What Happens After Probate Is Granted in Ontario

Receiving the Certificate of Appointment of Estate Trustee is a milestone, but it is the start of the real work. The certificate gives you authority to act. It does not finish the job.

This article sets out the usual order of what comes next, with the deadlines that catch people out. Speak to a lawyer or accountant when the estate has a business, foreign assets or a dispute.

What your role is now

Estate trustees wind up the deceased's affairs, pay taxes, bills and other debts, collect the estate assets, and distribute the residue to those entitled to it.

In practice, you will show the certificate to banks, investment firms and other institutions that hold the deceased's assets. For land, land registry staff accept a certificate of appointment of estate trustee as proof of an estate trustee's authority to deal with a deceased owner's land. Keep a running record of every dollar in and out.

File the Estate Information Return

You must file an Estate Information Return with the Ministry of Finance within 180 calendar days after the certificate is issued. It lists each asset and its value on the date of death, and it must be filed even if the estate value is $0.

If you find new assets, or learn that the return was incorrect or incomplete, you must file an amended return within 60 days of becoming aware of it, and any extra tax is then payable. Keep records for four years.

Failing to file, or making false or misleading statements, can lead to a fine of at least $1,000 and up to twice the tax payable, and possibly up to two years' imprisonment, or both.

Deal with income tax

The final T1 return is due April 30 of the following year if death occurred between January 1 and October 31. If death occurred between November 1 and December 31, it is due 6 months after the death.

If the deceased, or a spouse or common-law partner living with them, was operating a business at death, the return is due June 15 of the following year for deaths from January 1 to December 15. For deaths from December 16 to 31 it is due 6 months after death. The extension does not apply to tax shelter businesses.

A deceased person is considered to have sold all their capital property just before death, which can create a capital gain on the final return. Capital property left to a surviving spouse or common-law partner (or spousal trust) who lived in Canada can roll over tax-deferred. It must generally vest in the spouse within 36 months of death, and the legal representative can elect not to use the rollover.

Get the clearance certificate before you distribute

The legal representative should get a CRA clearance certificate before distributing the estate. It certifies that all amounts owed to the CRA have been paid. A representative who distributes first is personally liable for any tax debt, up to the value of the assets distributed.

Beneficiaries often ask for money quickly. Because a representative who distributes first is personally liable for any tax debt, up to the value of the assets distributed, it is worth explaining to them why you are waiting for the clearance certificate.

Pay debts, take compensation and distribute

Pay the estate's debts and taxes before the residue goes out. Then distribute the residue to those entitled to it. If there is a will, that generally means the people it names. If there is no will, the rules for an estate without a will decide who is entitled, and a common-law spouse does not inherit in that situation. Whichever applies, keep signed receipts.

An estate trustee is entitled to a fair and reasonable allowance for their care, pains and trouble and the time spent, as a judge of the Superior Court of Justice allows. The allowance can be fixed when the accounts are passed. This does not apply where the will itself fixes the allowance.

Fees earned for administering an estate are generally treated by the CRA as income from an office, reported in box 14 of a T4 slip, when the executor does not act in that role in the regular course of business. A professional executor such as a trust company is treated differently.

What to do next

• Diarize the 180-day deadline for the Estate Information Return
• List the final return due date and any business-income extension
• Send the certificate to each institution and keep copies
• Keep a ledger of receipts, payments and communications with beneficiaries
• Apply for the CRA clearance certificate before you distribute
• Get legal advice if a beneficiary objects or your compensation is questioned

Frequently asked questions