Category: Estate Planning

Death, Taxes and Estates: Part 3

RobH1 Comment

I am not a lawyer, accountant or tax expert. Your situation may be a lot different than mine. Seek professional guidance if needed.

Part 1 of this blog is found here, and Part 2 is here.

I’m in the tax season stage of wrapping up my Mom’s estate, who died a little over a year ago, a year and a bit after my father died.

Current status

I decided to hire a pro to do the Final Return and the Estate Return since I couldn’t figure out the fine details1 of doing an Estate Return. The Final Return (that’s the easy one, it’s just a regular tax return, except you have to inexplicably file it on paper) would have been within my skill set, but the Estate Return (the one that you have to file to deal with any income generated by the estate after death) was new and confusing to me.

I knew I was going to have to pay taxes on both returns, and using the tax calculators referenced here, I had a pretty good idea of what tax was going to be owed. In essence,

  • The Final Return takes the full value of the RRIF on the day of death as income. This will mean a lot of tax if the RRIF is sizable.
  • The Final Return also assumes any non-registered assets are liquidated on the day of death, which in the case of equity holdings, typically attracts capital gains and the associated taxes2.
  • The Estate Return is going to have to pay tax on any dividends, interest, or capital gains realized by the assets in the estate. Here the tax rate is high, because an Estate is treated as a Trust, and trusts don’t get personal deductions, meaning you get taxed on the first dollar of gains you manage.

A few wrinkles

Submitting the necessary paperwork to the accountant was the usual tedium of getting scans of T-slips, charitable donations and the like to the accountant. I did encounter a few problems.

BMO Investorline Problem 1: Sending T-slips to invalid addresses

My Mom’s assets were all held with BMO Investorline. Imagine my surprise when her retirement home let me know that snail mail from BMO (not BMO Investorline) had arrived at the home. I changed the address of all communications with BMOI to me nearly a year ago at that point, so you can imagine I was less than happy about having to drive across town to pick up what turned out to be a T-slip for the HISA I bought in her self-directed account. At that point, I was a few steps away from livid.

After spending some time with hapless agents who could not tell me why the mail ended up at an invalid address, I penned a note to the formal complaint department of BMO. I just figured that if there was some systemic issue at play here, that at least I could help those who followed me.

The complaints department ultimately admitted it was a screwup on their part and offered their apology. Whether or not it will happen to someone in my shoes in the future is unknown to me, but beware.

BMO Investorline Problem 2: Not providing an RC249 slip

The RC249 is a CRA slip that covers the losses incurred by a RRIF post-death.

It makes some sense: as mentioned above, the owner of the RRIF is assumed to get income equal the the value of the RRIF on day of death. But the RRIF assets aren’t automatically liquidated; they remain invested in whatever they were invested in. If that includes stocks/ETFs and the like, then it’s possible for the value of the RRIF to actually decline post-death. And that is what happened in my case. This loss becomes a tax benefit to the estate return, but only if you have an RC249 to prove it.

Now, the RC249 is clearly intended to be filled out by the issuer/carrier of the RRIF, in my case BMOI. And so, you would expect that to be automatically provided, wouldn’t you? Wrong again.

Another set of back and forth, first with the standard BMOI agents, and then the BMOI estate department, eventually produced a valid RC249 that I could send to the accountant.

Paying taxes owed

As much as I disliked the entire process of working with BMOI’s estate department, the one thing I did like about BMOI was that their non-registered accounts can be linked with a bank account (AccountLink) against which cheques can be written3. (This is something I set up months ago to help distribute some assets early to the beneficiaries). So once the accountants informed me of the eye-watering tax bill (which was pretty much aligned with what I expected), I was able to write the cheques and drop them off with little fuss. Thinking about how you will do that is something to consider in dissolving the estate.

Final Return Notice of Assessment

This was received in pretty short order, a few weeks after it was submitted, and the tax bill was correct.

Next steps

I await the Notice of Assessment for the Estate Account, at which point my accountant will be able to apply for a clearance certificate from CRA. This certificate essentially tells me that CRA considers all business with my mom and her estate closed. Once I have this, I can fully distribute all funds from the estate without having the CRA come after me for monies owed. This takes “up to 120 days” per the website.

