Whether you’re thinking about creating or updating your will or administering the estate of a deceased person, your thoughts will inevitably turn to costs. For instance, clients often ask: how much are estate fees? And how much will I have to pay when I create or administer a will?
The relevant fees and tax implications of administering an estate will vary depending on the circumstances. Below, we’ll outline some relevant fees and taxes that will-makers need to know about before setting pen to paper. For further information, speak with an experienced estate lawyer to understand the financial implications of creating and administering a will.
Estate Fees for Creating a Will in Ontario
While no estate fees are associated with creating a will in Ontario, you will need to factor in the costs of lawyer’s fees (and, if applicable, law firm disbursements).
In Ontario, you’ll need to pay lawyer fees if they’re preparing a will for you. The cost of a will prepared by a lawyer varies – for example, different lawyers within the same firm may charge different rates for their services depending on their level of skill and specialization.
The complexity of your estate will also play a role – for example, if you have minimal assets, you may not need to pay as much as a prospective will-maker with significant assets or more complex personal circumstances.
Law Firm Disbursements
Depending on the law firm’s fee structure, you may also need to pay for the law firm’s “disbursements” (expenses incurred during the preparation of your will). These expenses can include printing, filing fees, and travel expenses.
For more information on the specific fees associated with creating your will, consult your estate lawyer.
Estate Fees for Administering a Will in Ontario
After a will-maker passes away, their estate must be “administrated.” This process is handled by the estate’s executor, who is responsible for carrying out the will-maker’s instructions and administering the estate’s assets.
During the administration of an estate, several fees can arise, as follows.
Final Tax Returns
As part of the administration process, the executor will file a final tax return for the estate. If the deceased owes any taxes, they will be paid directly out of the estate before any inheritances or assets are distributed to beneficiaries.
Estate Administration Tax
The estate will need to pay estate administration tax, which taxes the value of the estate’s assets at the time of the will-maker’s death. This tax is paid as a deposit when applying to the court for probate.
Probate fees are calculated as follows:
- $0.00 for estate assets valued at up to $50,000
- $15.00 per $1,000 for estate assets over $50,000.
To learn more about calculating the value of an estate, refer to the Government of Ontario’s website on Estate Administration Tax.
Note that you are not required to pay Estate Administration Tax if you are not applying for probate or if the value of the estate’s assets is under $50,000.
When is Probate Required?
Probate is required if the will-maker owned real property or had assets held by a financial institution (e.g., funds held in a bank account). To that end, most estates will require probate in Ontario.
Probate is also required if:
- An individual dies without a will
- A will-maker does not name an executor in their will
- An external body (such as a financial institution) requests probate to release the will-maker’s assets
- A dispute arises regarding the appropriate estate trustee
- A dispute arises regarding the validity of the will
For further information on the probate process, see our recent blog post: When Does an Estate Go to Probate in Ontario?
Lawyer Fees and Law Firm Disbursements
You will incur lawyer fees and law firm disbursements like creating a will during the probate process. These fees vary depending on the lawyer, law firm, and pricing.
However, when you incur lawyer fees and law firm disbursements during the administration of an estate, note that these fees will be paid by the estate – not the executor or the beneficiaries.
Taxes on Estate Assets for Beneficiaries
A common question for estate beneficiaries is whether their inheritance is taxable. Thankfully, the Canada Revenue Agency (CRA) has stated that most gifts and inheritances are not taxable. This means that beneficiaries, in most circumstances, do not have to worry about setting aside money to pay taxes on inheritances received from an estate.
Things to Consider for Estate Fees in Ontario
The information above provides a very high-level overview of how much estate fees are and the types of estate fees that can arise when creating a will or administering an estate. However, additional costs can arise, so it’s important to have a clear understanding of your obligations before engaging a lawyer to draft a will, agreeing to be an executor, or even contesting a will as a beneficiary. Here are just a few tips to help you on your journey:
- When consulting with an estate lawyer, request a quote or budget before retaining them. Understanding how much you can expect to pay – and what you’re paying for – will help you decide on the services you’re seeking and set aside the appropriate funds to pay.
- Your estate lawyer can help you determine whether additional professional services are required, as it’s important to consider whether tax advice is needed when creating an estate plan. Retaining the services of a tax specialist can help minimize estate fees and taxes in the long run.
- If you’re the executor of an estate (or a beneficiary), speak with a lawyer early to ensure you understand your obligations – especially regarding potential fees. Understanding how estate taxes and fees are paid and where the money will come from will ensure peace of mind as you navigate the estate administration process.
Contact the Estate Lawyers at Tierney Stauffer LLP for Comprehensive Estate Planning
At Tierney Stauffer LLP, we take a client-focused approach to our work, providing innovative guidance through the estate planning and administration process. Whether you’re dealing with a deceased person’s estate or require estate planning assistance, our estate lawyers have extensive experience. They will work to secure the results you need to move forward. Call us at 1-888-799-8057 or contact us online to set up a consultation with an experienced wills and estates lawyer.