My name is Mark Goodfield. Welcome to The Blunt Bean Counter ™, a blog that shares my thoughts on income taxes, finance and the psychology of money. I am a Chartered Professional Accountant. This blog is meant for everyone, but in particular for high net worth individuals and owners of private corporations. My posts are blunt, opinionated and even have a twist of humour/sarcasm. You've been warned. Please note the blog posts are time sensitive and subject to changes in legislation or law.

Monday, April 11, 2011

You Have Been Named An Executor- Part 2- Now What?

As I noted in the first installment of this series, I have been an executor for three estates. I have also advised numerous executors in my capacity as the tax advisor/accountant for the estates of deceased taxpayers. The responsibility of being named an executor is overwhelming for many; notwithstanding the fact many individuals appointed as executors had no idea they were going to be named an executor of an estate. In my opinion, not discussing this appointment beforehand is a huge mistake. I would suggest at a minimum, you should always ask a potential executor if they are willing to assume the job (before your will is drafted), but that is a topic for another day.

So, John Stiff dies and you are named as an executor. What duties and responsibilities will you have? Immediately you may be charged with organizing the funeral, but in many cases, the immediate family will handle those arrangements, assuming there is an immediate family in town. What’s next? Well, a lot of work and frustration dealing with financial institutions, the family members and the beneficiaries.

Below is a laundry list of many of the duties and responsibilities you will have as an executor:

  • Your first duty is to participate in a game of hide and seek to find the will and safety deposit box key(s).  If you are lucky, someone can tell you who Mr. Stiff's lawyer was and, if you can find him or her, you can get a copy of the will. Many people leave their will in their safety deposit box; so you may need to find the safety deposit key first, so you can open the safety deposit box to access the will.
  • You will then need to meet with the lawyer to co-coordinate responsibilities and understand your fiduciary duties from a legal perspective. The lawyer will also provide guidance in respect of obtaining a certificate of appointment of estate trustee with a will ("Letters Probate"), a very important step in Ontario and most other provinces. 
  • You will then want to arrange a meeting with Mr. Stiff's accountant (if he had one) to determine whether you will need his/her help in the administration of the estate or, at a minimum, for filing the required income tax returns. If the deceased does not have an accountant, you will probably want to engage one. 
  • Next up may be attending the lawyer’s office for the reading of the will; however, this is not always necessary and is probably more a "Hollywood creation" than a reality. 
  • You will then want to notify all beneficiaries of the will of their entitlement and collect their personal information (address, social insurance number etc).
  • You will then start the laborious process of trying to piece together the deceased’s assets and liabilities (see my blog Where are the Assets for a suggestion on how to make this task easy for your executor). 
  • The next task can sometimes prove to be extremely interesting. It is time to open the safety deposit box at the bank. I say extremely interesting because what if you find significant cash? If you do, you then have your first dilemma; is this cash unreported, and what is your duty in that case? 
  • It is strongly suggested that you attend the review of the contents of the safety deposit box with another executor. A bank representative will open the box for you and you need to make a list on the spot of the boxes contents, which must then be signed by all present.
  • While you are at the bank opening the safety deposit box, you will want to meet with a bank representative to open an estate bank account and find out what expenses the bank will let you pay from that account (assuming there are sufficient funds) until you obtain probate. Most banks will allow funds to be withdrawn from the deceased’s bank account to pay for the funeral expenses and the actual probate fees. However, they can be very restrictive initially and each bank has its own set of rules. 
  • As soon as possible you will want to change Mr. Stiff's mailing address to your address and cancel credit cards, utilities, newspapers, fitness clubs, etc. 
  • As soon as you have a handle on the assets and liabilities of the estate, you will want to file for letters of probate, as moving forward without probate is next to impossible in most cases. 
  • You will need to advise the various institutions of the passing of Mr. Stiff and find out what documents will be required to access the funds they have on hand. In one estate I had about 10 different institutions to deal with and I swear not one seemed to have the exact same informational requirement. 
  • If there is insurance, you will need to file claims and make claims for things such as the CPP benefit. 
  • You will need to advertise in certain legal publications or newspapers to ensure there are no unknown creditors; your lawyer will advise what is necessary.
  • It is important that you either have the accountant track all monies flowing in and out of the estate or you do it yourself in an accounting program or excel. You may need to engage someone to summarize this information in a format acceptable to the courts if a “passing of accounts” is required in your province to finalize the estate. 
  • You will also need to arrange for the re-investment of funds with the various investment advisor(s) until the funds can be paid out. For real estate you will need to ensure supervision and/or management of any properties and ensure insurance is renewed until the properties are sold. 
  • A sometimes troublesome issue is family members taking items, whether for sentimental value or for other reasons. They must be made to understand that all items must be allocated and nothing can be taken.  
  • You will need to arrange with the accountant to file the terminal return covering the period from January 1st to the date of death. Consider whether a special return for “rights and things” should be filed. You may also be required to file an “executor’s year” tax return for the period from the date of death to the one year anniversary of Mr. Stiff's death. Once all the assets have been collected and the tax returns filed, you will need to obtain a clearance certificate to absolve yourself of any responsibility for the estate and create a plan of distribution for the remaining assets (you may have paid out interim distributions during the year).
The above is just a brief list of some of the more important duties of an executor. For the sake of brevity I have ignored many others (see Jim Yih's blog for an executor's checklist).