  1. More accurately: I couldn’t bear spending hours reading arcane text on various CRA websites hoping I didn’t make a mistake ↩︎
  2. Note that unless directed, the liquidation doesn’t ACTUALLY take place. In my case, I moved all assets to HISA accounts once I gained control of the assets via probate, (a delay of a few months) and then liquidated the assets at the end of 2024. This I did to avoid earning any income from the estate holdings in 2025, which would have delayed the estate return. ↩︎
  3. No matter how hard I tried, I could not convince anyone at BMOI/BMO to send me a debit card for the account, which would have allowed me to “Bill Pay” CRA instead of writing cheques. ↩︎

Death, Taxes and Estates: Part 2

RobH5 Comments

I am not a lawyer, accountant or tax expert. Your situation may be a lot different than mine. Seek professional guidance if needed.

Part 1 of this blog is found here.

I’m still wrapping up the estate of my late mother, who died a little over a year ago, a year and a bit after my father died.

My situation

All my mom’s worldly assets were held with BMO Investorline: RRIF, TFSA and a non-registered account. This was a self-directed account; the relationship with BMO (as I came to learn) was pretty informal. Me and my siblings were named as beneficiaries of the estate, and my Mom had taken steps to name us as beneficiaries for the RRIF and TFSA. More details about how that works were covered in a previous post.

First weeks

I had ready access to estate cash because I was named as a joint account holder on my Mom’s chequing account1. This is a very useful thing to have in place, since it can cover expenses incurred after death: funeral costs, moving expenses are two that come to mind. I treated this account as part of the estate, but it allowed me to spend the estate’s money instead of my own for these things.

DIY Estate Handling

Informing BMO Investorline2 of my mother’s death was required, and that took a single call to the general help desk. After about a week I had an initial meeting with their estate department.

Once I provided proof of death, all accounts were frozen and I could no longer even see what was in them. BMOI correctly noted that we were the beneficiaries of the TFSA and RRIF and we started the paper-intensive3work of liquidating and distributing the assets held in those accounts. I checked my notes — it took about 2 months for that step to be fully completed.

What was unexpected was that BMOI gave us ALL the money in the RRIF, with no taxes withheld. From a tax perspective, a RRIF is treated as income in the hands of the deceased on the day they die. For most people, that means a substantial tax bill for that tax year. So as an executor4, I had to be VERY sure that my Mom’s non-registered account could cover the tax bill that would eventually come. Using a tax calculator helped a lot.

The non-registered account, where the bulk of the assets lay, would require a probated will, as I expected. This account remained locked and frozen.

Probate and probate fees

In the very simplest terms, probate means getting a court to certify a will as accurate. And when you think about it, it makes sense that financial services companies want to be VERY sure that the executor (aka estate trustee) is in fact the correct person.

After doing a bit of reading (mostly this source) I decided I could tackle it on my own. This was made significantly easier by the fact that I lived in the same city as my mother, and I had access to a courthouse were I could take my completed forms.

When filing your probate papers, you also have to pay probate fees (aka Estate Administration Tax), which means you have to know the total value of the estate on the day of death. BMOI was able to provide me statements up to that day so I had a to-the-penny accurate assessment of the value held there. BMOI was also able to write a cheque to the Ontario Minister of Finance for these fees using funds available5 in the non-registered account. This meant I wouldn’t have to front the money myself.

Probate fees, in my Mom’s case, were not particularly large (not compared to the estimated tax bill), and since RRIF and TFSA were not part of the estate, they were also lower than they could have been.

After filing, the wait for the court-certified document began. I had very low expectations (I had conservatively estimated a 6 month delay here), but I actually had the probated will arrive in the mail a month later, which was about 4 months after my mother’s death.

Using the Probated Will

With a probated will in hand, I could now unlock the non-registered funds in my Mom’s estate. This required me to open an estate account with BMOI and then transfer the non-registered funds to it. After all that paperwork, I once again had full access to the assets that were formerly held in my Mom’s non-registered account — I could log in to the portal, see the holdings, and most importantly, perform transactions myself at the usual self-directed transaction fees.

I sold all the assets (mostly ETFs, naturally) and partially distributed them to the beneficiaries. Distributing the assets was admittedly (again) more challenging than I thought. Since I was quite familiar with how BMOI worked, I requested AccountLink cheques for the estate account, figuring this would be the easiest way to distribute the funds6. This resulted in a bit of a runaround, but eventually I got a box of cheques sent to me. I held some money back7 so I could pay the 2025 tax bill; this money I invested in a HISA.

