal professional if needed. They can help you decide on the best choice based on your unique situation.

3. Beneficiary Designations

Designating beneficiaries for assets such as TFSAs, RRSPs, RRIFs, or life insurance policies is one of the simplest ways to bypass probate fees. These assets transfer directly to the named beneficiaries, saving both time and money. You can even name multiple beneficiaries and specify how the assets will be divided. For example, you might allocate 50% to a sibling, 30% to a friend, and 20% to a charity. However, it’s essential to keep your beneficiary designations up to date, especially after significant life events such as a divorce or separation. Ensuring your beneficiary designations are up to date ensures that your assets go to the intended recipients.

4. Gifting During Your Lifetime

Gifting assets during your lifetime creates meaningful moments with loved ones and can reduce the value of your estate, lowering probate fees. While gifting smaller items such as jewellery or furniture is relatively straightforward, larger assets such as real estate can be more complex. Tax consequences, such as capital gains taxes, may be triggered if the property’s value has increased since its purchase.

For example, transferring ownership of a family cottage might trigger significant capital gains taxes, while gifting a vehicle could involve sales tax—though certain family members may be exempt. For more information on vehicle transfers and exemptions, visit the Government of Ontario – Transfer ownership of a vehicle to a family member.

5. The Importance of a Valid Will

A valid will is the foundation of any effective estate plan. While it won’t eliminate probate fees, it can significantly simplify the probate process. Without a clear and legally valid will, disputes can erupt, adding unnecessary stress and expenses for your intended beneficiaries.

By having a valid will in place, you stay in control of how your assets are distributed, ensuring your family is better cared for and your legacy is better preserved.

Other Estate Planning Strategies

You may also want to explore advanced strategies such as living trusts, segregated funds, or multiple wills. These options can provide additional benefits; however. these strategies require professional guidance to ascertain they are properly implemented.

Take Action Today

Probate fees don’t have to diminish the value of your legacy. With smart planning strategies—such as joint accounts, creating a will, and beneficiary designations—you can ensure as much of your legacy goes directly to the people or causes you care about most.
Secure your legacy and protect your loved ones today.

Our easy-to-use Last Will & Testament Toolkit makes it easy to create a will that ensures your assets go where you want them to—whether to family, friends, or charitable organizations. Don’t wait—get started today!

Disclaimer: The content provided on this blog is for informational purposes only and is not intended to be, and should not be taken as legal advice. The discussions and insights featured herein are meant to enhance your understanding of legal matters in a general context. However, each legal issue has its own unique set of facts and circumstances and should be discussed with a qualified legal professional. For advice tailored to your specific situation, please contact a lawyer of your choice. Use of this blog does not create a lawyer-client relationship between you and the authors of this website.