The $17,250 Mistake Most Ontario Homeowners Make
Ontario's Estate Administration Tax (probate) charges nothing on the first $50,000 of estate value, then $15 for every $1,000 above $50,000 — a rate of 1.5%. On a $1.2 million estate (a mid-range Ontario home plus RRSP and non-registered savings), probate fees total approximately $17,250. On a $1.5 million estate, they exceed $21,750. These fees are paid before the estate is distributed, and many are entirely avoidable with proper planning.
Probate is only one component of estate planning costs. The more significant exposure for most Canadians is the tax triggered on death. The deemed disposition rule treats virtually all assets as sold at fair market value on death — triggering capital gains on a vacation property, non-registered portfolio, or a business interest that may have grown substantially. A $800,000 Ontario cottage with a $200,000 adjusted cost base produces a $600,000 capital gain — and an illustrative tax bill of approximately $160,590 at Ontario's top rate. All figures in this article are illustrative. Consult an estate lawyer and CPA before making any estate planning decisions.
| Estate Value (Ontario) | Probate Fees | Calculation |
|---|---|---|
| $500,000 | $6,750 | ($500,000 − $50,000) × 1.5% |
| $800,000 | $11,250 | ($800,000 − $50,000) × 1.5% |
| $1,200,000 | $17,250 | ($1,200,000 − $50,000) × 1.5% |
| $1,500,000 | $21,750 | ($1,500,000 − $50,000) × 1.5% |
| $2,000,000 | $29,250 | ($2,000,000 − $50,000) × 1.5% |
Ontario Estate Administration Tax as of 2025. Other provinces have different probate fee structures. Assets passing outside the estate (joint ownership, named beneficiaries) are not subject to probate. Consult an estate lawyer for your province.
The Deemed Disposition: Tax on Death
On death, the Income Tax Act deems every capital property to have been disposed of at its fair market value immediately before death. This creates a capital gain on the difference between fair market value and the adjusted cost base (ACB) — which is included in the deceased's terminal T1 return and taxed at their marginal rate.
The illustrative tax on the Ontario cottage example: $600,000 capital gain at the 50% inclusion rate × 53.53% top marginal rate = approximately $160,590 in tax due on the terminal return. This must be paid from the estate before the property can be transferred to heirs — often requiring the estate to sell the property if liquid assets are insufficient. Life insurance is the most commonly used tool to fund this liability without forcing an asset sale. Consult an estate lawyer, CPA, and licensed insurance advisor for a coordinated strategy.
Five Strategies to Reduce Ontario Estate Costs
- Beneficiary designations on registered accounts: RRSP, RRIF, TFSA, and life insurance proceeds with a named beneficiary pass directly to the beneficiary — bypassing the estate entirely, avoiding probate, and (for RRSP/RRIF to surviving spouse) deferring tax through a rollover. Update beneficiary designations whenever family circumstances change.
- Joint ownership with right of survivorship: Assets held jointly with a spouse automatically transfer to the survivor on death without passing through the estate — avoiding probate on the jointly held asset. Must be structured carefully to avoid unintended tax consequences. Consult a lawyer before adding joint ownership.
- Life insurance to fund the tax liability: A personally-owned life insurance policy can be structured to provide the liquidity needed to pay capital gains tax on death without forcing asset sales. For cottages, investment portfolios, and business interests with large accrued gains, this is often the most practical solution. Compensation disclosure: WealthFusions advisors may earn commission from insurance placed through our carrier partners.
- Multiple wills (Ontario): Ontario allows testators to have two wills — one for assets that require probate (real estate, bank accounts) and one for assets that do not (private company shares). The private will is not submitted for probate and is not subject to probate fees on those assets. Consult an estate lawyer with Ontario expertise.
- Alter ego or joint partner trust: Individuals age 65 and over can establish an alter ego trust (or joint partner trust for couples) that holds assets during their lifetime and transfers them on death without probate. The assets in the trust are not part of the estate. Useful for large estates with significant non-registered assets. Consult an estate lawyer for eligibility and setup. Significant legal and ongoing administrative cost — appropriate for larger estates.
Common Estate Planning Questions
Ontario's Estate Administration Tax (probate) is: $0 on the first $50,000 of estate value, and $15 per $1,000 (1.5%) on any value above $50,000. On a $1.2 million estate, probate fees total approximately $17,250. Assets that pass outside the estate — through joint ownership, named beneficiary designations, or trust structures — are not subject to probate. See the CRA estates tax page and the Ontario Estate Administration Tax page for current rates. Consult an estate lawyer for your specific estate structure.
Under the Income Tax Act, a deceased person is deemed to have disposed of all capital property at fair market value immediately before death — triggering a capital gain on the difference between fair market value and the adjusted cost base (ACB). This gain is included in the deceased's terminal T1 return and taxed at their marginal rate. For assets passing to a surviving spouse, the deemed disposition can be deferred through a spousal rollover. For non-registered assets passing to other beneficiaries, the tax is due on the terminal return regardless. Consult a CPA and estate lawyer for your specific estate composition.
If a TFSA has a named beneficiary (or successor holder if the beneficiary is a spouse or common-law partner), it passes directly to the beneficiary outside the estate and is not subject to probate. If no beneficiary is named, the TFSA becomes part of the estate and goes through probate. Unlike RRSP/RRIF (which have specific tax rollover rules for spouses), TFSA proceeds paid to a non-spouse beneficiary are received tax-free — the TFSA retains its tax-free character. Update your TFSA beneficiary designation to ensure it reflects your current intentions. Consult an estate lawyer for the implications in your province.
When an RRSP or RRIF passes to a surviving spouse or common-law partner (either through a named beneficiary or successor annuitant designation), the assets transfer on a tax-deferred basis — the deemed disposition that would otherwise apply on death is deferred. The surviving spouse absorbs the RRSP/RRIF and continues to defer tax until they withdraw the funds. This spousal rollover is one of the most valuable tax deferrals in the Canadian system. Name your spouse directly on your RRSP and RRIF — do not leave these to flow through the estate. Consult a CPA and estate lawyer to ensure your beneficiary designations are properly coordinated.
Yes — without a valid will, your estate is distributed under Ontario's intestacy rules (Succession Law Reform Act), which may not reflect your wishes. Intestacy rules determine who gets what based on family structure, without any regard for your actual relationships or intentions. A will also names an executor to administer the estate, which avoids the court appointing one. For Ontarians with minor children, a will is the only mechanism to name a guardian. A basic will is relatively inexpensive to prepare — consult an estate lawyer. Online will services like Willful are an option for simpler estates — they are an affiliate partner of WealthFusions (see affiliate-disclosure).
The Bottom Line
Estate planning is not exclusively for the wealthy. A mid-range Ontario homeowner with an RRSP, TFSA, and non-registered investments can face $17,000 in probate fees, $160,000+ in capital gains tax on a cottage, and a distribution outcome that does not match their intentions — all from failing to review beneficiary designations, update a will, and structure joint ownership thoughtfully. The cost of proper estate planning is a fraction of the cost of not having it. Consult an estate lawyer and CPA before making any estate planning decisions. All figures in this article are illustrative only.