The job of an executor is demanding and draining. Should you wish to take executor fees for your efforts, there is a standard schedule for fees in most provinces. For example in Ontario, the fee is 2.5% of the receipts of estate and 2.5% of the disbursements of the estate.

Finally, it is important to note that executor fees are taxable as the taxman gets you coming, going and even administering the going.

The blogs posted on The Blunt Bean Counter provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.

88 comments:

  1. Do you know how the executor is supposed to handle estate assets such as GICs that are locked in? Will the beneficiaries have to wait until the term is up, which may take years?

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    Replies
    1. While the financial institution has the right to insist that a GIC is held to maturity most will terminate the contract as a gesture of good will.

      Delete
  2. Good question. An estate can carry on for years until all the assets are realized.

    If you have not already, you should ask the financial institution if they will either agree to break the GIC into "pieces" you can distribute to each beneficiary or redeem the GIC and what would be the penalty. The answer may be no to both the above.

    If the answer is yes to either question, you should then consult with the estate lawyer to get a legal release from the beneficiaries that they agree to either of these actions (if not and you incur a penalty for example, you could be liable for the forgone interest).

    Also, you must ensure that you hold assets until you can get a clearance certificate for the estate, so be careful distributing. In a perfect world, maybe you can get the institution to break the GIC into pieces and that is what is distributed to the beneficiaries once you get the clearance certificate.

    In any event, first find out if you have any options, then speak to the estate lawyer to ensure you protect yourself, first and foremost from any action by the beneficiaries.

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  3. When my father died i inherited some money from where i come from in Canada. My sister send it to me. There was no documentation of how much i inherited. Is it illegal to distribute money to beneficiaries without showing them any numbers?

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  4. N1-This is more of a legal issue, but you should consider the following. In my article I talk about the passing of accounts. There is a strict legal obligation for an Estate Trustee to keep a complete and accurate set of accounts.

    However, in Ontario for example, passing the accounts is required in only certain circumstances and often in "friendly family estates" it is not done. In Ontario at least, a beneficiary can force the passing of accounts by obtaining a court order or an Estate Trustee can voluntarily apply to court for a passing of accounts.

    All that being said, in the estates I handled, I did not do a passing of accounts. However, I provided a summary of all the receipts and disbursements for review by the beneficiaries and as I recall, the lawyer provided some kind of release form. Thus, I would ask your sister to please provide a summary of the estate nicely. If she does not and you think you not received what you should, you then have to determine whether a family feud is worth the dollars in this case and if the answer is yes, you should see a lawyer to discuss your options.

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  5. Thanks for the mention Mark!
    Great information as always!
    Jim

    ReplyDelete
  6. Non mutual fund type RRSP of which named beneficiary is not the spouse.
    Does the financial Institution which holds RRSP issue payment to beneficiary and issue T5 to beneficiary ?

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    1. Anon:

      I don't understand your question. Are you talking about someone who died? If so, the financial institution will issue a T4RRSP or T4RRIF to the deceased based on the RRSP/RRIF value at death and their representatives must report the income on the deceased final tax return. However, the funds from the RRSP/RRIF are paid to the beneficiary. This can be problematic as the estate has to pay the tax and the beneficiary gets the funds from the RRSP/RRIF.

      Delete
    2. " Are you talking about someone who died?"= yes;deceased= estate
      Thank you very much for your response.
      Greatly appreciate your ongoing generosity by providing answers to the questions the readers have submitted.
      Your response gives rise to the following: Does the financial institution withhold and remit to CRA a specific amount of income tax (under the name of the deceased) prior to issuing RRSP fund(s)payment to the beneficiary ?

      Delete
    3. Thx Anon

      I try to provide direction without providing specific tax planning advice.

