When Can an Executor Distribute an Estate in Ontario?

Being named executor often brings a quiet pressure: beneficiaries want to know when they will be paid. Paying before you have the CRA clearance certificate can leave you personally responsible for unpaid tax.

This guide walks through the usual order of steps in Ontario when an estate is distributed under a will. It explains what must happen before you distribute, what protects you, and what to do with a child's share. How this applies when there is no will depends on your situation, so it is worth confirming with a lawyer, and a lawyer or accountant can also confirm the details of your own facts.

Debts and expenses come first

Ontario guidance says that under a will, the estate is distributed once the assets have been liquidated and the funeral and burial expenses and any debts have been paid. In practice, that means you need a clear picture of what the estate owns and what it owes before anyone receives a share.

Estate trustees must keep accurate records of the estate's assets and transactions. Good records help you decide when you are ready to distribute, and they matter if you are later asked to account for what you did.

Notifying creditors and what it protects

After you give the required notice for creditors to send in their claims, and once that period has expired, you may distribute the estate having regard only to the claims you then have notice of. You are not liable for claims you had no notice of at the time of the distribution.

That protection has a limit. A creditor or claimant keeps the right to follow the estate's assets into the hands of the people who received them, even after a protected distribution. So a beneficiary who is paid may still face a claim later. It is worth telling beneficiaries this when they ask for early payments.

The CRA clearance certificate

Before distributing any property, the legal representative of a deceased taxpayer must obtain a certificate from the Minister. It confirms that all tax amounts have been paid or that security for them has been accepted.

If you distribute without the certificate, you are personally liable for the unpaid tax amounts, up to the value of the property distributed, and the Minister may assess you at any time. This applies to any distribution, including interim ones. No official fixed percentage exists for how much to hold back, so the size of a holdback depends on the facts.

Shares for children and relief if something goes wrong

A child's share is handled differently. A child entitled to $35,000 or more must generally have the money paid into court, unless a will or beneficiary designation names a trustee of the child's money or a judge has appointed a guardian of property. Money is paid to the Accountant of the Superior Court of Justice, and for a child's estate money the executor, administrator or trustee files an affidavit.

If the child will receive less than $35,000, it can be paid to the parent the child lives with or to the person with lawful custody, who holds it until the child turns 18 or reaches the age stated in the will.

If you make a mistake, the court may relieve a trustee, wholly or partly, from personal liability for a breach of trust if you acted honestly and reasonably and ought fairly to be excused. Similar relief is possible for a personal representative who overpays a creditor, if they acted honestly and reasonably to protect or conserve the estate's assets. Relief is not automatic, so do not plan around it.

What to do next

• List all assets and debts, and keep records of every payment in and out.
• Pay the funeral and burial expenses and the debts.
• Give the required notice to creditors and wait for the claim period to end.
• File the returns, pay the tax, and request the clearance certificate on Form TX19.
• Check whether the estate has a GST/HST number and needs Form GST352.
• Decide how any holdback will be handled before an interim payment, and put the plan in writing.
• Treat any child's share separately, using the $35,000 rules.
• Talk to a lawyer or accountant before you distribute if anything is unclear.

Frequently asked questions