Estate trustees, and the lawyers who assist them, routinely certify the value of an estate when applying for a Certificate of Appointment of Estate Trustee and when providing the information which determines the estate administration tax payable. Inaccurate information is often an innocent error stemming from incomplete records, inadvertent oversights or good-faith valuation estimates. However, where information is submitted despite it being knowingly false, the consequences can be more severe than reassessment and interest. Severe consequences may extend to any lawyer or professional who assisted in the preparation and submission of the application.
It is a Provincial Offence under the Estate Administration Tax Act, 1998
Section 4.1 of the Act requires an estate representative applying for an estate certificate to give the Minister of Revenue prescribed information about the deceased and is the statutory foundation of the Estate Information Return (“EIR”). Section 5.1(2) then makes it an offence to make, “or assist in making,” a statement in that information that is false or misleading in respect of any fact, or that omits a fact so as to render the statement false or misleading. The words “assist in making” are significant: the offence is not confined to the applicant and may capture an advisor or lawyer who participates in the false statement. Section 5.1(1) separately makes it an offence to fail to comply with the section 4.1 disclosure obligation. On conviction, section 5.1(4) provides for a fine of at least $1,000 and up to twice the tax payable by the estate. Conviction may also result in imprisonment of up to two years.
An Exception for Honest Error
Section 5.1(3) provides that no person is guilty under section 5.1(2) if that person did not know the statement or omission was false or misleading and, in the exercise of reasonable diligence, could not have known. This is the statutory line between an error and an offence, and it underscores the importance of documented diligence.
Potential Exposure Under the Criminal Code
Because a probate application is supported by a sworn affidavit, knowingly advancing materially false information may, on the appropriate facts, engage various criminal code offences. Whether particular conduct crosses any such threshold is highly fact-dependent and turns on knowledge or constructive knowledge.
The Rules of Professional Conduct
Independent of any offence, a lawyer who knowingly participates in submitting false information engages the Rules of Professional Conduct, including the duty of integrity (Rule 2.1-1) and the prohibition on knowingly assisting in or encouraging dishonesty or fraud (Rule 3.2-7). A breach constitutes professional misconduct and may result in proceedings before the Law Society Tribunal.
Practical Takeaways
Confirm the source of every valuation; where a lawyer relies on client-supplied values without independent verification, that reliance should be clearly documented and in correspondence. Advise clients in writing of their continuing obligation to correct an EIR later found to be incorrect or incomplete. Decline to advance information the lawyer knows, or in an exercise of reasonable diligence ought to know, to be false. As section 5.1(3) makes plain, the distinction between an error and an offence is not the outcome but is the knowledge or constructive knowledge, tested against the standard of reasonable diligence.
Whether acting as a lawyer assisting a client or the applicant, it is prudent to seek qualified advice when uncertain before information is submitted.