If you are named the executor or administrator of an estate, you have many responsibilities. You are required to determine the assets and liabilities of the estate, apply for probate, file one or more income tax returns, pay any debts of the estate and distribute the remaining assets to the beneficiaries. You must notify Social Development Canada if the person received Canada Pension Plan or Old Age Security. More complicated estates may require up to three income tax returns as well as one or more trust returns for the estate. As executor, you are required to take appropriate steps to reduce the income taxes in the estate to ensure the beneficiaries receive all they are entitled to.
Certain special rules in the year of death include: the ability to carry back charitable donations, pool two years of medical expenses, report the full amount of RRSP or RRIF balances unless transferred directly to a spouse, report the amount of any unpaid Home Buyers Plan loan unless the remaining balance is assumed by the spouse, the non application of Minimum Tax, reporting of accrued gains on all capital property unless transferred to a spouse and the ability to claim unused capital losses in the year of death. Filing deadlines for final returns are extended if the individual dies after November 1st and prior to April 30th.
Professional advice is strongly recommended when an individual dies. CRA provided two guides with respect to deceased individuals; What to do following a death and Preparing returns for deceased persons. In addition there is a guide for an estate return for the period after death.
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