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Thursday, April 8, 2010

Does an executor have to pay the deceased's unpaid debts out of his own money?


This isn't going to be a quick yes or no answer because, as with everything in law, much depends on the circumstances of each case. Here are some general rules you can work with.

The debts of an estate (including income tax) must be paid before any beneficiaries receive their money. If an executor ignores the debts and pays the beneficiaries, the executor may be held personally liable for those debts.

If paying the debts first means that the beneficiaries get little or nothing out of the estate, this is not the executor's fault.

Often an executor asks about debts because there are more debts than there are assets in an estate. An executor should a) honestly try to figure out what legally enforceable debts exist, b) be very careful to put appropriate values on estate assets, and c) use the estate assets to pay the debts. Where there is a lot of debt, this usually means selling assets to realize a cash value that can be divided among creditors. If there is not enough money to pay everyone 100% of what is owed to them, the executor may have to try to negotiate a settlement whereby each creditor gets a certain amount on the dollar.

If the estate is fully used up to pay the legally enforceable debts and expenses, and there are still debts of the deceased unpaid, the executor does not have to use his own money to pay them. That's assuming, of course, that the executor has not done anything fraudulent or negligent with the estate's money.

When listing the debts of an estate, the executor should remember to include debts that are not payable immediately but that will become payable in the future, such as income tax at the end of the year.

To protect himself or herself against personal liability, an executor should advertise in the newspaper for creditors and claimants against the estate. Doing so won't overcome any negligence on behalf of the executor, but assuming there is no negligence, advertising for creditors certainly helps.

132 comments:

  1. Hi Lynne,
    My dad recently passed away and I came across your website (very well done by the way) when I was doing research. My dad owes a lot of debt and I've also been paying his condo fees, electricity bills, etc. since he had left no will and I cannot sell his property. When I go to repay the debts once I become the executor, can I make it a priority to get my money back first, then pay off the creditors (e.g. credit card companies). Thanks for your help!

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  2. Hi Lynne,
    My sister and I are equally joint beneficiaries and executrices of my father's will. His entire estate consisted of one R.R.I.F and two small life insurances policies both of which we are equal beneficiaries. There is also a joint bank account (me and my father) with documented survivorship.

    If money is paid directly to the beneficiaries of the R.R.I.F and insurance policies and if I can prove ownership of the bank account, what is used to pay his Income Tax owing and any remaining bills. I have been using the joint account for this purpose, but I am now questioning doing this. There is not enough funds in this bank account (and never was enough funds) to pay his taxes owing.



    Thanks,

    Lena

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    Replies
    1. Hi Lena,
      The creditors whose bills remain unpaid are probably going to be out of luck in terms of being paid, since there isn't anything in the estate to pay them with. Be,aware that creditors can challenge your claim to the joint bank account, based on the fact that joint accounts such as the one you describe are presumed in law to belong to the parent's estate unless proven otherwise.

      If there are a lot of bills, you may want to get legal advice as to which bills have priority legally, so that you pay the right ones.

      Canada Revenue Agency is another matter. There will be tax payable on the RRIF. CRA may not be willing to let those go unpaid. They have the ability to go after the recipients of the RRIF to get the taxes paid.

      Lynne

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    2. Hi Lynne,

      Simple question I can't find an answer for. If after paying the small funeral bill and moving expense 2500$ there is not enough money to pay the full cost of the probate lawyer $800, who is responsible for paying the lawyer? It is only like 500$ left to pay so not lot of money but I am trying to stop two family betters from arguing about it.

      Delete
  3. Dear Lynne:
    My sister and I were executives of my father's estate and to our knowledge, all debts were paid, and we received the final clearance certificate from Revenue Canada nearly three years ago, and so the estate was disbursed and the estate account was closed out.
    Now nearly three years later, I got a letter from my dad's pension fund claiming that a bill for an an overpayment against his pension fund was not paid.
    It's been three years since the estate account was closed off so I am not sure ... I thought I sent them a cheque at the time, but it's been so long that I am not certain. We did do an advertisement at the time to make sure there were outstanding debts and had no response. So I thought it was over and done with, long ago.
    Now I am getting this letter. Are my sister and I responsible even though the estate was long ago wrapped up and we got the clearance certificate?