      Anyways, when someone has a RRIF, there should be a T4RIF for payments prior to death that will include income tax withheld and this slip is taxable on the deceased’s return. Assuming the RRIF did not transfer to a spouse, there should then be another T4RIF slip for the value of the RRIF on the date of death which is again taxable in the deceased’s return.

      In a perfect world, the day after someone died, the institution would be informed and the RRIF would then be transferred to an estate or beneficiaries account. However, often the bank is not informed for a while and they keep paying out the RRIF and deducting income tax for a month or two. Since this is post-death, we typically just put this on the T3 estate return and the CRA does not seem to be bothered.

      Delete
    4. Again,thank you very much for your response
      Thank you for your time and expertise; greatly appreciate the detailed information

      Delete
  7. Does the executor have to claim executor fees as income ? My wife is an executor and the lawyer adviced her not to issue T4. So, does that mean it doesn't have to be claimed on her income tax return as income ?

    ReplyDelete
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    1. Anon, not exactly accurate advice.

      Firstly executor fees are taxable as either income from employment or as business income. In your wifes case as I assume she is not a professional executor, she has to report income and should issue a T4 and related withholdings as per the CRA http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/rtrns/t4/slps/cmpltng/bx14-eng.html

      Delete
  8. My father passed away May 21, 2011 and his final OAS and CPP payments went into his bank account - held jointly with my mother - on May 27th.
    The CRA told me that the OAS can go on a Rights or Things Return, but the CPP does not - it goes on a Trust return (or the Final return I suppose). Is this correct?
    They also told me that when doing my Mom's Schedule 2, for spouse's income I enter Dad's income 'only from the period covered by the Rights and Things Return', not the income from the Final return. Are they right? Because it seems illogical and makes me question all of their advice.
    Thanks for your time and any guidance you can provide.

    ReplyDelete
    Replies
    1. Hi Anon

      If you open this link (http://www.ey.com/CA/en/Services/Tax/TaxMatters-Oct-2010)to the death and taxes article by Ernst & Young, you will see they say

      Common rights and things include the following:

      • The final month’s Old Age Security (OAS) and Canada Pension Plan (CPP) payment, if these were received after the date of death (such payments are made late in the month)

      In addition, if the estate received the $2,500 CPP death benefit, it may be reported on either the T3 Estate Return or on the beneficiary(ies) return. This is not a “rights or things”.

      Finally, I think what they are getting at with the schd 2 comment is that the CRA wants you to use the income for the entire year for a spousal claim:

      The CRA says If the net income of the spouse or common-law partner is less than the base amount for the year (see line 303 in the guide that came with the deceased’s return), you may be able to claim all or part of this amount. Use the net income of the spouse or common-law partner for the whole year, not just up to the deceased's date of death.

      You should read the deceasd taxpayer guide
      http://www.cra-arc.gc.ca/E/pub/tg/t4011/t4011-e.html#P254_29528

      Delete
  9. what is required when 2 executors are out of the province?

    ReplyDelete
    Replies
    1. sorry, I am not a lawyer, that is more of a legal question

      Delete
  10. Can I withdrawal from the estate account if I am exutor.

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    Replies
    1. Matt, Withdraw what? Your executor fee? If that is the question, speak to the estates lawyer as at some point you will be entitled to withdraw those funds. Otherwise, unless paying bills for the estate, u have no right to withdraw any funds, they do not belong to you.

      Delete
  11. I have been named executor for a relatively simple estate. I hired a lawyer and an accountant who have completed much of the work, although I did run some errands, close out the bank account, follow up with mutual funds and dividends that need to be transferred to the beneficiary, as well as complete a few other sundry tasks to wrap up the estate.

    I am now wondering what my fee should be. The lawyer has suggested an hourly rate of about $100, having documented all my time spent on the estate.

    Other people, who have experience being executor, suggest I request the 2.5 % that is typical and would be significantly more than the hourly rate fee.

    What is are my rights when it comes to setting the fee?

    I am not sure what is fair, what is expected or what I should request.

    ReplyDelete
    Replies
    1. See this article that discusses the issue in Ontario. Typically the fees are based on the percentages noted in the article.

      http://www.heydary.com/publications/executor_duties.html

      Delete
  12. how long to keep the records of an estate once completed?

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  13. See my blog below on keeping income tax records. I am pretty sure it applies to estates also but have not looked at the issue in some time.

    http://www.thebluntbeancounter.com/2011/02/how-long-do-i-have-to-keep-my-income.html

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  14. I was told if you are both the executor and a beneficiary (any beneficiary) of an estate, you can take the executor's fee as an increase in inheritance. Is this correct?

