Sample Estate Accounts for an Ontario Executor: A Walkthrough

Many executors have never seen finished estate accounts, so they do not know what they are aiming for. This walkthrough shows the usual order of a set of accounts and the kinds of entries that appear in each part.

The example below is a simplified, made-up estate of $240,000 at death, the same figure Ontario uses to illustrate its tax. Where an amount would come from a bank statement or invoice, the table says so rather than inventing a figure. Real accounts are filled in with your actual numbers, and a lawyer or accountant can confirm the layout.

Step 1: Open with the estate's value at death

Accounts start with a schedule of what the deceased owned on the date of death. In our example, the total is $240,000, made up of a bank account, an investment account and a vehicle. Estate value for tax purposes includes assets such as Ontario real estate (less encumbrances), bank and investment accounts, vehicles and business interests, and excludes items like beneficiary-designated RRSPs, RRIFs and TFSAs and out-of-province real estate.

Under the Estates Act, a sworn statement of the value of the property is required before a grant, and later-discovered property must be reported in a sworn statement within six months. Your opening schedule should match those statements.

Step 2: Record what came in

Next, list receipts. Each line should show the date, the source and the amount.

Step 3: Record what went out

Disbursements are listed in date order, with a short description and a reference to the receipt or invoice. Typical entries in a simple estate include the following.

• Estate administration tax of $2,850 on the $240,000 estate, paid when the application is filed, because it is $15 per $1,000 (or part) of value over $50,000.
• Funeral and burial costs. These are real expenses of the estate, but they cannot be deducted when working out value for the Estate Information Return.
• Debts and final bills, such as credit cards and loans, which also cannot be deducted from value for the return.
• Legal and accounting fees.
• Final income tax return balance and any estate T3 tax.
• Executor compensation, if claimed.

Notice the difference between what reduces the value for tax and what is simply paid out of the estate. Funeral costs, legal fees, loans and credit card debts are paid by the estate, but they are not deducted from the value used for the return.

Step 4: Taxes that belong in the accounts

The deceased's final return is due April 30 of the following year if death was between January 1 and October 31, or six months after death if it was November 1 to December 31, and any balance is due the same day. If the deceased or a spouse or common-law partner ran a business, the filing date is June 15 for deaths from January 1 to December 15, though payment dates do not change.

If the estate earns income, a T3 return is due 90 days after the trust's tax year-end, and a graduated rate estate can keep that status for up to 36 months after death. The Estate Information Return is due within 180 calendar days of the certificate being issued, even if the value is $0. Failing to file it, or making false or misleading statements, can lead to a fine of at least $1,000 and up to twice the tax payable, up to two years in prison, or both.

Step 5: Show the balance and what to do next

The accounts close with a statement of what is left: total receipts, minus total disbursements, equals the balance available for the beneficiaries. Then show the proposed distribution to each person.

Before you distribute, a legal representative must obtain a clearance certificate and is personally liable for unpaid amounts, up to the value distributed, if they distribute without it. CRA says to request it after filing the returns, receiving the notices of assessment and paying or securing all amounts owing, and that CRA acknowledges within 45 days while the assessment can take up to 120 days.

• Build the opening schedule from your date-of-death values.
• List every receipt with date, source and amount.
• List every payment with an invoice or receipt attached.
• File the Estate Information Return on time and keep the records behind the estate's value for four years.
• Request the clearance certificate before distributing.
• Have a lawyer or accountant review the accounts before beneficiaries sign off.

Frequently asked questions