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    Replies
    1. You and your sister are executors for life, so you do legally have to deal with anything that comes up on the estate.

      If you paid out the beneficiaries when there was an outstanding debt, you may be responsible for the payment of the debt yourselves.

      You raise a good point about advertising for creditors. If you had never heard of this pension plan and they missed out on the deadline you imposed in your notice to creditors, you would have a good case for refusing to pay them. However, you suggest that you did know about them because you said you thought you sent them a cheque. .

      An executor really should still have estate records three years later, since it's not that unusual for things to pop up, but if you don't have any, then you'll have to reconstruct what you did. If you paid estate debts using cheques, do you still have the cancelled cheques? Or can you find them online using the account number?

      The Clearance Certificate only means that the estate does not owe any more taxes. It doesn't mean that you can't be held responsible for other things.

      Lynne

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  4. I am one of two Executors on my parents' Wills. When calculating the Value of the Estate, there were only 2 assets at death; bank account and condo. Now in the Debt of the Estate, funeral expenses have been indicated by the other Personal Representative (Executor). Both funerals were pre-arranged and pre-paid, so I consider only the supplementary/additional expenses to be a Debts of the Estate, but the other PR has indicated the entire cost of the funeral. Is this correct?

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  5. My brother recently passed away without a will. According to our best estimates, his estate is insolvent. Members of the family have little appetite to take on administration of the estate, as it will mean a significant amount of work, for absolutely no benefit, and we are already burdened with another family estate to deal with. What happens if no one steps forward, and simply walk away? Total value of the estate (including real estate) is under 250K

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    1. If you're hoping that some unknown person will simply step in and do the job for you, unasked, I wouldn't count on it. If nobody does anything, the house will fall apart for lack of maintenance, and will eventually be taken by the municipality for non-payment of property taxes. Any money left in unclaimed bank accounts will continue to sit there until eventually, years later, it's paid to the Bank of Canada.

      Rather than walking away, why not call a trust company and ask if they'll do the estate for you, or perhaps ask if they'll help with the estate you're already working on? The value of the estate doesn't really matter when the person has already passed away, and by using a trust company you can hand over literally all of the legwork. I worked for Scotiatrust for 7 years, and can vouch for their skill with estate work.

      Lynne

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  6. Lynne:
    I am the executor of an estate that had a HUGE tax bill (multi-million$) because most of the assets were in an RRSP that became fully taxable upon death. Unfortunately the assets in the RRSP were in small penny stocks that have since gone down in value, in some cases off the board or down 95% ! We had been systematically selling stock to cover the tax bill ($50,000 each month) but now the value of the portfolio is significantly less than the remaining tax bill because of the drastic drop in portfolio value in the last year. Is there any liability on my part? How can the CRA expect me to "play the markets" to sell at the right time to cover this expense. Your advice would be much appreciated. Thanks !

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  7. Lynne,

    I have and received the CPP death benefit in regards to my father's death. I am the executor and the cheque is made out to the Estate of...Am I allowed to cash this cheque and use those funds to pay and recoup costs of his cremation and celebration of life expenses before any of his debts are paid? This would include any debts to the bank.
    Any advice would be appreciated. Regards.

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    Replies
    1. The expenses you mention are exactly those which the CPP death benefit is designed to cover. Normally an executor opens an estate bank account, rather than cashing a cheque, partly because that gives the bank the opportunity to verify his or her right to the money. There is no doubt you're allowed to deposit it. Whether you can just cash it might be another matter.

