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Deceased Tax Return

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  • Deceased Tax Return

    Afternoon everyone I was hoping I could get some advice from some bright people! Unfortunately, my dad passed away last September without a will. I have applied to the courts to become the executor of the estate and am waiting to hear. Hopefully, I hear back within the 4-6 month window that they provided me when I applied. But I digress, tax season is around the corner and I usually do Dad's taxes. However, this year will be a bit different from what I have read.

    A summary of Dad's assets:
    • Non Reg Chequing account = $150K (all cash)
    • RRIF = $8K (all cash)
    • Sources of income while he was with us = CPP / OAS / Defined Benefit pension
    From what I understand this is what I need to do - please correct me if I am wrong
    • File taxes as if he were alive from Jan 1 2020 to his date of death (Sept 2020)
      • This would account for:
        • All of the income from the DB plan
        • All of his medical expenses (he lived in Long Term Care and had medicinal expenses as well)
        • The closing of the RRIF - which would be considered a full withdrawal from the account and is fully taxable
          • I should note that TD has already closed this account and distributed the assets to my brother and I
        • The 8 months worth of CPP and OAS payments
        • Any charitable donations
    • File a return for Rights or Things
      • This would account for:
        • the September payment of CPP and OAS but NOT the September payment from the DB plan
    • CPP Death Benefit
      • Was made payable to myself
      • From what I understand I have two options:
        • Option 1 = claim the payment on my own return on the 'other income' line
          • This option allows me to avoid the T3 given that there is no other changes to the Fair Market Value of the account
        • Option 2 = Claim the CPP DB payment on the T3
          • This would require that I apply for a trust account number with CRA before I can file any paper work with them
    Some questions for you all:
    • Is my above outline correct?
    • Has anyone completed a Return for Rights and Things using TurboTax, which I generally use for 'normal year' tax purposes
      • I have asked the TurboTax folks and they gave me a politician answer (i.e an answer to a question that was not asked)
    • I have done a back of the envelope calculation on Dad's tax bill and once I factor in all of his medical expenses he is most certainly going to be getting a refund - (if only we could charge the government interest for borrowing our money for free)
      • Would this refund, which would flow into his chequing account be considered a change in the Fair Market Value, thereby forcing me to file the T3?
    • Assuming that there is no change in the Fair Market Value of the account and I take on the CPP Death Benefit taxes, can I file the Final Return and Return for Rights and Things at the same time?
      • Is there anything precluding me from filing for the clearance certificate as well or do I have to be officially named the executor before I can apply for that?
    As always - can't thank you enough for your time and help! Any and all help is much appreciated!

  • #2
    I strongly suggest you hire an accountant to look after the taxes. It’s worth the investment and could save you plenty.

    Comment


    • #3
      Sorry to hear about your father. My condolescences.

      When my sister passed away, I had an accountant handle the tax returns. Its a couple hundred bucks well spent and a lot less stress for the executor, as you often have many other things to worry about or coordinate. I wouldn't try to handle this on my own for the small fee involved. Not worth it in my opinion.
      Proud member of the Prune Juice Army.

      Comment


      • #4
        First, sorry for your loss .

        I Agree with above, I have always done own and family taxes but used an accountant when somebody passed....well worth the few hundred $.
        "Don't cry because it's over, Smile because it happened "

        Comment


        • #5
          Firstly, sorry for your loss.

          Secondly, I echo what others have said regarding getting professional help, especially because your Dad passed without a will.

          Get in touch with an accountant who has experience in dealing with estates, especially within the first year after death.

          My Dad passed in late 2015. He had a complete will, and all of the assets prepared and documented. Even so, my sister (as co-executor) and myself still had to navigate all of the details with an accountant and a lawyer. It all worked out, but the process can be agonizingly slow at times.

          One key point. In ALL of your communications with the CRA, record and document everything. Names, dates, times, emails, next steps, current status, deadlines, etc.. We found this out when the CRA credited the wrong account (i.e. they applied a tax instalment to my Dad's personal account rather than to his estate account). This resulted in penalties and interest, much confusion, investigation and paperwork, all because someone in Sudbury didn't pay attention to detail and screwed it up. In short, clarify what is going to happen and then eventually confirm that it was done correctly.
          Sage of the GTA...