Preparing for Tax Season

In late 2024, I removed the remainder of the estate from the HISA account. This was done so as to not have any income generated by the estate in 2025. This simplifies the tax filing considerably.

After doing a bunch of reading, I gave up on the idea of attempting to do the taxes myself. I knew there would have to be both a Final Return (for my Mom) and an Estate Return (aka a T3 return) but I wasn’t really sure about all the steps, and of course CRA’s website isn’t really designed for the layperson to figure this stuff out easily. There was also the matter of filing a CRA clearance certificate. I hired a pro to figure all this stuff out. As it turns out, my Mom’s estate qualified as a GRE Trust, which is, as I understand it, pretty typical. That would appear to offer some potential tax benefits, but I’ll have to wait and see and this point.

  1. It didn’t hold a significant amount of money. Larger sums could conceivably attract the attention of CRA as a bare trust. ↩︎
  2. Hereafter referred to as “BMOI”. Laziness. ↩︎
  3. Actually, mostly filling out PDFs and sending them back over secure messaging ↩︎
  4. If the estate can’t pay the taxes, then the executor is legally obligated to pay ↩︎
  5. Like all matters estate-related, this took a lot of effort. Having sufficient funds when my mother was alive was a very simple process: log on to the portal, sell some shares, wait a few days, get the money. In an estate scenario you have to write a letter of direction to indicate what, exactly, to sell. Then you wait a week or two. Then you get angry at the fact that they charged you $40/trade. Then you write another letter of direction to indicate who to write the cheque to. Then you wait a week for the cheque to arrive. ↩︎
  6. I’m not really sure how the mechanics would work with a broker that doesn’t have bank services. EFT I guess? ↩︎
  7. Probably more than I needed to hold back, but I wasn’t taking chances. ↩︎

Death, Taxes and Estates: Part 1

RobH4 Comments

I am not a lawyer, accountant or tax expert. Your situation may be a lot different than mine. Seek professional guidance if needed.

What happens to our investments when we die? Having lost both my parents in the past 2 years, I’ve (regrettably) had a lot of exposure to the ins of outs of estates and how they work.

Being Ready for the Inevitable

Fact: we’re all going to die. Pretending this isn’t true isn’t helpful to your survivors. So there are some concrete things you should have in place before that happens.

  • Have a will. Whether DIY, software-assisted1, or prepared by a suit, just get it done — here’s a nice step-by-step guide. And if you do have one, is it up to date? Take a look.
  • Have the will name exactly one executor, with alternate executors in the event your first pick isn’t available . Hearing multiple stories from multiple sources about how much extra work and delay having joint executors causes, I cannot recommend this all-too-common approach. You’re not “playing favourites” by naming one person2.
  • Make sure your executor knows how to get a hold of the will. Be very specific, and repeat this information frequently so it’s top-of-mind.
  • Make sure your RRIFs/RRSPs/TFSAs name successors and/or beneficiaries. I covered that topic in more detail here.
  • Make sure any life insurance policies name a beneficiary
  • Make sure your workplace pension3 names a survivor4.
  • Prepare a death binder5 with all assets clearly specified — provider name, account numbers, name on the account. Is the list really long? Maybe it’s time to trim that list down. Every provider on that list will create work for your executor. So if you want to be kind, keep the list of providers small. Make sure your executor knows where to find it.
  • Have a month or two of expenses in cash that is accessible by those who survive you, like in a joint chequing account. Assets held solely in your name will be frozen when you’re dead, possibly for weeks or months.
  • Set up someone (your executor, for example) as your authorized representative with CRA. This makes dealing with taxes much easier for those that you leave behind. How? Read here.

My Situation

My parents held no real estate, and all their assets were held in DIY investments (RRIF, TFSA and non-registered accounts). They each had a will and named the other as the executor with me as the alternate. They dealt with two providers — one for their DIY investments (BMO Investorline) and one for their day-to-day banking (CIBC). So in terms of complexity I think I had it pretty easy.

Dealing with the death of the first parent

My Dad’s death was not a surprise, and because of this I was able to maximize his TFSA contributions before he died. Dad did hate paying taxes.

