CPP or OAS Paid After Death: Must the Ontario Estate Repay It?

A deposit from CPP, OAS or the CRA lands in the account of someone who has just died. Whether it can be kept depends on which payment it is and which month it was issued for, and leaving it unaddressed can turn into a repayment demand months later.

This article explains, in plain terms, which month's payment an estate can generally keep, what has to go back, who in the family can act, and how a repayment fits alongside the rest of the estate's bills. Your situation may have details that change the answer, so a lawyer or accountant can confirm the specifics.

Which month's payment can the estate keep?

CPP and OAS benefits must be cancelled when the person receiving them dies. They are payable for the month in which the death occurs. That means the payment that belongs to the month of death is generally not a problem for the estate.

The month after the death is where the trouble starts. All payments issued after the month of death must be returned, and any that have already been cashed must be repaid. If someone dies late in a month, the following month's deposit can arrive quickly, so it helps to act before it does.

What must be returned or repaid

• CPP and OAS payments issued after the month of death: these must be returned, and any already cashed must be repaid.
• Other CRA payments received after the death: these should be returned to the tax centre.
• Anything else paid by the government after the death: the safest approach is to report the death and ask the payer what to do with it.

The CRA also reminds families that a death should be reported to avoid benefit repayments. The CRA now calls the GST/HST credit the Canada Groceries and Essentials Benefit, so you may see that name on notices or on older guidance that still uses the former name.

Who can act: the estate trustee

When a person dies in Ontario, their property passes to their personal representative, the estate trustee, who holds it for the people legally entitled to it after debts are paid. The estate trustee is the only person with legal authority to manage or distribute the estate. Relatives who are not the estate trustee have no authority to withdraw money from the deceased's sole accounts.

This matters for repayments. If a payment has landed in the deceased's own account, a family member generally cannot simply pull it out and send it back. The estate trustee deals with it, and a Certificate of Appointment is what gives the authority to manage the estate's assets and pay its debts. Reporting the death and returning a payment you receive by cheque or mail is a different step from moving money out of an account, so ask Service Canada or the CRA what they need from you.

How to notify Service Canada and the CRA

Speed is the best protection against a clawback. The two notices are separate, so plan to do both.

Keep a note of the date and time of each call, the name of the person you spoke with and any reference number. Keep copies of anything you mail.

How a repayment fits with the estate's other debts

How a particular repayment ranks alongside the estate's other obligations depends on the facts, so it is worth confirming with a lawyer. Separately, unless the will says otherwise, the deceased's debts and funeral and testamentary expenses are paid out of the residuary estate. Where the estate's assets are not enough to cover everything, different rules apply, and a lawyer can explain how the order of payment works.

Repayment is also one part of a larger clean-up. The legal representative must file a final T1 Income Tax and Benefit Return, and a T3 return may also be needed for the estate. A legal representative who distributes property without a clearance certificate can be personally liable for unpaid amounts, up to the value of the property distributed. Sorting out benefit repayments early keeps the file tidy before anything is paid out to beneficiaries.

What to do next

• Call Service Canada at 1-800-277-9914 to report the death and stop CPP and OAS.
• Notify the CRA by phone or by mailing Form RC4111.
• Check the deceased's account statements for deposits dated after the month of death.
• Leave any deposits dated after the month of death untouched until you have confirmed with Service Canada or the CRA what must be returned.
• If you are not the estate trustee, ask the person named as executor to take over, or ask a lawyer how to get the authority needed.
• Keep a record of every payment received, every call made and every repayment sent.

If the amounts are large, if the estate is short of money, or if you are unsure who has authority, speak with a lawyer before paying anything out to beneficiaries.

Frequently asked questions