How much should an executor hold back from final distribution in case an unknown claim surfaces later?

There's no fixed percentage or dollar figure that applies to every estate - how much to hold back depends on the specific risks in that estate, such as whether a creditor notice period has been properly completed, whether a CRA clearance certificate has actually been obtained, and whether there's any realistic possibility of a late tax reassessment, an unresolved claim, or an unpaid bill still surfacing. An estate trustee who has properly gone through the Trustee Act notice-to-creditors process and secured a clearance certificate has generally addressed the biggest categories of risk already, which can reduce how much of a holdback is realistically needed.

Where more uncertainty remains, for example an estate with ongoing litigation risk, a business the deceased owned, or a tax filing that hasn't yet been finalized, a larger or longer holdback is more prudent, even though it delays what beneficiaries receive. This is ultimately a judgment call the trustee has to make and be able to justify if a beneficiary later asks why funds were held back or already distributed.

Rather than guessing at a number, an estate trustee facing genuine uncertainty should discuss the specific risks with the estate's lawyer and accountant, and document the reasoning behind whatever holdback amount is chosen.