A Practical Refresher on Probate, Property, and Family Tax
At Cumberland’s latest client event, Laura Ross and Steve Sims led a discussion on a topic that is often misunderstood until it becomes urgent: what actually happens when an estate has to be administered, taxed, and divided. The session explored the planning decisions that can reduce tax, ease administration, and help families avoid conflict.
One of the clearest themes of the discussion was that probate often gets more attention than it deserves. In Ontario, probate is visible and relatively easy to calculate: No tax on the first $50,000 of estate value and 1.5% above that.
But probate is often not the largest cost an estate will face. As the presenters emphasized, taxes on death can be far more significant, particularly for higher-net-worth families with investments, cottages, or other appreciated assets.
One example illustrated this clearly: an estate with a $1 million RRSP and a $3 million investment portfolio could face roughly $45,000 in probate costs, but an estimated $750,000 in income taxes.
The speakers also highlighted a separate issue. Probate can create a period in which assets are effectively frozen while executors wait for court certificates, gather valuations, and deal with financial institutions. Laura Ross described real-world cases involving vacant properties, delayed sales, and executors who may have to carry costs personally while they wait for authority to act.
Proactive strategies that can help
From there, the discussion turned to the planning decisions that can improve outcomes before an estate is ever administered:
- Use planning tools intentionally. The discussion covered strategies such as beneficiary designations, multiple wills, trusts, and joint ownership. But both presenters stressed that these are not one-size-fits-all solutions. Joint ownership, in particular, was described as a “blunt instrument” that can reduce probate while also creating risk and confusion if it is not documented properly.
- Plan for tax at death before it becomes urgent. Steve Sims walked through strategies such as spousal rollovers, RRSP or RRIF drawdowns, estate freezes, and life insurance as a source of liquidity. Families can often arrive at a better outcome if they understand the liabilities in advance and coordinate across their accountant, estate lawyer, and investment advisor.
- Think carefully about how property should be treated. The presentation also touched on principal residences, cottages, and foreign property. These assets can create not only tax issues, but also difficult decisions around who inherits what, how equalization should work, and whether certain properties can realistically be kept in the family.
- Address family dynamics directly. Blended families, children living outside Canada, and unequal inheritances can all create tension if a plan has not been thought through clearly. The presenters returned repeatedly to the idea that technical and financial planning are important, but communication matters too.
Bring us your questions
During the Q&A, attendees asked about personal holding companies, trustee structures, executor selection, and one of the most common practical problems Steve Sims sees in real life: missing records, especially cost base records for long-held assets.
Laura Ross also spoke candidly about the burden often placed on family executors and the situations in which outside support or professional trustee services may make sense.
At Cumberland, we believe probate, property, and family tax conversations are best had early, and with the right advisors around the table. We welcome your questions and are pleased to help you identify the right support.
