What Happens to a Dead Person's Bank Account in Ontario?

When someone close to you dies, one of the first practical questions is what happens to their money. You may be wondering whether the account is frozen, who can touch it, and what the bank will want before it lets anyone act.

This article explains the Ontario rules on who has authority over a deceased person's accounts, when a court certificate is usually needed, and what happens after the estate trustee gets that authority. Bank practice varies from one institution to another, so use this as a map and not a script.

Who has authority over the account after a death

When a person dies in Ontario, their property passes to their personal representative, who is usually called the estate trustee. The estate trustee holds it as trustee for the people legally entitled to it, after the deceased's debts are paid.

Ontario's probate guidance says the estate trustee is the only person with legal authority to manage or distribute an estate. Relatives who are not the estate trustee have no authority to withdraw money from the deceased's sole accounts.

This means a relative who is not the estate trustee should not expect to use the deceased's sole accounts. The details of how and when a bank restricts an account differ by institution, so ask the bank directly what it needs.

When probate is needed and when it is not

A Certificate of Appointment gives the estate trustee authority to manage the estate's assets and pay its debts. Probate is usually needed if the deceased owned real property or had assets held by a financial institution, although whether it is needed depends on the type of asset.

There is a simpler route for smaller estates. If the estate is valued at $150,000 or less, the estate trustee can apply to the Superior Court of Justice for a Small Estate Certificate. That certificate gives authority to manage only the assets listed in it.

What a particular bank will accept for a particular account is a question for that bank. It is worth asking early, so you know which certificate, if any, the estate will need.

What happens once the estate trustee has authority

A Certificate of Appointment gives the estate trustee authority to manage the estate's assets and pay its debts. A Small Estate Certificate gives authority over only the assets listed in it, so whether it reaches a particular account depends on what the certificate lists. The money is not simply shared out right away. Debts and funeral and testamentary expenses are generally paid first, out of the residuary estate, unless the will says otherwise.

There are also tax and filing steps for the estate. Some are triggered by receiving an estate certificate, while others, such as the deceased's tax returns, have their own timing, so it is worth confirming deadlines with a lawyer or accountant.

• Within 180 calendar days of receiving an estate certificate, the estate trustee must file an Estate Information Return with the Ministry of Finance, even if the estate's calculated value is $0.
• No Estate Administration Tax is payable if the estate is worth $50,000 or less. For certificates applied for on or after January 1, 2020, the tax is $15 for every $1,000 (or part thereof) of the estate's value above that amount.
• The deceased's legal representative must file a final T1 Income Tax and Benefit Return, and a T3 return may also need to be filed for the estate.

Timing rules that can delay paying out the money

Even when the estate trustee has access, there are limits on when money can be handed to beneficiaries. They depend on the family situation.

A personal representative who distributes in breach of the dependant support rule is personally liable to pay the amount distributed. That is one reason trustees are cautious about paying out too early.

Joint accounts need special care. For dependant support claims only, money payable on death to survivors under the terms of a deposit, property held in joint tenancy, and life insurance the deceased owned on their own life are treated as part of the net estate. How a joint account passes in other situations depends on how it was set up, so it is worth getting advice.

What to do next

• Find out whether there is a will and who is named as estate trustee.
• List the accounts, noting which are in the deceased's name alone and which are joint.
• Do not withdraw money from a sole account unless you are the estate trustee with authority.
• Ask each bank what documents it requires from the estate trustee, since practice varies.
• Keep funeral receipts and other estate-related records.
• Speak with a lawyer if the estate is large, there is a dispute, or you are unsure whether probate is needed.

Frequently asked questions