Estate Administration Terminology
Below our probate lawyers and estate administration lawyers explain key terms and roles in plain English:
Estate: Your assets and liabilities at the time of death. If an estate has more liabilities than assets, it is in fact, insolvent or bankrupt.
Estate Administration Tax: Ontario’s Estate Administration Tax (also known as probate tax or probate fees) is about 1.5 per cent of the value of the estate. The tax is a fee payable to the government.
Here is a more detailed breakdown: $5 for each $1,000, or part thereof, of the first $50,000 of the value of the estate. $15 for each $1,000, or part thereof, of the value of the estate exceeding $50,000.
To calculate the Estate Administration Tax on an estate, use the Ministry of the Attorney General’s calculator.
Learn more about Ontario’s Estate Administration Tax [probate fee].
Estate trustee: An estate trustee is the person who is responsible for dealing with the administration of an estate. There may be one or more estate trustees named in a will. Estate trustees are responsible for carrying out the wishes of the deceased person as set out in the terms of the will and administering an estate according to Ontario law.
Estate trustees (also called executors) who are named in a will apply to the court for a certificate of appointment as estate trustee with a will. In the past, this process was called “Letters Probate.”
When the court is satisfied that the will is valid, it will issue a signed certificate that confirms the authority of the estate trustee to administer the will according to Ontario law.
Importantly, an estate trustee is a fiduciary, note our probate lawyers and estate administration lawyers. An estate trustee must always act in the best interests of the estate’s beneficiaries. The estate trustee is fully accountable to the court, including complying with a court audit and supervision.
Our estate administration lawyers report that many estate trustees find the process of estate administration time-consuming and burdensome. It is not unusual for estate trustees to not complete their duties. Reasons for this can include death, illness, a severe accident, or resignation. In this eventuality, the court will appoint a new trustee, with a new certificate of appointment of succeeding estate trustee, following very strict guidelines.
The old terms: Executor is appointed in a will, and the court issued letters of probate. The new term in Ontario only is estate trustee with a will and the court issues a certificate of appointment of estate trustee with a will.
When there is no will, a person applies, and letters of administration are issued. Now, they are referred to as estate trustee without a will and the court issues a certificate of appointment of estate trustee without a will.
In Ontario, an estate trustee is entitled to compensation which is about 5 per cent of the estate’s value but is subject to court approval or negotiation with the beneficiaries. Trustee compensation is 2.5 per cent of capital receipts and disbursements, and 2.5 per cent of all revenue receipts and disbursements above the expenses incurred to properly administer the estate.
Executor: An executor is the other term used by probate lawyers and estate administration lawyers for estate trustee.
Holograph will: A holograph will is one entirely in the testator’s own handwriting and signed by the testator. This is done to ensure that the holograph will represents the true final wishes of the testator. Importantly, the holograph will must contain provisions that dispose of the testator’s property. After death, a disinterested party must provide an affidavit attesting to the handwriting.
A typed-out will signed by the testator is not a valid holograph will; it will not hold up in court. In Ontario, digitally signed wills are not permitted.
When a testator is unaware of the rules for a holograph will, it usually means two things: 1) the testator’s estate will not get distributed as s/he intended and 2) his or her estate will be distributed as prescribed by Ontario’s rigid SLRA.
Intestate: To die without having made a will. When the deceased person did not have a will, an estate trustee will be appointed by the court to administer the estate.
Our estate administration lawyers advise that only residents of Ontario can apply to be an estate trustee of an Ontario resident who died without a will. In addition, the rules stipulate who can apply to become an estate trustee when a person has died without a will. The order is: spouse, common-law partner, or child.
If the court agrees that person will be appointed an estate administrator rather than an estate trustee. An estate administrator does not wield the same powers as an estate trustee—a big difference. Estate administrators have no powers until court appointments are made.
Lastly, if you die without a will, your estate will be distributed according to the very strict rules of Ontario’s Succession Law Reform Act.
Office of the Public Guardian and Trustee (OPGT): The OPGT protects the interests of potential heirs when an Ontario resident dies and no eligible person is available to administer the estate.
If there are professional services required to administer the estate, like tax returns, real estate maintenance, legal, investigative, or genealogical research, the associated fees are paid out of the estate as expenses. [this is true for any estate, not just those handled by OPGT]
In addition, when the OPGT is appointed estate trustee, fees are charged to the estate according to regulation under the Public Guardian and Trustee Act.
Power of attorney (POA): A power of attorney is a legal document in which you appoint a person [the attorney] to make decisions for you while you are alive in case you are unable to make decisions for yourself should you become mentally incapable, are in hospital (for example, in a coma). It is prudent to create your powers of attorney when you make your will.
Our estate administration lawyers also advise that sometimes, a power of attorney can be used if you are not able to tend to important matters personally because you are thousands of kilometres away.
There are two types of powers of attorney (POAs): power of attorney for property [for real estate, investment accounts, bank accounts, physical possessions, etc.] and power of attorney for personal care, which authorises the attorney to make health and welfare decisions along with safety, housing, clothing, and hygiene. Both types of powers of attorney end upon the death of the testator.
Probate: Probate is the court process that gives the executor the authority to act as the estate trustee. Probate is a court process that gives formal approval for 1) the will as the last valid will of the deceased and 2) appoints the person who will act as the estate trustee (or executor) of the estate.
There are separate probate forms, depending on the estimated value of the estate: a simplified process for estates valued at less than $150,000, and one for estates valued at more than $150,000.
Our probate lawyers and estate administration lawyers advise that financial institutions are not obliged to waive probate under any circumstances. If they waive probate, they will require the beneficiaries to sign waivers of indemnity, holding the bank not responsible for any future claims against the estate. If a financial institution does not waive probate, the only way forward is to obtain a probate grant in speedy fashion.
Probate is not always required but is dependent on the quantity of assets that will be distributed to beneficiaries as well as the value of those assets, advise our probate lawyers.
Testator: The person who makes and executes a last will and testament. After the will is properly executed, the person is said to have died “testate,” leaving a testament in place.
Valid will: To be formally valid, our estate administration lawyers advise that a will must be executed according to the law, meaning a will must be signed by the person making it (the testator) and two witnesses who do not benefit from the will in any way. In other words, they cannot be beneficiaries named in the will.
In an age that is increasingly electronic, a valid will recognized by the courts must be the original hardcopy, with “wet signatures” [in ink] of the testator and the two witnesses. For this reason, once a valid will is executed, meaning signed by the testator and the two witnesses, it becomes a very valuable document indeed. However, wills and powers of attorney can be executed with the testator and witnesses together by video conference but, in that case, each person must still sign the document on paper and are later brought together with special affidavits.
Our estate administration lawyers recommend that it should be kept in a safe place to protect it from fire, theft, being misplaced, accidentally thrown out, and so on. Many people choose to keep their original will with the lawyer who drafted and executed their will. Most charge an annual storage fee for the safekeeping of wills.
HELPFUL TIP: Never place the will and POA documents in a safety deposit box as these original documents are usually required to gain access to the safety deposit box. Where a trust company is appointed as executor/attorney, they may be willing to store these documents for you. The estate administration lawyers at Massey LLP will store these documents for you, as part of our fee. We don’t charge an extra or annual storage fee.
Will: Even though Ontario residents are not required by law to have a will, our estate administration lawyers advise clients that it is in their best interests to make a will if one or more of the conditions below apply:
You own property (real estate, investment accounts, bank accounts, art, valuable collections, etc.).
You have children who are under the age of 18 children.
You have children with special needs who will continue to need lifelong financial support.
You are looking after dependents, such as aging parents, who depend on you for care and financial support.