Application for a Certificate of Appointment of Estate Trustee
A Certificate of Appointment of Estate Trustee is a document issued by the court that formally appoints someone as the executor and gives that person the authority to manage and distribute the estate of a person who either died with a Last Will and Testament or who died intestate (without a will). The Certificate of Appointment is proof to all concerned that the Executor is empowered to administer the provisions of the deceased’s will, or if there is no will, as directed by the Ontario Succession Law Reform Act.
This grant of authority was formerly known as “Letters of Probate”. The process of applying for a Certificate of Appointment of Estate Trustee is still often referred to as the probate process. The Certificate of Appointment verifies the authority of the Trustee to deal with various third parties in the course of administering the Estate, such as liquidating bank accounts, selling property, and filing the deceased’s final tax returns. Our Estate Administration team will prepare the application for you and submit it on your behalf along with all necessary notices, attachments and enclosures.
Applications where the deceased had a Will
If the deceased had a valid Will that appointed an individual as Estate Trustee, our lawyers will assist the named Trustee with filing an application for a Certificate of Appointment of Estate Trustee with a Will, if the nature of the assets requires the issuance of a Certificate of Appointment.
Not all estate assets require probate. These include:
- Jointly owned assets with a right of survivorship (JTWROS);
- RRSPs, RRIFs, TFSAs with a named beneficiary other than ‘Estate’;
- Insurance proceeds paid to a named beneficiary other than ‘Estate’;
- Real estate owned outside of Ontario;
- Gifts made during your life;
- Assets in a trust created during your lifetime (inter vivos trusts).
The Application for a Certificate of Appointment with a Will requires the submission of the original will along with an Affidavit of Execution. The Affidavit of Execution is a sworn statement from one of the witnesses, stating the formal requirements were followed. If the original Will can not be found or the Affidavit of Execution is missing, your lawyer can discuss with you alternative means of satisfying the court.
Applications where the deceased had no Will
If the deceased did not have a valid Will, they are said to have died intestate and default succession rules will govern the administration of their Estate. To learn more about intestate succession and what these rules mean for you, please click here.
With respect to administering the deceased’s Estate without a Will, an individual will need to be appointed by the court as the Estate Trustee. An application must be filed for a Certificate of Appointment of Estate Trustee Without a Will. The list of individuals entitled to make this application is prescribed by law. Our lawyers will advise you if you are entitled to apply and we will prepare and submit the application on your behalf.
The Estate Administration process can be complex and time-consuming. The depth of experience of our Estates counsel enables clients to feel confident that the administration of an estate for which they are responsible will be managed with skill and sensitivity.
Estate Administration Tax
When an application for the appointment of an Estate Trustee is made, an Estate Administration Tax (probate fee) is calculated. While we do not have an inheritance tax in Ontario, as many other jurisdictions have, the estate is responsible to pay the Estate Administration Tax to the Ministry of Finance. This tax is calculated based on the total value of all assets owned by the deceased at the time of death that are subject to probate. There is no Estate Administration Tax on the first $50,000 in value of the Estate. The fee is 1.5% of the balance of the value of the estate.
Filing Income Taxes For The Deceased
The Estate Trustee is responsible to file final tax returns on behalf of the deceased. A terminal tax return is filed to account for the calendar year of the testator’s death. Often a second or even subsequent ‘trust’ return is required to account for income that accrues to the estate after the testator’s passing, such as income from investments and the receipt by the estate of the Canada Pension Plan death benefit. Executors should seek the advice of an accountant who is familiar with processing terminal returns. Executors should also request a Clearance Certificate from the Canada Revenue Agency to confirm that all assessments are final. Until the receipt of this CRA clearance, it is suggested that the final distribution of the estate not be made to protect the estate in case there is an amount due.
Estate Information Return
The Estate Trustee must file an Estate Information Return with the Ontario Ministry of Finance within 180 days of the issuance of the Certificate of Appointment. This is a detailed inventory reflecting everything a person owned at death and the value of those assets. The Ministry of Finance uses the return to ensure that the correct Estate Administration Tax (probate fee) has been paid. There are penalties for failing to file, or for filing late. The advent of this requirement in 2015 has resulted in a threefold increase in the amount of Estate Administration Tax collected by the government.
Estate Trustee Compensation
Estate trustees are generally entitled to be compensated for the care, pains, trouble, and time expended to administer an estate.
The benchmark for calculating the compensation of an Estate Trustee is a “fair and reasonable amount”. Determining what is a “fair and reasonable amount” of Estate Trustee compensation can be challenging.
In some cases the Will specifically addresses the compensation an Estate Trustee is entitled to, but this is not always the case. If the Will does not specify the amount of compensation the estate trustee is entitled to receive, then the Estate Trustee and the beneficiaries will need to agree to the amount of compensation that is paid to the Estate Trustee.
We do have some guidance regarding the proper amount of Estate Trustee compensation. Compensation is routinely calculated as:
- 2.5% of the capital receipts (value of the estate and assets), plus
- 2.5% of the disbursements (payments out of the estate), plus
- Two-fifths of 1% of the average annual value of the assets, as a care and management fee.
The calculation of a percentage fee is not the end of the inquiry. There are five factors that courts consider when evaluating reasonable compensation for an estate trustee:
- The size of the estate;
- The care and responsibility involved;
- The time required;
- The skill and ability demonstrated by the trustee;
- How successful the trustee was.
A high value estate with a complex asset structure and multiple beneficiaries will require more engagement by the Estate Trustee and may command a fee at the higher end of the scale. Conversely, if an Estate Trustee brings the testator’s ‘life in a bag’ to the lawyer, leaving much of the Estate Trustee’s work to be completed by the law firm, his or her Estate Trustee compensation may be at the lower end of the scale.
Estate Trustee compensation is treated as income and so is taxable to the Trustee. Some Wills may include a specific bequest for the estate trustee, which is not taxable.