Although my Mom was legally the executor, I did almost all the work involved. Most providers seemed to be pretty good about dealing with me once they got confirmation from my Mom. The key documents and facts you’ll be asked for in almost every encounter are the same, so have these ready each and every time:

  • Date and place of birth of the deceased
  • Date and place of death of the deceased
  • SIN number of the deceased
  • A death certificate (this is issued by the funeral home, typically)
  • The will
  • Funeral home invoice (if applying for a death benefit)

Dealing with the bank was easy. One 30 minute meeting6 and all was sorted.

As many DIY financial services providers don’t have brick and mortar locations, high quality digital versions7 are also generally accepted. In the case of BMO Investorline, I had to visit a BMO branch8 with the documents so they could send them as “true copies”. How a provider with no affiliation with a bank does this, no idea9.

In the case of any DIY investment held in the deceased’s name — those assets get frozen upon notifying the provider. This can be problematic if one is relying on those assets to say, pay rent, or pay for funeral arrangements.

The unexpected complication arose from the non-registered joint account — it didn’t just “convert” to removing one person’s name from the account — you have to open a new, individual account, involving all the same paperwork as though you were a new client, and then transfer the joint assets “in kind” to the new account. During this time, the funds were not accessible. This is beyond annoying, but I suspect this is the same regardless of who your provider is. My mom lost access to her joint account for about 6 weeks while this was settled.

Taxes for the death of the first parent

The tax return you file for a person who has died in this scenario is called (ominously) the Final Return. A person who dies is treated as though they sold all their assets on the day of death. I did not file a T3 Return10 return for my Dad, since all the assets passed through to my Mom. If he had had non-registered assets held solely in his name, I think I would have had to.

  • For a RRIF or RRSP, this means CRA assumes you sold all the holdings on the day you died and recognized it as income11
  • For a non-registered account held solely in one name, CRA assumes you sold all the holdings on the day of death and recognized any capital gains at that time.

I was able to successfully file the Final Return for my Dad using Wealthsimple’s tax software12. The Final Return cannot be eFiled — you have to print it and send it using snail mail.

Adjustments after the death of the first parent

After my Dad died and my Mom had all the combined TFSA/RRIF assets in place, we updated her TFSA and RRIF to name me and my siblings as beneficiaries by filling out a form. This proved to be helpful in reducing the tax bill a bit when she died. More on that in a future post.

  1. “willful.” seems to be a trendy option nowadays: https://www.willful.co/ ↩︎
  2. One could argue the opposite — just give the duties to your least favourite relative as a last vengeful act ↩︎
  3. Some workplace pensions provide death benefits and/or an ongoing survivor pension, but only if you take the trouble to name a survivor in that pension. ↩︎
  4. And if you do, I’m envious 😉 ↩︎
  5. Paper is probably less trouble than trying to provide a file location/passwords, but YMMV. ↩︎
  6. Prearranged online of course. You can’t just walk into a branch to do anything these days. ↩︎
  7. You’ll get good at this workflow or go crazy trying. Take photo on phone, airdrop to laptop, compress/convert image so it can get through email… ↩︎
  8. Do NOT assume that the brokerage has anything to do with the bank with whom they share a logo. I learned this the hard way with BMO/BMO Investorline. ↩︎
  9. Maybe notarized documents? Let me know at comments@moneyengineer.ca. ↩︎
  10. AKA “Estate Return”. A person who dies becomes a new tax entity, typically named Estate of <dead person> ↩︎
  11. Which is why you name a successor for your RRIF — this tax penalty is thereby avoided ↩︎
  12. It was because Intuit Quicktax could not handle this scenario that I ended my decades-long relationship with them. ↩︎

Doug Dollars for the Dead?

RobHLeave a comment

I’m the executor for my Mom’s estate (she died about a year ago). On Friday last week, I got a cheque in her name1 from the Government of Ontario. Premier Ford’s handiwork, it seems. My Mom’s estate just got $200 richer.

Anyway, per this Star article, it seems like I’m not the only one. And, apparently, the right thing to do is to deposit the cheque, thus adding it to the estate — which I will do, once I pay a visit to my local branch2.

  1. Not “The Estate of” which is a sign that the sender is working from less-than-current information. ↩︎
  2. All transactions involving an estate require a physical visit to a bank branch. As an online native, I find this confounding, perplexing and irritating. ↩︎