FISCAL AGENTS: Financial Services Group

Open the QuickNav window
Site Map

The Knowledge Bank

The Money Centre

The Learning Centre

Financial Tools

The Money Management Newsletter
General Interest
GICs / Fixed Income
RIF Planning
RSP Planning
Managing Money
Choosing Fin.Services
Insurance Products
RESP Savings
Taxes / Estate Matters
Home Ownership
Companion Advisor
Product Reviews
E-Newsletter Archive
Front Page Archive
Subscription Services

Products and Services

About Us

Glossary of
Financial Terms

The Money Management Newsletter: Taxes and Estate Matters
Exercise caution when trying to avoid probate costs

Since June 1, 1992 when probate fees in Ontario were increased, we have noticed many clients taking extra precautions registering the ownership on GICs and mutual funds as well as designating beneficiaries on their RRSPs and RRIFs. Probate fees in Ontario are now $5 per $1,000 of estate value for the first $55,000 and $15 per $1,000 thereafter with no maximum. The former fee structure was limited to $5 per $1,000 of estate value.

Some cautions are in order however:

Non-registered funds

Ownership on GICs and mutual funds are now more frequently made joint with right of survivorship so that if one owner passes away, funds will pass outside of probate to the remaining joint holders of the investment. However, be aware that:

1. CDIC coverage combinations with one institution will be reduced if all registrations are in the same joint names (i.e. For two people, the limit would be $60,000 rather than a possible $180,000).

2. Joint registrations, especially with children will reduce flexibility and control of investments (i.e. child falls out of favor; some companies want joint agreements signed by all parties). Creditors of the joint holder can attack the joint holder's share of the investment.

3. Ensure that proper income tax reporting procedures are followed to avoid attribution problems.

Registered funds

With registered funds (RRSPs, RRIFs) naming a beneficiary within the plan will allow proceeds to pass to the beneficiary, outside of probate, upon the planholders demise. Be very cautious however, of the potential income tax repercussions for your estate.

If the named beneficiary is a legal spouse, a tax free rollover is permitted to an RRSP or RRIF in the beneficiaries name (there are separate rules for dependent children). Probate is also bypassed.

If any other type of beneficiary is designated i.e. a charity or non-legal spouse, funds will pass out of probate to the beneficiary, however the estate will be left with the tax liability since a tax free rollover is not permitted in his case. Tax liabilities can be as high as 48% (in Ontario) of the RRSP or RRIF value with a maximum of 30% withheld at source by a financial institution.

If the estate does not have any liquid assets with which to pay the tax liability, the executors and heirs may have to dispose of other assets such as the family home to raise funds (the beneficiary may refuse to part with any of RRSP/RRIF proceeds).

In situations where an individual wishes to pass registered funds onto someone who is not eligible for a tax free rollover, it may be prudent to name the estate as beneficiary and let the will provide for fund allocation after all taxes and fees have been paid. Probate fees will apply in this case but it may save a lot of grief for the heirs.

In all cases legal advice should be obtained when determining registrations or beneficiaries.

* * *
Use this link to load a printer-friendly
version of this document.

Do you want to share this page with someone else?
Send this page to
Your email address

Have a question regarding this article? Use our feedback form to send us a note.

© , Fiscal Agents Money Management Newsletter
25 Lakeshore Road
Oakville, Ontario
L6K 1C6
(905) 844-7700


Fiscal Agents Home

Knowledge Bank Money Centre
Learning Centre Financial Tools
Newsletter Products & Services
About Us    

Legal | Site Map | Home | Search

Copyright © 1984 - Fiscal Agents Financial Services Group

Questions? Comments?
Use our Feedback page to contact us.
Taxes & Estate Matters
Care decisions have tax consequences

Tax Credits, Deductions and Benefits

The two certainties of life - death and taxes

Make your final wishes come true - by leaving memories, not problems

Missed claiming a Capital loss in prior years? Tax Court says it's not too late, so re-file

Some simple Estate Planning solutions

Is a Trust for you?

Estate planning: Getting started - before it's too late!

As the warm weather arrives, has your tax refund?

Year-End Tax Planning

Understanding the pros and cons of Revocable and Irrevocable Beneficiaries

Planning for your children's future

Power of Attorney and a Living Will: The same thing?

The ABC for ACB - Calculating the Adjusted Cost Base (ACB) for tax purposes

Alter ego & joint partner trusts in estate planning

How to revoke that Power of Attorney

How to make a GIC qualify for tax credit

Estate Planning Guide - Ten estate planning tips

What happens if there is no Will?

Exercise caution when trying to avoid probate costs

Look out for the PAR tax slip

The Companion Advisor:
Taxes & Estates