Who Pays Property Taxes and Utilities on an Estate Home in Ontario

A house does not stop costing money when its owner dies. Property taxes, utilities, heat and basic upkeep keep arriving while the estate is being sorted out. If you are the estate trustee, you may wonder who pays and whether the bills could end up on you personally.

This article gives a general picture for Ontario. Rules and practices for property tax and utility accounts vary by municipality and by provider, so it points you to the questions to ask rather than promising a fixed rule.

Who is in charge of the home

A deceased person's property, including the home and its contents, vests in the personal representative, who holds it as trustee. Only an estate trustee has legal authority to manage or distribute an estate, which includes selling the home or clearing it out.

Beneficiaries often want to help, and some live in the house. Even so, decisions about the home generally go through the trustee, so it helps to keep family informed while making clear who is responsible.

Where the money for carrying costs comes from

Which part of the estate covers the day-to-day costs of looking after the home depends on the will and on what the estate holds, so it is worth confirming with a lawyer. Separately, the deceased's own debts are paid from the residuary estate rateably according to value, subject to a contrary intention in the will and to s. 32 of the Succession Law Reform Act. Whether a particular bill that arrives after the death, such as property tax or a utility bill, is treated that way depends on the facts, so it is also worth confirming.

If the home is mortgaged, the land itself is primarily liable for the mortgage debt as between the people claiming through the deceased. The beneficiary who receives the home takes it subject to the mortgage unless the will or another document shows a contrary intention. A general direction in the will to pay debts out of the estate is not enough by itself to shift the mortgage off the home; the intention must be signified expressly or by necessary implication.

If the estate has little cash, a trustee sometimes needs to plan around that, for example by discussing a sale with the beneficiaries. Where a sale is made only for the purpose of distribution, it is not valid without the required concurrence, which generally means a majority of the beneficiaries holding at least half the interests. Where a minor has an interest, no sale or conveyance under the Act is valid without the written approval of the Children's Lawyer or, failing that, a judge's order.

Property tax and utility accounts

Municipalities and utility companies each have their own procedures for accounts of a person who has died, including how bills are re-addressed and what they require from the trustee. Because those practices differ, contact each one directly, tell them who is handling the estate, and ask what proof they need.

• Ask the municipality how the tax account will be billed during administration and whether any amounts are outstanding.
• Keep heat on and water protected, with the utility's help, so the house is not damaged.
• Keep every bill and receipt in one place.
• Write down who paid what, and when.

If a beneficiary lives in the home during the administration, whether they should pay rent or cover some costs is not fixed by a simple rule. It turns on the will, the trustee's general duty to act fairly toward all beneficiaries, and the circumstances. Raise it early and write down what is agreed.

When a trustee can be personally liable

The most serious exposure for a trustee often comes from distributing too soon. A CRA clearance certificate, requested on Form TX19, confirms that the estate's income tax, GST/HST, interest and penalties owing up to the date it is issued have been paid or secured. Form GST352 is also needed if the deceased had a GST/HST number. A legal representative who distributes assets, such as house sale proceeds, without first getting a clearance certificate can be personally liable for unpaid tax, up to the value of the assets distributed.

For other creditors, a personal representative who advertises for creditors' claims and then distributes is not liable to a creditor whose claim they had no notice of at the time of distribution.

A court may relieve a trustee from personal liability for a breach of trust if the trustee acted honestly and reasonably and ought fairly to be excused. That is a discretion, not a certainty, so careful records are your best protection.

A trustee is also entitled to a fair and reasonable allowance for their care, pains and trouble, as allowed by a judge of the Superior Court of Justice.

What to do next

• Confirm you hold the authority to act for the estate before signing anything for the house.
• Contact the municipality and each utility to set up the accounts for the estate.
• Make sure the house is insured and secured.
• Track every expense and every payment from the estate.
• Before distributing sale proceeds, get a CRA clearance certificate, since distributing without one can make you personally liable for unpaid tax up to the value distributed. How to deal with other creditors before distributing depends on your situation, so it is worth confirming with a lawyer.
• Speak with a lawyer or accountant if the estate cannot cover the carrying costs.

Frequently asked questions