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OPINION: How to navigate the role of an executor or trustee

No one likes to talk about death, but as the saying goes, two things are certain: death and taxes.
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Laurie Bissonette, FCPA, FCA, is a Partner with KPMG Enterprise™. She can be reached at 705-669-2521 or lbissonette@kpmg.ca.

No one likes to talk about death, but as the saying goes, in life two things are certain: death and taxes. And upon death, taxes can become more complicated. So what do you do if someone you know has passed away and you are the executor?

When a person dies, the executor or administrator (sometimes referred to as the “trustee”) of the person’s estate is responsible for the individual’s affairs and distributing assets as set out in his or her will. 

The executor’s responsibilities include determining the assets and liabilities of the estate, filing all income tax returns for the deceased and the estate, paying the debts outstanding at the date of the individual’s death (including all taxes), and letting the beneficiaries know which of the amounts they receive from the estate are taxable.

If there is no will or the will is invalid, provincial law will determine how the deceased’s assets are distributed. 

The deceased’s representatives or heirs must apply to the court to appoint an administrator to administer and distribute the estate according to a formula set out in provincial legislation.

The executor will normally apply to the court for “letters probate,” or as it is referred to now in Ontario “Certificate of Appointment of Estate Trustee with (or without) a Will” which will give court approval for the executor to take over the deceased’s property, manage it and distribute it to the beneficiaries of the estate. Probate fees are charged by the courts in each province to grant letters probate.

In Ontario, the fees are now referred to as an “Estate Administration Tax” and are assessed at 0.5 per cent for estates up to $50,000 and 1.5 per cent for those amounts in excess of $50,000. The probate fee is generally applied to the total value of an estate’s assets at the time of death, without any deduction for debts other than those encumbering real property.

If the deceased received Canada Pension Plan or Old Age Security payments, the executor should contact Service Canada to cancel the deceased’s benefits and apply for death benefits due to a surviving spouse or the estate. The executor should also contact the bank or other financial institutions to cancel payments from a pension or other annuity or investment.

The executor should get a clearance certificate from the Canada Revenue Agency before distributing all of the property under his or her control. 

A clearance certificate indicates that all taxes for which the deceased is liable have been paid. 

If a certificate is not obtained, the executor will be liable for any tax the deceased owes. Note that a separate clearance certificate is needed for any trusts set up under the will of the deceased.

The final return for the deceased is due by April 30 of the following year or six months after death, whichever is later. For example, if the date of death is March 10, 2018, the deceased’s 2018 tax return is due April 30, 2019. Any tax balance owing is also due at this time.

A similar extension is available when an individual dies prior to the tax filing due date for the prior year’s return. 

For instance, in this example, since the individual died before the filing due date of the 2017 tax return, it would now be due Sept. 10, 2018 (instead of April 30, 2018).

If the deceased was paying instalments, no further instalment payments have to be paid after his or her death.

Tax planning does not necessarily cease on death. There may be many opportunities available for post-mortem planning to lessen the tax burden on the estate and beneficiaries.

If you find yourself in the executor role you should seek advice on how to minimize the tax burden on the estate that is now under your care.

While an executor’s duties are extensive, if you understand the steps and responsibility of your role and take one task at a time, you can “survive” it.




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