Even with careful record-gathering at the beginning of an estate administration, it is not uncommon for an estate trustee to later discover an additional asset. The estate trustee may think they have prepared a complete list of all the assets owned by the deceased as of the date of death. Then, after the Certificate of Appointment of Estate Trustee (probate grant) (the “Estate Certificate”) is issued, something else turns up. It may be a forgotten bank account, an old share certificate, or an investment statement that later surfaces.
Estate trustees are often surprised to learn that paying Estate Administration Tax (“EAT”) at the time probate is obtained does not necessarily end their obligations. Where additional estate assets are discovered after an Estate Certificate has been issued, Ontario’s probate tax regime requires estate trustees to revisit their EAT calculation and, if necessary, make an additional payment.
Today’s blog will look at what an estate trustee may need to do when subsequent assets are discovered.
The Statutory Framework
In Ontario, the requirement to pay EAT arises under the Estate Administration Tax Act, 1998. EAT is payable based on the “value of the estate” as required to be disclosed to the court under section 32 of the Estates Act at the time of the application for an Estate Certificate. For applications made on or after January 1, 2020, estates with a value exceeding $50,000 are subject to EAT at a rate of $15 per $1,000 (or part thereof) of value over that threshold.
The statutes anticipate that the initial probate application may not capture all estate assets. Subsection 32(2) of the Estates Act provides that, when an estate trustee discovers (after the Estate Certificate is issued) any property belonging to the deceased at the time of death that was not included in the original probate value, the trustee must file a sworn statement with the court within six months, reporting the total value of the newly discovered property.
The Estate Administration Tax Act, 1998 provides in subsection 2(7) that the additional EAT on the subsequently discovered property of the estate is payable at the time the sworn statement is delivered to the court.
In other words, the discovery of additional estate assets triggers a fresh obligation to pay EAT, even though probate has already been granted.
Amended Estate Information Return
Correspondingly, the fresh obligation to pay EAT triggers an obligation to file an amended Estate Information Return (“EIR”). I have written prior blogs here and here about the requirement of an estate trustee in Ontario to file an EIR.
The Ontario Ministry of Finance EIR Guide has a section on “Subsequently Discovered Property.” It provides that an amended EIR setting out the subsequently discovered property and its fair market value must be received by the Ministry of Finance within 60 calendar days after the statement is delivered to the court. (Note that the Estates Court Staff Procedures Manual states that the amended EIR is required within 30 days after the additional tax is paid at the court, but this appears to be a typo based on what is set out in the EIR Guide. The 60-day period is also consistent with Ont. Reg. 310/14 made under the Estate Administration Tax Act, 1998.)
Depending on timing, it may not be necessary to file an amended EIR for subsequently discovered assets. The initial EIR is due within 180 calendar days after an Estate Certificate is issued. If an affidavit reporting subsequently discovered assets and the additional EAT is filed with the court before the initial EIR is due and filed, it is only necessary to file one EIR. The EIR would include the subsequently discovered assets and report the combined amount of the two payments of EAT (payment on filing the probate application and payment of additional EAT on the subsequently discovered property).
Action Checklist
The following summarizes the applicable actions and timelines when subsequent assets are discovered:
- Identify asset and note the date discovered.
- File sworn statement with the court within six months of the discovery.
- Pay additional EAT when delivering statement to the court – payable to the Minister of Finance.
- File amended EIR with the Ministry of Finance within 60 calendar days after delivering the sworn statement and EAT to the court.
Closing Thoughts
Ideally, an estate trustee will have a complete list of the deceased’s assets when applying for the Estate Certificate, so the estate value (and related EAT) can be reported accurately the first time. But “surprise” assets do happen, even with careful record-gathering. Keeping the required actions and timelines in mind can help estate trustees address the new information smoothly and keep the estate administration on track.
Thanks for reading.
