How to Close a Deceased Person's Bank Accounts in Ontario

You have been named as executor, or you are stepping in to deal with a family member's affairs, and the person's bank accounts are sitting there. You may be wondering what you can do right now, what has to wait, and what the bank will want from you.

The short answer is that it depends on how each account is set up and how large the estate is. This article explains the main rules that affect bank accounts after a death in Ontario and what to confirm before you close anything.

Probate and bank accounts: the general picture

Probate is the court process that confirms the person with authority to deal with an estate. In Ontario, probate is usually needed for assets held by financial institutions, and for real property that does not pass by survivorship. That is why many banks will not release or close an estate account until they see a court-issued certificate.

Banks set their own paperwork requirements, and these differ between institutions and between accounts. Rather than guessing, contact each bank, tell them about the death, and ask what they need from you before they will release funds or close an account. Ask for the list in writing.

Accounts that may not be part of the estate

Some assets pass outside the estate, for example by joint ownership with survivorship or to a designated beneficiary. A participant may also name a person to receive a plan benefit, such as an RRSP, RRIF or pension, by a signed instrument or by will. Those assets may not need to go through your estate account at all.

Joint accounts need care. A gratuitous transfer from a parent to an adult child, including into a joint account, is presumed to be held on a resulting trust for the parent's estate, but evidence that the parent intended a gift can rebut that presumption. For a transfer to a minor child, the starting point is instead the presumption of advancement, which means a gift. Courts look at things like later statements of intention, the wording of the bank documents, who controlled and used the funds, any power of attorney, and how the account was treated for tax. Bank documents alone do not settle who owns the money, so a disputed joint account is a good time to speak with a lawyer.

Small estates, estate tax and timing

Since April 1, 2021, a small estate for probate purposes is one worth $150,000 or less, and it uses Form 74.1A (Application), Form 74.1B (Request to File) and Form 74.1C (Draft Small Estate Certificate). A smaller process does not remove the other obligations that come with a certificate.

For applications made on or after January 1, 2020, no Estate Administration Tax is payable on estates worth $50,000 or less. Above that, the tax is $15 for each $1,000 or part of $1,000 by which the estate exceeds $50,000. An Estate Information Return must be filed within 180 calendar days after the estate certificate is issued, even if the estate is worth $0. If the deposit was based on an estimated value, an undertaking is required, and you must file a sworn statement of the actual value and pay any extra tax within six months after giving the undertaking.

Before you close accounts and pay out beneficiaries

• Debts: if the estate cannot pay everything it owes, debts are paid proportionately, with no debt ranked ahead of another, and Crown debts rank alongside the others.
• Creditors: an estate representative who has given the required notices to creditors may distribute the estate and is not liable to a creditor whose claim they had no notice of at that time, but creditors can still follow estate assets into the hands of people who received them.
• Tax: a representative who distributes assets without a CRA clearance certificate (requested on Form TX19) while tax is owing is personally liable for the unpaid amounts, up to the value of the assets distributed.
• Final return: the deceased is treated as having disposed of capital property just before death at fair market value, and any resulting capital gain goes on the final return.

Closing the accounts and paying beneficiaries too early is a common way for representatives to put themselves at risk. An accountant can help with the final return, and a lawyer can confirm whether it is safe to distribute.

What to do next

• Find out whether there is a will and who is named as estate trustee.
• List every account and note whether it is sole, joint, or has a named beneficiary.
• Contact each bank and ask in writing what it requires before releasing or closing the account.
• Decide whether you need probate or the small estate process.
• Keep all records of money received and paid out.
• Request a clearance certificate before distributing, and speak with a lawyer or accountant if any account is disputed.

Frequently asked questions