4. Deal with assets and debts

You must make sure that all of the estate’s taxes and debts are paid before you give anything to the beneficiaries.

Give notice

You may have to do things like:

• notify the government to stop payments like CPP, OAS, social assistance, and disability insurance payments
• notify companies that have assets with a designated beneficiary, such as  registered investments, pensions, and life insurance policies
• cancel the person’s driver’s licence, and social insurance and OHIP cards
• close personal accounts such as utility accounts, credit cards, and memberships or online accounts

Estate bank account

You usually need to open an estate bank account to deposit money received from the sale of assets or other investments, and to pay the estate’s taxes and debts. It’s important that you keep it separate from your own money or bank account.

Selling assets

Selling real property, such as a house, may be one of your biggest jobs. You may have to clear it out before you sell it. It’s a good idea to talk to the beneficiaries before spending money from the estate for any major expenses, like renovations.

You must try to get a sale price that you think is the fair market value. Fair market value is the amount a reasonable person would pay. Make sure you keep copies of any estimates you get by real estate agents or appraisers. If you sell to someone related to you or to a beneficiary of the estate you should get written consents from the other beneficiaries to all the terms of the deal.

You may also have to sell the car or other assets. The car will need a safety standards certificate. If there is a car loan, it will have to be paid off before you can sell the car.

Pay debts

Make a list of all the debts that the estate owes. This includes things like rent, mortgages, lines of credit, credit card payments, and car loans.

If the person who died is a tenant, you will have to give a notice to end the tenancy agreement to the landlord and you will have to pay whatever rent is owed. Check if the landlord has any deposits, for example, a key deposit or deposit for the last month’s rent.

To make sure that all the debts are paid, you can put a notice in a local newspaper, called a “Notice to Creditors and Claimants”. It asks people to contact you if they think the person who died owed them money.

If someone says the person owed them money, ask for proof in writing. If you’re sure their claim is valid, you can pay the debt from the estate. Get a written receipt to prove it’s been paid.

Income tax

Make sure that the person’s income taxes returns for all previous years have been filed properly and any taxes owing are paid. You will also have to file a final return for the year in which the person died. It covers the part of that year up until the date of death.

And you have to fill out a special tax return for the estate. This covers the period after the person died.

Other taxes

Some assets, like TFSAs, RRSPs, and RRIFs have to be given to the designated beneficiary, or sold, within a certain time. If you miss the deadline, more taxes may have to be paid.

Other assets like real property and shares in a corporation may have capital gains taxes that need to be paid.

Get legal and tax help

You may need to get help from an estates lawyer and from someone who knows about taxes, like an accountant. You may also want to check with a lawyer before paying a debt, especially if you’re not sure if it’s a real debt. Their fees are usually paid from the estate, if they’re reasonable.