- An estate trustee who distributes before getting a CRA clearance certificate is personally liable for unpaid amounts, up to the value distributed.
- No distribution may be made from a deceased spouse's estate within six months of death without the spouse's written consent or court authorization.
- Some assets, such as a TFSA with a successor holder, may not have to wait for the estate to close.
If you are a beneficiary who needs money sooner, you may wonder whether the estate trustee can pay you part of your share now. This is often called an interim distribution: a payment made before the estate is fully wrapped up.
Whether it is possible depends on the will, the estate's debts and taxes, and how comfortable the trustee is with the risk. This article explains why trustees are cautious and what options may exist.
What an interim distribution is
An estate trustee's job is to wind up the deceased person's affairs, pay taxes, bills and other debts, and then distribute the estate according to the will. A final distribution comes at the end of that process. An interim distribution is a partial payment made earlier.
Estates are still presumed to be wrapped up within one year of death, often called the executor's year, although for a complex estate the court accepts that expecting this may be unreasonable. Whether a partial payment makes sense depends on what the will says, how much cash the estate has and how certain its debts and tax bills are.
Why trustees are cautious: debts, taxes and personal risk
A legal representative who distributes assets before getting a CRA clearance certificate (Form TX19) is personally liable for unpaid amounts, up to the value of the assets distributed. That means a trustee who pays out too much too soon could end up covering a tax shortfall from their own pocket.
Other uncertainties also make trustees hold money back:
- The final return may not yet be filed. It is due April 30 of the following year for a death between January 1 and October 31, or six months after death for a death between November 1 and December 31.
- A different due date may apply for a business. If the deceased, or their spouse or common-law partner, was carrying on a business, the final return is due June 15 of the year after death for deaths from January 1 to December 15, although any balance owing is still due by the normal payment date.
- New assets may turn up. An amended Estate Information Return is generally due within 60 calendar days when, for example, new assets are discovered.
- Estate Administration Tax may apply. For applications on or after January 1, 2020, no tax is payable on estates of $50,000 or less, and above that it is $15 for every $1,000 (or part thereof) of the estate's value. The estate pays it, not the beneficiaries.
What a holdback means
A holdback is money the trustee keeps in the estate to cover debts, taxes and costs that are not yet settled. A trustee may be willing to pay you part of your share while keeping back enough to cover those unknowns. How much to hold back is a judgment call that depends on the facts, and a lawyer or accountant can help the trustee decide.
If you are asking for an early payment, it helps to be realistic. A partial payment is more likely to be considered when the estate has plenty of cash, the debts are known and the tax position is clear.
Rules that can block early payment
| Situation | Rule |
|---|---|
| Deceased had a spouse | No distribution may be made from a deceased spouse's estate within six months of death unless the surviving spouse consents in writing or the court authorizes it. |
| Deceased left a will and a surviving spouse (a separate deadline that runs alongside) | The surviving spouse must elect either to take under the will or to receive the equalization entitlement, and the election must be filed with the Estate Registrar for Ontario within six months after the death. A spouse who does not file in time is deemed to have elected to take under the will or under the Succession Law Reform Act, unless the court orders otherwise on application. |
| Beneficiary is a minor or incapable adult | The probate application may also need to go to the Office of the Children's Lawyer and the Office of the Public Guardian and Trustee. |
The spousal rules apply to married spouses. Common-law partners are not covered by the Family Law Act equalization election, so a lawyer can confirm how the rules apply in your case.
Other routes and what to do next
Not everything is paid through the estate. Jointly owned assets that pass automatically to the surviving owner, and RPPs, RRSPs, RRIFs and TFSAs with a beneficiary designation, are excluded from the estate value for Estate Administration Tax. A TFSA successor holder immediately becomes the new holder and owner, and the account continues. A designated beneficiary of a TFSA instead receives the account's value.
If you receive ODSP, report any inheritance you receive or expect to receive to your caseworker. You and each family member can receive up to $10,000 in total in a 12-month period from gifts, inheritances, trust and life insurance payments and lottery winnings without affecting income support. An early payment could affect your benefits, so check before you accept it.
- Ask the trustee, in writing, whether a partial payment is possible and what amount they would hold back.
- Ask about the tax filing dates and whether a clearance certificate has been requested.
- Find out whether any of your inheritance sits outside the estate, such as a designated account.
- If you receive ODSP, report any inheritance you receive or expect to receive to your caseworker.
- If the trustee refuses and you suspect a problem, ask a lawyer about a court request to pass accounts.
Frequently asked questions
Can I demand an interim distribution?
Generally, a trustee decides based on the will and the estate's position. If you believe the estate is not being handled properly, a person with a financial interest may ask the court to order the trustee to pass accounts.
Why won't the trustee pay me until the tax clearance arrives?
A representative who distributes before getting a CRA clearance certificate is personally liable for unpaid amounts, up to the value of assets distributed. Waiting protects the trustee, and often the beneficiaries as well.
Can a surviving spouse get paid in the first six months?
No distribution may be made from a deceased spouse's estate within six months of death unless the surviving spouse consents in writing or the court authorizes it. Talk to a lawyer about whether consent or a court order makes sense.
Does an early inheritance affect ODSP?
Yes, it can. You must report any inheritance you receive or expect to receive, and amounts above $10,000 in a 12-month period count as income in the month received, unless used for an approved disability-related item or service.
Sources
- Ontario.ca – ODSP eligibility for income support — ontario.ca
- Ontario.ca – Apply for probate of an estate — ontario.ca
- Ontario Court Forms – Rule 74.15 — ontariocourtforms.on.ca
- Ontario.ca – Administering estates — ontario.ca
- Rivard v. Morris, 2018 ONCA 181 — ontariocourts.ca
- Canada.ca – Apply for a clearance certificate — canada.ca
- Family Law Act, R.S.O. 1990, c. F.3 (CanLII) — canlii.org
- Canada.ca – If you are a successor holder of a TFSA — canada.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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