April 15th, 2021 eState Planner Advanced Topic Webinar Recap

Ian and Jordy discussed Estate Administration Tax issues. Here's a quick summary:

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What is Estate Administration Tax (EAT)?

EAT is payable upon filing an Application for a Certificate of Appointment of Estate Trustee with or without a Will.

The value of the estate is defined as all “the property that belonged to the deceased at the time of his or her death.” The value is the fair market value at the date of death. Importantly, it is only assets governed by the Will being submitted that have to be included. That is why multiple wills work to reduce EAT.

There is no EAT on the first $50,000.00 of estate value. However, once the estate value exceeds $50,000, $15.00 is owed for every $1,000.00.

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What is included when calculating EAT? 

All assets (located anywhere in the World) have to be included in the calculation of EAT except:

1. Real Estate outside of Ontario.
2. Assets not governed by the Will being submitted for Probate. (e.g. assets governed by a Secondary Will).
3. Assets that do not beneficially belong to the deceased at the instant of death because of:

              Right of survivorship of beneficial interest or

               Designation of beneficiary of beneficial interest.

Therefore, assets that pass by right of survivorship or beneficiary designation, but are received by the recipient "in trust" to be distributed in accordance with the Will, still attract EAT.

What if you don’t know the value of the estate?

If Estate Trustees are unsure of the value of the estate, it is possible to base their calculation on an estimate. Under the Act, they are required to provide the court with an undertaking that they will file a sworn statement of the actual value of the estate and pay any additional tax within 6 months if the actual value is higher than the estimated value. However, the Act specifies that, if the estimated value is higher than the actual value, a refund can be obtained. Therefore, although perhaps more onerous, it is advisable to file two EIRs (one estimated value and one actual value) if Estate Trustees are unsure of the correct value of the estate.

If you would like to watch the full webinar, click this link here.‍

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