Must Old Age Security and CPP Overpayments Be Repaid After a Death in Ontario?

A parent or spouse has died, and then you notice that a pension payment has landed in their bank account anyway. It is natural to wonder whether the money can stay, especially when the estate has bills to pay.

This article explains what the federal rules say about notifying Service Canada, which payments belong to the estate, which must be returned, and what the estate trustee is expected to do. It is general information, and the details of a particular situation are worth confirming with a lawyer or accountant.

Tell Service Canada as soon as possible

Service Canada asks to be told of the date of death of a CPP or OAS beneficiary as soon as possible. Reporting promptly helps stop payments before more are issued, which means less to untangle later.

If someone was acting for the person under an authorization, that authority does not carry on. An authorized representative's authority to deal with Service Canada ends at death, and the executor, as the legal representative, takes over. If there is no will or named executor, Canada.ca refers to CRA guidance and provincial rules. Who has authority in that situation is worth confirming with a lawyer.

Which payments the estate keeps and which must go back

Benefits are payable for the month in which the death occurs, and the estate is entitled to the OAS and CPP payments for the month of death. Payments issued after the month of death must be returned.

Notice that the test is the month of death, not the exact day. A death late in a month does not by itself mean later payments are owed to the estate.

Do not spend the money, and do not ignore it

If payments have already been redeemed, meaning spent or withdrawn, they must be repaid. This is why it helps to leave later deposits alone. Money that appears after death is not a windfall for the estate or for family members, and spending it only turns a simple return into a repayment.

If the money was in a joint account, or the bank has frozen the account, how the return happens in practice can vary. Ask the bank how it handles reversals, and keep a record of what you told Service Canada and when.

Other benefits that also stop

The cancellation process covers more than the basic pension. Service Canada's cancellation guidance lists CPP survivor benefits and the Allowance for the Survivor among the benefits that must be cancelled on a death. If the person also received QPP, Retraite Québec must be contacted too.

A CPP death benefit and a survivor pension are different things from the deceased's own retirement payments. The CPP death benefit is among the assets that generally pass outside the estate for estate administration tax purposes. Whether the surviving spouse or others qualify for survivor benefits is a separate question to raise with Service Canada.

The estate trustee's role and what to do next

The executor settles unpaid debts and overpayments, including taxes owed to the CRA, before distributing the remaining assets to the beneficiaries under the will. A repayment owed to Service Canada is the kind of overpayment that should be dealt with before anything is handed out.

• Call Service Canada and report the date of death, or confirm that it has been reported.
• Do not spend or transfer CPP or OAS deposits made after the month of death.
• Ask the bank to return post-death direct deposits to the originator.
• Return any cheques received after the month of death with the estate's name and address, or the name and address of the person handling the affairs.
• Repay any post-death payments that were already spent.
• Check whether QPP or survivor-type benefits are involved.
• Keep copies of everything, and get advice before distributing estate assets if you are unsure about amounts owing.

Frequently asked questions