Executor Duties for RRSPs and RRIFs After Death in Ontario

An RRSP or RRIF is often one of the largest assets a person leaves behind, and it is also one of the easiest to misunderstand. Some plans pay directly to a named person, and others fall to the estate, and the tax consequences can be significant either way.

This article explains the executor's practical role: what to find out first, which tax filings and deadlines matter, and why a clearance certificate comes before the final distribution. How a particular plan is taxed depends on the facts, so an accountant or lawyer should confirm the details.

Start with the plan documents

Before anything else, find out which registered plans the deceased held and who, if anyone, is named as beneficiary on each one. The answer is in the plan contract and the records held by the financial institution.

Whether a plan forms part of the estate or is paid straight to a named person affects what you must collect, report and distribute. Property that does form part of the estate vests in the personal representative as trustee, subject to payment of the deceased's debts. Ask each plan issuer in writing how it treats the plan, and keep the answers.

• List every RRSP, RRIF and similar plan, with the institution and account number.
• Ask each institution whether a beneficiary is named and what it needs from you.
• Keep copies of the death certificate, the will and any certificate of appointment you hold.
• Note any plan where the paperwork is unclear and ask a lawyer or accountant about it.

The tax returns the executor is responsible for

As legal representative, the executor must file all required returns for the deceased and make sure any balance owing is paid before the estate is distributed. The executor must also confirm that all balances owing to the CRA are resolved.

The due date for the final T1 return depends on when the death occurred.

If the deceased, or a spouse or common-law partner living with them, was operating a business on the date of death, the filing deadline moves to June 15 of the following year for deaths from January 1 to December 15, but payment is still due on the regular due date.

The estate's own return and your fees

Income earned after death, including from plans that stay in the estate, may mean the estate has its own T3 trust return. A T3 return must be filed no later than 90 days after the trust's tax year-end, and any balance owing is due within the same 90 days.

A trust must file if it has total income from all sources of more than $500, and it must also file, even at $500 or less, if it makes a capital distribution to beneficiaries. A graduated rate estate may have a non-calendar tax year, while other trusts generally must use a December 31 year-end. An estate can be a graduated rate estate for no more than 36 months after the death.

If you are paid for acting as executor, the tax treatment depends on who you are. Fees paid to someone who does not act as an executor in the course of a business are income from an office or employment, reported in box 14 of a T4 slip. Fees earned by a professional executor acting in the course of a business are business income, reported on a T4A slip. If the estate pays executor fees, it must file a T4 Summary and the related T4 slips.

Get a clearance certificate before you distribute

A clearance certificate confirms that the estate has paid all amounts of income tax. If you distribute assets without one and tax is owing, you are personally liable for the unpaid amounts, up to the value of the assets distributed.

The request is made on Form TX19, and only after the required returns are filed and assessed and taxes are paid or secured. Do not send it at the same time as the returns. The CRA acknowledges the request within 45 days, and the assessment can take up to 120 days. If the deceased had a GST/HST number, a separate Form GST352 is also needed.

Ontario's official guidance says the estate is distributed once assets have been liquidated and the funeral and burial expenses and any debts have been paid. Build the clearance certificate timeline into what you tell beneficiaries about when they can expect payment.

What to do next

• Confirm each plan's beneficiary status in writing with the issuer.
• Hire or consult an accountant early, since registered plan income can change the tax picture.
• Note the final return due date that applies to the date of death.
• File all required returns and pay any balance owing.
• Request a clearance certificate only after the returns are assessed.
• Hold back distributions until the certificate arrives, or get advice on the risk of distributing earlier.

If beneficiaries disagree about a plan, or the paperwork is unclear, speak to an estates lawyer before you move any money.

Frequently asked questions