Are You Responsible for a Deceased Parent's Debts in Ontario?

A creditor has phoned or written to you about your late parent's account. It is natural to wonder whether the debt is now yours, and some callers are not clear about the answer.

This article explains how Ontario generally handles a deceased person's debts and what to check before paying anything. Whether you are personally liable can depend on documents you signed, so it is worth confirming with a lawyer.

Debts are generally dealt with through the estate

When someone dies, their debts are generally a matter for their estate, meaning what they left behind. The person in charge is the estate trustee named in the will, or an administrator if there was no will. Being a child of the person who died does not by itself make you the person who pays.

If the estate has enough, debts are paid from it first. If it does not have enough, debts are paid proportionately, with none ranked ahead of another, and debts owed to the Crown and to the personal representative rank alongside the rest. Whether a debt is yours personally depends on things like whether you co-signed, guaranteed it or held the account jointly. Check any document with your name on it.

When you may be dealing with the debts as trustee

If you are the estate trustee or administrator, you are handling the debts on behalf of the estate. With no will, the spouse or common-law partner usually has the first right to apply, and if there is none a close adult relative such as a child, parent, grandchild, sibling or nephew or niece can apply.

If you give the required notices to creditors, you may distribute the estate and are not liable to a creditor whose claim you had no notice of at the time of distribution. Paying creditors out of your own pocket is not required just because you hold the role.

Beneficiaries and gifts from the estate

If you receive something from the estate, a creditor keeps the right to follow estate assets into the hands of the people who received them. Hold off spending an early distribution until the debts are understood.

Some things pass outside the estate, such as property held jointly with survivorship or assets with a named beneficiary. A person may name a beneficiary of a plan such as an RRSP, RRIF or pension. For a dependant's support claim, joint accounts, property held in joint tenancy, life insurance owned by the deceased and amounts payable under a beneficiary designation are treated as part of the estate. Whether a creditor can reach a particular joint or designated asset depends on your situation, so it is worth confirming with a lawyer.

Tax debts and personal liability

Taxes are a common debt. The final return is due April 30 of the following year for a death between January 1 and October 31, or six months after the death for a death between November 1 and December 31.

If the deceased or their cohabiting spouse or common-law partner was carrying on a business, the final return is due June 15 of the following year, or six months after the death if the death was between December 16 and 31. Any balance owing is still due by the regular date.

A legal 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 what was distributed.

What to do next

• Do not agree to pay, and do not acknowledge a debt as yours, on a first phone call.
• Ask the creditor to put the claim in writing, with the account name and balance.
• Check whether you co-signed, guaranteed or jointly held any account.
• Find out who is the estate trustee or whether an application has been made.
• Keep a log of every call and letter.
• Get legal advice before paying a debt from your own money or distributing estate assets.

Frequently asked questions