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  15. can you tell me if there is any recourse when a co-executor sells estate assets without authorization of the other executor?

    ReplyDelete
    Replies
    1. Sorry, don't know. You need to speak to an estate lawyer.

      Delete
  16. My father passed away in March - There was 47,866.00 in a RIFF that got split between 4 children. We each received approx 11900.00. I just received a T4RIF from Canaccord (they were holding the account) with an amount of $180.76 in Box 22 (Other Income). I am not the executor - Doesn't this go to the executor to report on final tax return.?

    ReplyDelete
    Replies
    1. Hey Miss Muffin:

      Got to love your handle. Sorry to hear about your dad

      My guess is the $180 was income that was earned in the RRIF after your father's death and before Canacord got around to paying it to you. So if you checked your dad's RRIF at his date of death, was his RRIF $47,866 or a lessor amount? If it was a $47,866 then I would ask Canacord why you have not been paid another $180 or in the alternative, what the heck the $180 is

      Delete
    2. Miss Muffin is our dog :) -
      Thank you very much for your answer - I will check into this . I will let you know the outcome if you like.

      Delete
  17. can one beneficiary do all the legal paper work without the other.. and can she keep rest of the money that belong to 4 people,,

    ReplyDelete
  18. Hi Anon

    No, not if the will states the estate is to be split 4 ways. I am not an estate lawyer, but if that is the case, speak to the lawyer handling the estate as to what you need to do or engage a lawyer to deal with the situation

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  19. my mother passed in 2010. her bank did not issue a T4RRIF slip for her RIF until Oct 2013 but dated the slip 2010. the slip was issued when the bank finally released her accounts (everything had previously been frozen) to an estate account. we now have to claim the RIF and pay the taxes which I fully understand and have no problems with this. what I am concerned about now is penalties and interest. Will this apply as the T4RRIF was not issued until this year and backdated. If there are penalties is there anything that can be done as it will add up to a significant amount (RIF is roughly 50K). There was also a slip issued for 2013 for interest earned between 2010 and 2013 which would need to be claimed. I really am not sure where I go from here. Thanks.

    ReplyDelete
    Replies
    1. Hi Anon

      If you filed your moms return for her year of death, there should be no penalties only interest. If the return was not filed on time you will have penalties and interest.

      In either case, I would make a fairness claim to request that the interest and/or penalties be waived, because the late filing was solely the result of the bank.

      Delete
  20. If there 2 executors of my parents's will, me and my sister. And I have paid income tax of my share and my sister doesnt paid, is it going to be affected me or responsible?

    ReplyDelete
    Replies
    1. Hi Anon:

      The estate is responsible for the taxes payable, for which you as executor are ultimately responsible. Were there not sufficient funds in the estate to pay the taxes or were the funds left directly to you and your sister and thus you did not have enough funds?

      Unfortunately I cannot provide an answer as I am not a lawyer and you should discuss with your estate lawyer.

      Delete
  21. My father just passed and I am the daughter executor. My mother is still alive and just informed me of this. I am calling his lawyer Monday for details. Will I still be responsible for all this even with her alive? They were still happily married at the time of his death. I know he invested heavily. What role will I play in all of this? Thank you, Tracey

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    Replies
    1. Hi Tracey:

      I am sorry to hear about your dad. If you accept the executorship, you are responsible. The good news is, if your dad essentially left everything to your mom, then for tax purposes, things should be fairly simple. The lawyers can guide you on any probate issues, which may require a little more work. If u don't have an accountant, I would engage one to guide you through this and again, if your dad left everything to mom, should be fairly simple for tax.

      Delete
  22. My wife's brother (federal employee) passed in 2012 without a will. His mother and my wife were the sole surviving relatives. My wife acted as executor as mother is elderly. Because of issues surrounding not having a will, there were many delays. We filed a 2012 FINAL tax return and got a clearance certificate. Because he died one month after retirement the estate received a lump sum payment (less taxes) in-lieu of pension. Some time after that (in the 2013 tax year) we received a T4A for that payment. We are not sure if we should:
    a) re-open 2012 tax file and add T4A amount
    b) file a 2013 tax return for her brother using the T4A and tax paid as his sole income (even though he died in 2012)
    c) file a T3 Trust Return for the amount as it may be deemed that it was paid in trust to his estate
    It seems that all 3 have tax implications of varying degrees and the assets of the estate have already been distributed.

