Home » News & Events » Estate Planning » 10 BASICS OF SETTLING AN ESTATE


by | Aug 22, 2022 | Estate Planning | 0 comments

Navigating the estate settlement process is often an overwhelming task during an already difficult time. It can be challenging and time consuming, involving much coordination amongst your financial, legal, and tax advisors. Typically there are some common points of confusion or areas that clients have the most questions about.

Here are 10 basics of settling an estate, to help you understand what may be involved.

1. Multiple death certificates are helpful – some institutions require the original, even if it’s just to look at and send back to the executor.

2. Registered and TFSA accounts that have named beneficiaries or successor holders – beneficiaries will receive the proceeds of their entitlement prior to probate being granted in most cases.

3. Non-registered assets, corporate assets, and the sale of the deceased principal residence (amongst other things) will normally require probate granted before assets can be dispersed.

4. Tax must be accounted for at the estate level/deceased person’s level – beneficiaries do not typically pay tax on their inheritance.

  • This can pose a problem if a registered investment account is named to beneficiaries who are not spouse or financial dependents of the deceased where a rollover may be used. Normally the full entitlement is sent to the named beneficiary, while tax must still be paid and managed at the estate level. It is important to ensure there will be money available to pay tax.

5. Assets are deemed “disposed” at the deceased’s date of death. Currently, a principal residence is not taxable. Registered investments, if no rollover is available and utilized are considered disposed and will be taxable as income on the deceased’s terminal tax return. Non-registered assets are also deemed disposed, and resulting capital gains or losses will need to be listed in the terminal return.

6. Unused capital losses can be used to reduce ANY income in the year of death, not just capital gains.

7. More than one tax return can be filed for the deceased, including the terminal return, and a “rights or things” return. An accountant can determine if this is necessary or beneficial.

8. Executors normally have a right to compensation and may or may not wish to take this. Finalizing an estate can be substantial work.

9. A clearance certificate should always be requested from CRA once taxes have been paid – in many cases, distributions to residual beneficiaries are best left until this has been issued.

10. Using an estate management system, such as Cadence, can save executors time and ensure nothing is missed when settling an estate.

Your Financial Advisor and other professionals are here to help you through the process. If you have questions about the estate settlement process, please contact us.

You can also find more information about our estate planning services here.