Estate trustees in Ontario will now be required to report much more detailed information regarding the value of assets in an estate after a recent change in the province's probate laws. The change is part of a wider effort by the Ontario government to tighten compliance rules regarding probate.
Under new legislation in force Jan. 1, estate trustees are now required to file an "Estate Information Return." This new form must be filed within 90 days of the estate trustee being issued a certificate of appointment of estate trustee, known as a probate certificate, by the provincial government.
Prior to this year, the estate trustee could provide the government with the amount he or she had calculated as the value of the estate, without being required to provide supporting documentation. "It was believed that asset values were being conservatively estimated, and in some cases, significantly underestimated" by estate trustees under the previous legislation, according to a white paper issued by Mackenzie Financial Corp. of Toronto.
Now, if the government determines that an estate's value was underestimated, it can issue an assessment or reassessment notice up to four years after the issuance of the probate certificate. Beyond the four-year limit, the government can still assess or reassess an estate if the estate trustee failed to file an information return within 90 days, deliberately made false statements or excluded information on the return.
Executors who fail to file an estate information return or make false statements on the return may be liable to a fine, penalties or imprisonment.
The changes to legislation, first proposed in the 2011 Ontario budget, give the province more information regarding estate valuations and greater power to ensure compliance with probate rules.
"The government gave itself the capability to assess and re-assess if need be," says Wilmot George, director of tax and estate planning with Mackenzie, "and broader authority to assess penalties."
Probate taxes in Ontario are set at $250 for the first $50,000 ($5 for each $1,000, up to $50,000), and at 1.5% of the estate thereafter.
In cases in which probate certificates were requested before Jan. 1, there will be no requirement to file an estate information return.