    ReplyDelete
    Replies
    1. Hi Anon:

      I cannot provide a definitive answer without all the facts, you need to ask your accountant or engage one. Subject to the facts, it appears the payment most likely will fall into (c), but again, I cannot provide a definitive answer, so peak to an accountant and provide all the details of the RPP. Just as importantly, you also need to understand the issues surrounding any tax owing since the assets have already been distributed, u may need to speak to your estate lawyer once you sort out how to file the return.

      Delete
  23. My mother called me today. She asked me to go to her to city hall next week to sign a paper "relieving my duties of being a co-executor". My father died Jan 2009. I did not know he had a will nor that he made me a co-executor. What should I do?

    ReplyDelete
    Replies
    1. Hi Anon

      This is a legal question and I am an accountant, so I cant help you. All I can say is why does she want you to renounce and have you seen the will? You may want an answer to the first and a look at the second before you decide and in addition you may want a short consultation with an estate lawyer to understand whether you want to renounce your executorship.

      Delete
  24. Hi Mark,
    I have 2 questions for you. My brother passed a few months ago and apparently I need to file income tax return. There were no assets, pensions, RRSP's, etc. In fact, I paid for the funeral and filed for CPP. Death Benefit. Can I claim funeral expenses? My assumption is no, but it never hurts to ask.
    I have his T4 and ROE from his last employer but I'm not certain if he had other employers in the same year. Is there some way I can confirm this?
    Thanks for your assistance.

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    Replies
    1. Hi anon

      U cannot claim funeral expenses. the only way to confirm his t4 info is to get authorization from the CRA as the executor of the estate u must file form 1013 I think

      Delete
  25. If I am executor and 1/2 beneficiary can I purchase the main asset (the house) at market value if the other beneficiary agrees.

    ReplyDelete
    Replies
    1. Hi Anon

      Sorry, you would have to ask the estate lawyer that question.

      Delete
  26. Hi Mark.
    My brother and I are executors for my father's estate. In February the request was submitted to Revenue Canada for the Clearance Certificate. Do you have any idea of how long this typically takes to go thru? When we took over the state there were 7 years of tax returns that needed to be filed. Also, once we receive the certificate, can I distribute the funds or do I need to go through a lawyer/accountant?

    ReplyDelete
    Replies
    1. Hi Anon

      They have a large backlog for clearance certificates from what I understand. It can take several months as you are experiencing. I would call and see if you can get a status report and more importantly, to ensure it is in the system.

      You don't need to go through your accountant or lawyer, however, I would suggest that you just pass by you plan of distribution with your lawyer to ensure you have properly distributed and wound up the estate.

      Delete
    2. Thanks Mark ... great advice on both parts.

      Delete
  27. Hello can you please tell me ,my brother about 2 years ago sold my mother s house took all the money for himself there is a will making him the only beneficiary ......my mon is resinding in a nursing home all her pension is going there ......my question is ...who will be responsible to pay for her funeral expanses when the time comes .......thank you

    ReplyDelete
    Replies
    1. Hi Anon

      I am not an estate lawyer, but it is my understanding it is the estate's responsibility. The bank of the deceased will typically issue a cheque to cover the funeral expenses if there is enough money in the account.

      If there is not enough money in your moms account at her death, I am not sure what the answer is.

      Delete
  28. Hello, my step-mother passed away Sept.12, her will states that any inheritance is to be distributed equally among the 4 daughters (2 biological & 2 step-daughters). After my biological father died 6 years ago, we kept in touch rarely with my step-mother & 2 step-sisters. Because of this, my step-sister has requested that myself and my biological sister voluntarily forfeit our inheritance to her and her biological sister. Is this even allowed/legal?

    ReplyDelete
    Replies
    1. Hi Pn1230

      I am not an estate lawyer, you would have to contact one to determine what can and what cannot be done. Here is a link to your question answered by an estate lawyer in her blog. http://estatelawcanada.blogspot.ca/2010/04/can-beneficiary-turn-down-inheritance.html

      Delete
  29. My common law husband just passed away and I am named executor. I will be discussing who should guide me through this -- the financial institution or the lawyer. I'm told I should get quotes on what they charge and what they will do and decide that way. Or I could have it all done by the bank or by the lawyer. I am the main beneficiary and his son is the other -- he grudgingly accepts the will but could be 'cranky' or worse although, he lives in Europe and the will is very well written. Is it safe to continue as executor or would you turn it over to the other institutions. Is there more certainty the job will be done well if somebody else does it? More expensive for sure. Thanks for any suggestion.

    ReplyDelete
    Replies
    1. Hi Anon:

      I can't answer your question. For many simple estates, there is really no need for a professional executor and the lawyer/accountant can typically guide you through. However, some people find the job overwhelming and hire a financial institution.

