Executor Settling a $450K Estate in ON (2026): Probate Fees, Deemed Disposition, and the Executor's Tax Checklist

The Scenario: $450K Ontario Estate, No Surviving Spouse, One Adult Child

A Mississauga woman dies at 74. She was widowed three years earlier. Her estate totals $450,000, composed of:

• Principal residence (townhouse in Meadowvale): $280,000
• RRSP: $120,000
• TFSA: $50,000 (named beneficiary: her daughter)

Her daughter, age 48 and living in Burlington, is the sole executor and sole beneficiary. The daughter earns $95,000/year and is already in the ~37% combined bracket. The RRSP has no named beneficiary — it flows through the estate. The TFSA has a named beneficiary and bypasses the will entirely.

Here's where every dollar of that $450,000 goes — and what the executor needs to do, in order, to avoid personal liability.

Cost 1: Ontario's Estate Administration Tax (Probate Fees)

Ontario charges probate on all assets that pass through the will. The rate: $0 on the first $50,000, then $15 per $1,000 (effectively 1.5%) on everything above.

Probate fee calculation: ($400,000 − $50,000) × $15 / $1,000 = $5,250. If the RRSP had no named beneficiary (as in our scenario), the full $400K is probatable. Had the RRSP also had a named beneficiary, the probatable estate would have been just the $280K home — dropping probate to $3,450.

Cost 2: Deemed Disposition — The "Invisible Tax" on Death

Under section 70(5) of the Income Tax Act, the deceased is deemed to have sold all capital property at fair market value immediately before death. This creates two distinct tax triggers on our $450K estate:

The principal residence: $0 tax

The $280,000 townhouse was the deceased's principal residence since purchase. Section 40(2)(b) of the ITA provides the Principal Residence Exemption (PRE) — one property per family unit per year. The PRE eliminates the entire capital gain on deemed disposition. Tax on the home: $0.

The PRE applies automatically when the executor designates the property on the terminal return (Form T2091). If the deceased owned a second property — a cottage, a rental — the PRE can only cover one. The other faces the full deemed-disposition gain at the 50% inclusion rate.

The RRSP: the real tax hit

An RRSP with no surviving spouse and no financially dependent child triggers full income inclusion on the terminal return under section 146(8.8). The entire $120,000 is added to the deceased's income in the year of death.

Assume the deceased earned $30,000 of other income before death in 2026 (partial-year CPP at $1,507.65/month maximum plus OAS at $742.31/month). Total terminal-year income:

• Partial-year CPP + OAS + pension: ~$30,000
• RRSP deemed income: $120,000
• Total taxable income: ~$150,000

Without the $120K RRSP income, the deceased's terminal-year tax on $30,000 of CPP/OAS would have been roughly $3,500. The RRSP adds approximately $36,700 in incremental tax — an effective rate of about 31% on the RRSP alone. Push the RRSP to $200K and the marginal rate on the top portion reaches 44.97%.

The Total Bill: What This $450K Estate Actually Costs

That's the part nobody tells the executor upfront: a $450,000 estate — modest by GTA standards — costs roughly $48,000 to $51,000 to settle when there's no surviving spouse and the RRSP wasn't structured for rollover.

What If There Were a Cottage Instead of Just a Home?

Replace the $280K townhouse with a $180K townhouse plus a $100K cottage (purchased for $40K in 2002, now worth $100K). The PRE covers the townhouse. The cottage faces deemed disposition:

• Capital gain: $100,000 − $40,000 = $60,000
• Taxable portion at 50% inclusion: $30,000
• Tax at ~37.91% marginal rate (stacked on $150K terminal income): ~$11,400

The cottage adds $11,400 to the estate's tax bill. On a larger cottage — say a $300K Muskoka property with $200K in accrued gain — the taxable capital gain is $100K, pushing total terminal income past $250K and into the 48–53% brackets. The cottage tax alone could exceed $45,000. This is exactly why estate planning for recreational properties requires its own analysis — the deemed disposition on cottages is the most common source of estate-tax surprise in Ontario.

The Executor's Tax Filing Checklist (2026)

As executor, you're personally on the hook under ITA section 159(2) if you distribute assets before the CRA clears the estate. Here's the sequence — miss a step and you're writing a personal cheque.

Three Moves That Would Have Cut This Estate's Cost in Half

Every one of these had to be done before death. That's the frustration of estate work — the executor can't fix what the deceased didn't plan.

The biggest lever was the RRSP drawdown. Converting the $120K RRSP to a RRIF at age 71 and drawing at the minimum rate (5.28% at 71, per CRA prescribed factors under ITA Reg. 7308) would have slowly depleted the registered balance over a decade, with each year's withdrawal taxed at the retiree's lower bracket — 20–30% instead of 37–45% on a lump collapse at death. On a $120K balance, the lifetime tax savings from a strategic drawdown is typically $10,000–$20,000 compared to leaving it untouched until death. For a deeper look at RRIF minimums, see our RRIF minimum withdrawal guide for 2026.

How the US and UK Compare (for Context)

If you're searching "estate tax 2026" and landing on US-focused results, here's why Canada is different:

The critical difference: the US has a $15M exemption — most American estates owe $0. Canada has no exemption and no estate tax, but the deemed-disposition mechanism catches every RRSP, RRIF, and non-PRE property. A $450K Canadian estate with an RRSP can face a higher effective tax rate than a $450K US estate (which owes nothing). For a full comparison, see our 2026 inheritance tax guide.

The Capital Gains Inclusion Rate: What Executors Need to Know for 2026

The 2026 capital gains inclusion rate is 50% flat for all individuals, corporations, and trusts. The proposed increase to 66.67% on gains above $250,000 (announced June 25, 2024) was deferred on January 31, 2025 and cancelled outright on March 21, 2025 by the Carney government. The tiered rate never took effect.

If you're working from an estate plan drafted between June 2024 and March 2025, the capital gains projections may be based on the cancelled 66.67% rate. Have your accountant recompute. On a $200K cottage gain, the difference between 50% and 66.67% inclusion is roughly $16,000 in tax — the old plan overstates the bill.