          Comment


          • #6
            Sorry for your loss.
            Agree with all of the above.
            Get an accountant....don’t get bogged down personally with all the details.
            When my dad passed away the funeral home suggested using a company called Peacehold who handle a bunch of the documentation with government agencies. It was cost effective and dealt with a ton of stuff you don’t want to deal with during the death of a loved one. Money well spend in my opinion.

            Comment


            • #7
              I’m sorry to hear of your dad’s passing. Please accept my condolences. As for the questions that you posed, I have a few general observations:

              1. Since your father died without a will, you cannot be named the executor of the estate. In Ontario the estate representative of the person appointed by the court to act in the case of an intestacy is the estate trustee without a will. An executor, on the other hand, is the person named in a will to administer the testator’s estate.

              2. It is generally best to have a probate lawyer assist a survivor with any probate application. As for the various tax filings, a qualified accountant can prove invaluable.

              This is not intended, nor should it be regarded or relied upon, as legal advice. If you require legal advice, retain a lawyer. Since I am not authorized to practice law, that lawyer could not be me.
              This isn't a dress rehearsal. Enjoy yourself. There's no do-over.

              Comment


              • #8
                Originally posted by Benz View Post
                One key point. In ALL of your communications with the CRA, record and document everything. Names, dates, times, emails, next steps, current status, deadlines, etc.. We found this out when the CRA credited the wrong account (i.e. they applied a tax instalment to my Dad's personal account rather than to his estate account). This resulted in penalties and interest, much confusion, investigation and paperwork, all because someone in Sudbury didn't pay attention to detail and screwed it up. In short, clarify what is going to happen and then eventually confirm that it was done correctly.
                Good advice.

                Comment


                • #9
                  Originally posted by mpare View Post
                  I’m sorry to hear of your dad’s passing. Please accept my condolences. As for the questions that you posed, I have a few general observations:

                  1. Since your father died without a will, you cannot be named the executor of the estate. In Ontario the estate representative of the person appointed by the court to act in the case of an intestacy is the estate trustee without a will. An executor, on the other hand, is the person named in a will to administer the testator’s estate.

                  2. It is generally best to have a probate lawyer assist a survivor with any probate application. As for the various tax filings, a qualified accountant can prove invaluable.

                  This is not intended, nor should it be regarded or relied upon, as legal advice. If you require legal advice, retain a lawyer. Since I am not authorized to practice law, that lawyer could not be me.
                  I had a similar situation. My ex wife passed away without a will, leaving a heck of a mess to sort out. My kids asked that I be appointed estate trustee. The scenario is simple in theory. A person without a spouse dies, all goes to surviving children, which is what she would have wanted anyway. You have no idea how much of a hassle this process is. It took 18 months to finalize the estate. I recommend you get an estate lawyer and they likely have an accountant they know and work closely with the specializes in estates. Hire them both. It will save an immense amount of stress in the long run and all such costs are charged to the estate. As I gather the OP and brother are the main beneficiaries, you will effectively share the cost. But, it's worth it. Dying without a valid will is a legal quagmire.

                  My condolences to you as well.

                  Comment


                  • #10
                    You can’t imagine how much time our firm lawyers spent recommending to our clients that the make a will. We knew only too well the easily avoidable problems (if they had a will) which would arise in the case of intestacy. And yet many didn’t want one. The reasons were many, cost not being one of them. The most common reason, rarely articulated but easily discernible, was the fear that if they made a will, they’d soon die!

                    Originally posted by 68shark View Post

                    I had a similar situation. My ex wife passed away without a will, leaving a heck of a mess to sort out. My kids asked that I be appointed estate trustee. The scenario is simple in theory. A person without a spouse dies, all goes to surviving children, which is what she would have wanted anyway. You have no idea how much of a hassle this process is. It took 18 months to finalize the estate. I recommend you get an estate lawyer and they likely have an accountant they know and work closely with the specializes in estates. Hire them both. It will save an immense amount of stress in the long run and all such costs are charged to the estate. As I gather the OP and brother are the main beneficiaries, you will effectively share the cost. But, it's worth it. Dying without a valid will is a legal quagmire.

                    My condolences to you as well.
                    This isn't a dress rehearsal. Enjoy yourself. There's no do-over.

                    Comment

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