      What I would do is review the will with an estate lawyer and get their opinion on whether they can guide you through. Then get a quote from them for doing such.

      If you live in Toronto email me and I can provide you some names if you need a referral. bluntbeancounter@gmail.com

      Delete
  30. Hi Mark
    I have been appointed the trustee (executor) in my mother's will. She is currently alive and active. I am looking into the roles and responsibilities required of me by the powers that be. I am looking for a program or course that would help me prepared for this role. I am also concerned with how to deal with the physical assets. The family calls it dealing with the "10001 things" We want to make sure that fair value is assigned to these 10001 things and to maximize the value on items being liquidated. What forms of documentation is require? How do I handle the dispersion of these physical assets? What complications can arise and how do i minimize them? Is there an amount of time that these assets need to be sold by, or can the family wait and find the right price (get the fair market value for these items)?
    Thanks for any thought, ideas, suggestions or incites that you have.
    Nathan

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    Replies
    1. Hi Nathan:

      It is great you (a) know you are an executor and (b) are being responsible about your duties beforehand. You would have to google and search out a course in your city, but they are put on by various associations.

      If you go to my blog roll on the right hand side of my blog, 1/2 way to 3/4 the way down, there are 3 great blogs that are dedicated to estates, that would be helpful to read, Estate Debate, Estate Law Canada & Hull and Hull. If you scan their prior posts, many of the questions you ask or will have will be answered.

      Delete
  31. my friend is one of 3 beneficiaries; executor is another bene and his wife also. Having been a legal asst. for many years, I am familiar with how a Will and subsequent estate matters should be handled pursuant to LSUC. I believe the exec. handling of the Will and Estate is fraudulent. Should I contact LSUC? Executor lives in Alberta; I am disgusted with the way everything was done- it's been over 2 years; this small estate should have been completed by now; I would like to put the executor on notice that my friend is contemplating legal action; executor has not performed nor provided the proper documentation to my friend; apologies for being so lengthy

    ReplyDelete
    Replies
    1. Hi Anon

      That is too bad. I am not a lawyer so i am not sure the proper steps to take. As a legal assistant, maybe you have a legal contact who can give you direction. Sorry, not my area.

      Delete
  32. My father passed and I am the sole executor of his estate as well as being one of the beneficiaries. I'm nearing the end of completing my responsibilities. I have clearance certificates; the passing of accounts has been reviewed and accepted by the other beneficiaries. I have determined that collecting executor's fees would be best in this situation and the other beneficiaries have agreed as well. My question is about remitting income taxes properly so as not to incur any penalties from CRA. Is my father's estate responsible for remitting taxes just as any other employer would be? Do I need to have a business number associated with my father's estate or is the trust account number, issued by the CRA, sufficient?
    Is it accurate that my father's estate will need to issue a T4 for my executor's fees? Since the executor's fees will be collected in 2015 does this mean that the T4 must issued before the end of February 2016?
    Thank you

    ReplyDelete
    Replies
    1. See link below, the estate must issue a T4 by Feb 2016 if the fees are paid in 2015.

      http://executorsupportblog.ca/executors-fee-is-personal-income/

      Delete
  33. My partner passed away on January 1st of this year. An accountant did his income tax for 2014 and I just received his notice of assessment in the mail. I was named executor. He owes over $50,000 and his estate has no money. What do I tell Revenue Canada? He has owed this money for years as he was getting his wages garnisheed when he was working.

    ReplyDelete
    Replies
    1. You should speak to an estate lawyer who can advise you what to do before speaking to the CRA

      Delete
  34. Hello,
    My brothers and I are holding our inheritance in a trust account while waiting to receive the certificate of clearance. My aunt passed away in June 2014, and we filed her last tax return in February of this year.
    Is it safe to distribute all of the funds once we receive the clearance? A lot of her money came from investments in stocks, bonds and real estate. We are worried about the possibility of governments (we live in Quebec) reassessing gains from prior years at some future time. Meanwhile, the estate account is earning 1% interest on the balance. Do we declare that individually as benificiaries, or file another return for her next year?
    TIA
    RT

    ReplyDelete
    Replies
    1. Hi Anon

      You should file a T3 estate return until the estate is wound up.

      I have no knowledge of Quebec tax and estate laws and you seem to have concerns about prior years, thus you should check this with your estate lawyer before distributing the funds.

      Delete
  35. My father passed away this year in May.

    We have a family corporation which my father was the president and we all had equal shares.

    Before he passed he stepped down as president and my brother stepped in from vice-president to president. My father also transferred his shares equally to my brother and myself. I am not a director.

