Great Expectations: Potential Confusion for Beneficiaries Under New Ontario Probate Court Forms
On January 1, 2022, O. Reg. 709/21 went into effect. The regulations relate to significant changes to the Succession Law Reform Act RSO 1990, c. S.26 and, through the introduction of new simplified court forms, is also working to simplify and improve the probate process in Ontario. The official announcement on the Ontario Regulatory Registry boasts the elimination of 43 forms, the introduction of eight new forms and the modification of some 15 other forms.
One of the most significant changes to the application process for a Certificate of Appointment of Estate Trustee (CAET) is the notice requirement. Prior to January 1, 2022, a CAET applicant with or without a will had to serve Form 74.7 (with a will) or Form 74.17 (without a will) on all persons and organizations with a financial interest in the estate. Both forms indicated the applicant’s intention to apply for CAET and included the names of each person and organization entitled to a share of the estate. Form 74.7 also required the addition of an excerpt from the deceased’s will for legatees or the entire will for residual beneficiaries. No information regarding the value of estate assets was to be disclosed to a beneficiary at the probate application stage.
Reg. 709/21 modifies these requirements. Under the settlement, all beneficiaries under the will or all legal beneficiaries (if the deceased died without a will) must be served with the new Form 74A. This new form requires the disclosure of the value of estate assets on which the estate administration tax is calculated (i.e. assets passed under the will that is subject to probate). For the typical beneficiary who is unfamiliar with the intricacies of estate administration, the declared value can be misleading, as it does not include deductions for unsecured debts of the deceased, tax on deemed disposition immediately before death and other inheritance costs that must be taken into account. before distributions to beneficiaries can be calculated. As such, the value of the estate reported on Form 74A has the potential to create high expectations for beneficiaries who may very well end up receiving a considerably smaller share of the net worth of the estate than originally intended.
Transparency in the administration of the estate is one of the main sources of conflict between estate trustees and beneficiaries and, in this regard, the increased transparency offered by the disclosure of information at the beginning of the probate process is commendable. However, Form 74A does not provide any context regarding the declared net worth of an estate and therefore has the potential to create an unintended conflict. Estate trustees and their legal advisors may be well advised to provide this additional context when serving Form 74A on beneficiaries to avoid creating unreasonable “high expectations”.