Ontario executors now have a new task to add to their already lengthy list of obligations. The Ministry of Finance now requires executors to back up their estimates of the value of an estate by filing a new form, called an Estate Information Return (EIR).
The Estate Information Return (EIR) will have to be filed within 90 days of when the Certificate of Appointment is issued. If the information on the EIR is incorrect or incomplete, an amended EIR will have to be filed within 30 days. Executors could end up filing a series of EIRs as they gather new and more accurate information about the estate. Once four years has passed, however, there is no need to amend the Estate Information Return.
The new regulations are made under the Estate Administration Tax Act, 1998, which replaced probate fees with estate administration tax (EAT). EAT is a provincial tax charged in order to have the court certify that the will of a deceased person is valid and that the executor has the authority to deal with the estate. The tax is roughly 1.5% of the value of the estate. The new forms will provide the Ministry of Finance with information to assess and reassess the tax. The Ministry of Finance will do audits to check for compliance with the Estate Administration Tax Act, 1998.
The EIR requires full details of all of the assets the deceased person owned, including:
- real estate in Ontario
- bank accounts
- investments (e.g., stocks, bonds, trust units, options)
- vehicles and vessels (e.g., cars, trucks, boats, ATVs, motorcycles)
- all property of the deceased which was held in another person’s name
- all other property, wherever situated, including:
- intangible property
- business interests, and
- insurance, if there is no named beneficiary (other than the estate).
For example, where the deceased owned real estate, the EIR must include, in addition to the address of the property:
- The assessment roll number – from the municipality or property taxes.
- Property Identification Number (PIN) – for the property from the land registry system.
- Fair market value. The Municipal Property Assessment Corporation (MPAC) valuation may not be good enough. Many executors will be compelled to obtain a formal appraisal from a certified appraiser in order to evidence the fair market value at death.
- Where there is a mortgage or line of credit registered against the property, the amount owing at the date of death.
- Where the deceased was not the sole owner, the percentage value of his or her interest in the property.
The government clearly meant to signal that they are serious about the EIR. If the executor doesn’t file the return within the 90 days, that’s an offence. If he or she makes false or misleading statements on the EIR, that’s an offence, too. Upon conviction, the executor could face a fine of at least $1,000 plus up to twice the tax payable by the estate, or imprisonment, or both.
Executors will need to move quickly to gather full and accurate information on the estate; they will also want to protect themselves by obtaining and keeping the documentation to support the information they put on the EIR.
The new regulations apply going forward to every executor who applies for a Certificate of Appointment (probate), but if you applied before the 1st of January 2015 you will not have to file an EIR. And of course, if you can administer the estate without the certification of the court, you will not have to file the EIR either.
The new regulations have not changed the law radically, but they have created more paperwork, new obligations, and added risks for executors. It is more important than ever for an executor to get good advice as soon as he or she takes on the job.