    My brother is the executor and I am the secondary executor if my brother is unable to do his duties.

    My father did not have anything else in his name. No car, no house, his bank account has less than $500 and never much more. Any assets like property are under the corporation.

    We received a Statement of Account from the CRA stating that he owes $32,000.00.

    If his personal estate has no value i.e. no cash, no car, no property etc.

    What does the CRA do in this case? How do we go about dealing with this?

    My brother isn't a very responsible person and I'm afraid he will just ignore it. But because I'm listed as a secondary executor am I responsible for my father taxes ?

    Thank you

    ReplyDelete
    Replies
    1. Hi Anon

      I don't know the answer. You should speak to your fathers estate lawyer. It is possible that even though the estate has no assets, because he transferred assets prior to his passing the estate may be liable for the taxes anyways.

      Delete
  36. Hello BBC,
    I am both the executor and beneficiary of my father and I have his will , made out by a lawyer about twenty or more years ago. My father is in long term care, has lived a long time, he has been slowly and naturally losing his functions over several years. I see him there daily visiting and giving extra assistance as I too am retired. Suddenly today, as he just seemed to be losing more significant motor functions over a short time, I realize the time is coming very soon. We have no other close relatives, I am the last one of our family.
    ..
    Because of living a long natural life, my father, with my help, liquidated all his assets a long time ago and given away even most of what personal possessions remained, there is only a bank account, The funeral services etc were prepaid twenty years ago, including headstone etc. (minus carving of the final date). Taxes are up to date , Bills from the long term and and senior payments are automatic to the bank account - there is nothing outstanding.
    Actually , we/he have two accounts - a few years ago , he put some partial funds in a joint account for him and myself for a extra living expenses account living because he could no longer sign cheques etc and I stated handling all shopping , extras (such as special wheel chair) , etc. I only can access the joint account.
    ...
    The funeral director said they will provide me with a copy or copies of the death certificate when the time comes. Even the Long Term Care Institution has been notified which funeral service to call in event of death.

    My father never gave me Power of Attorney, as he considered the will sufficient. He likes to be in charge. However he signed (or initialed with a witness) - all forms for all branches of government (3 or 4 there were, federal and provincial) , tax etc for all mail etc to be handled by myself. ie - Authorized representative for handing information, mail etc (not manipulating funds).
    ..
    Bluntly , what do I have to do to officially settle the estate and claim the remains of the bank account when my father passes? It's been many years now , I have had this situation but I have always been unclear what to do in the final stage? I was at a seminar about 15 years ago, and the lawyer there (who was actually the one who helped my father make the will - small community) he said at that time .. something like ...I would probably simply take the will and death certificate to the bank? Is this true or do I have some kind of bureaucratic maze to go through? If so, I should like to be prepared for it.
    I.am very old school ie parsimonious and untrusting. - the last thing I would want to do is go ask a lawyer, - that would be like asking to be skinned alive.

    ReplyDelete
    Replies
    1. Hi Anon

      Ask your bank now what they will require if anything when your father passes away. Each bank seems to have a different set of rules so you may as well find out now if you will be required to do anything and/or whether they will still ask you to probate the estate.

      Delete
  37. Hello,
    My ex-husband passed away last year and his executor is winding up the estate. As his death was accidental, there were insurance proceeds to my children, the beneficiaries, one of whom is a minor. Regarding executor compensation, do the insurance proceeds have to be included in the value of the estate? Does the Court have to approve the amount of Executor compensation, as one of the beneficiaries is a minor?
    Thank you.

    ReplyDelete
    Replies
    1. Hi anon

      I am not an estate lawyer thus I am not sure about the answers, sorry.

      Delete
  38. I am trying to get the bank to stop any interest accruing on the estate bank account so I can file the final T3 for my Mother's estate. The interest is minimal as in under $50.00, thus a T5 is not sent out. Regardless by the letter of the law all interest income earned must be claimed when doing taxes. They are refusing to stop the interest in the estate account and therefore I can't properly complete the final tax return. This has been going on for 7 years now with a T3 filed each year for this reason. Bordering on ridiculous it is. For years the co-executor refused to sign giving the bank permission to stop the interest in the account and now that he has agreed to do so, the bank is saying it can't be done and the accounts have to closed out. Well the estate account can't be closed out until the final tax notice of assessments are in and the Clearance Certificate obtained. I am not a lawyer but have a legal background and am following the rules taught in my Ontario estate course and the guidelines of CRA which are clearly outlined on their website. The other executor whom I have parted ways with has been given incorrect advice on many occasions (probably obtained at his seniors coffee club) and has caused lots of grief during the settling of the estate.

    ReplyDelete
    Replies
    1. Chief, when you ask for the clearance certificate you can tell the CRA that the misc interest earned after the estate is wound up will be reported on the executors personal returns, they are usually ok with that

      Delete
  39. Hello,
    My husband died recently with a balance on his Line of Credit. I am the executor and opened an Estate Account at the Bank of Montreal. They recently withdrew money from this account to pay the Line of Credit. Can they do that?

    ReplyDelete
    Replies
    1. Hi Anon

      Sorry about your husband. I am not an estate lawyer, I am not sure if they can or cannot do it, sorry.

      Delete
  40. Hi Mark!
    My Mom passed on Nov 6th. On Nov 15th the bank gave us a PDF of her portfolio (GICs) based on the previous days market close that shows $10,670 higher then what the bank is now saying they will be dispersing to us. Is it correct that they disperse the amount the GICs were at on the day she passed rather than what they are at on the day they disperse?

    ReplyDelete
    Replies
    1. Hi Anon

      Assets are disbursed based on date distributed not the date of death. However it makes very little sense that GIC's would drop in value that much in such a short time. I would ask for a reconciliation or explanation

      Delete
  41. Hi Mark,

    If the calculation of estate trustee compensation is $50,000, but the estate trustee used a lawyer to do a lot of the work, so the net she received is $20,000 after the legal bills, she is taxable on the gross amount of $50,000, correct?

    ReplyDelete
    Replies
    1. Hi Anon

      You would need to ask your lawyer about this, but my understanding is that executor compensation is only based on guidelines and not any law and thus, the estate would only practically pay the $20k if that is all it has and not the $50k. If your lawyer confirms that is correct, then only the $20k received would be taxed.

      Delete
    2. Thank you for your response. I am sorry I don’t think I worded my question well. The executor fee is in fact $50,000, and the estate has those funds. But the executor had the lawyer do a lot of duties that she was responsible for as executor, so those legal bills directly reduce the executor fee. So after the legal bills are applied to the executor fee, the executor receives about $20,000. I am wondering when the T4 is prepared for those executor fees, if the employment income would be $50,000 or $20,000.

      Delete
  42. Hi Anon

    You need to ask your lawyer if the fee is legally $50k or $20k. As a layperson I would view this as a $50k entitlement but after legal fees an actual fee of $20k. But speak to your lawyer.

    ReplyDelete
  43. Hi. Since getting CRA on the phone is near impossible, I hope you don't mind me asking this. On the T3, there is a question about trust assets other than cash distributed to a beneficiary. Is this the estate? I am thinking of personal effects like dishes and furniture. I am the executor of my sister's estate and she left everything to one son. Nothing is in dispute and everything is completed (she passed in Dec 2015) except the T3. Do I have to send CRA a full list of all the personal effects left to the son? Nothing has significant resale value except a couple of antiques, but even then, under $2K per item. Thank you so much.

    ReplyDelete
    Replies
    1. Hi Julie:

      The CRA says the following,(see below). It does not seem to carve out dishes and furniture etc. of limited value, however, I do not have time to research the matter and see if there is an exclusion for personal use property.

      Per T3 guide:

      Distribution of property to beneficiaries If a personal trust distributes property to a beneficiary (to settle in whole or in part the beneficiary’s capital interest in the trust), attach a statement to the return that includes the following information about the distributed property: ■ the name and address of the recipient or recipients; ■ a description of the property; ■ the fair market value (FMV) on the day it is distributed; and ■ the cost amount on the day it is distributed.

      Delete
  44. Hello,

    My mother passed away in 2016, as the son and executor for her estate, can I file the final T1 return without a letter of probate. Will CRA accept the filing by a family member who is also the executor before the probate grant.

    Thank you in advance for your reply.

    ReplyDelete
    Replies
    1. Hi Anon

      I dont know, I have never had to look into this as every estate I have had, got probate before filing. You may want to ask your lawyer if you are still legally an executor without probate. If the answer is yes, which I think it is, you are only signing the return as executor, the CRA is not asking if probate has occurred.

      Delete
  45. My Mom passed away a month ago and I'm filing her income taxes for the past 2 years as well as this year. She has always been entitled to refunds.

    On my side, I'm behind in my own income taxes as well but most likely owe money to Revenue Quebec, not Revenue Canada. Is my owning money going to affect the refunds that the estate is owed?

    Thanks in advance,
    Tammy

    ReplyDelete
    Replies
    1. Hi Tammy

      I dont practice in Que. but in general the refund of an estate should not be affected by your personal situation.

      Delete