      Lynne

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  8. Lynne:
    I am not sure if you or anyone can help me here. My Son passed away at the end of May, he left no will, has no spouse and had a life life insurance policy through his place of employment worth $55,000 of which he never named a beneficiary. He had a small pension of which he did name myself as the beneficiary. Now where it gets complicated is he lived and died in Manitoba and I live in Ontario. The holder of the life insurance says that I cannot be appointed as the executor as I don't reside in Manitoba so I asked my brother if he would apply to be the executor. He was denied after filing documents at the court office as they said he would have to put up his house etc and have a $120,000 bond before they would appoint him, quite obviously neither he nor I am willing to have him do that. Before my Son's death his house was foreclosed on and they advised that the bank can go back on the executor for up to 10 years to have this debt paid. Also when going through his personal items which mostly consisted of clothes and documents we found money owing for a reassessment to 2010 taxes which looks like he did not pay, we know he did not file his 2014 taxes and we don't know whether he ever paid his 2013 taxes so who is responsible for all this debt and outstanding taxes. Do I have to turn over the pension proceeds that I was named beneficiary to since I have already had to pay $8500 for his funeral, $3000 to travel to where he used to live which was a 2400 km round trip to get his few belongings and have a small memorial service there. It just seems like it would be a huge expense for us to hire a lawyer in the other province to try and get the small insurance and I certainly cannot afford to pay out any money to a lawyer when there is still a headstone to purchase. I just have no idea what or where to turn.

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    1. I'm really sorry to hear about your son's passing.

      Hiring a lawyer is an option, as you've mentioned. A less expensive option could be to hire a trust company in Manitoba. They could apply to be co-administrators with you, and no bond would be required. I don't know for sure if they'd take any particular case, but it might be worth a call to find out. They are usually cheaper than lawyers because they don't bill by the hour, and they have a lot of training and experience with estates.

      Whoever is appointed by the court as administrator is responsible for filing the tax returns, including any that you find out were not filed for past years. This doesn't mean that the administrator has to pay the taxes personally, but he or she does have to pay the taxes to the extent that the estate can do so. Neither will the executor be held personally liable for any loss to the bank under the foreclosure.

      Canada Revenue Agency has the right to pursue individuals who receive certain gifts, such as RRSPs, that generate tax but I don't know of any similar right extending to pensions.

      I wish you all the best with this, and if you need the number of someone at a trust company in Manitoba, I can provide that to you.

      Lynne

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  9. Thank you Lynne for your quick response. A number for a Trust company in Winnipeg, MB or even Thompson, MB (this is where he lived) would be helpful as all this has me so stressed out and it seems like nobody at the courts are even willing to help or give guidance on what to do or where to go.

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  10. Can I ask about liability to pay the income taxes of a deceased if Letters Probate or Letters of Administration are never sought? All of the assets are jointly held by parent and daughter: house is in joint tenancy, and all bank accounts are jointly held. Is this a loophole? How can the Canada Revenue Agency go after the daughter in these circumstances? Nothing has been filed in court, so I do not see how the CRA has any claim against the daughter. Thanks for your help.

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  11. This comment has been removed by the author.

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    1. I disagree that only 10% of the assets are "legally" in the estate. All of the items that were jointly owned between your grandmother and your father are legally in the estate. This is the case because it is known that your grandmother did not intend for your father to inherit those items for his own use. Her intention was to distribute them among beneficiaries. The rules about joint ownership changed in 2007 and apparently your father and grandmother were not aware of that. I suggest that your father prepare an amended inventory of the estate, file it with the court, and pay the additional probate fee, the administer the estate according to the will. Otherwise he could be sued by any of the beneficiaries, not to mention your bankruptcy trustee.

      Lynne

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    2. Thank you for your help Lynee. It does sounds like they were not aware of the change in rules. We`ll have to adjust accordingly.

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  12. Hi there,

    Very good article - I do have a question in regards to the recent passing of my girlfriend's father. She is the beneficiary on his life policy - if she becomes the executor, does that mean she would have to pay off the debts using the life insurance she received?

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  13. Hello lynne
    I have a question. I'm the executor of my mom's will as I'm the oldest. I have 1 sister. Can I get a trust company to do the probate or do I have to get a probate lawyer. Our mom had no money for anything . Her funeral expenses were paid for.

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    Replies
    1. Are you sure that probate is necessary? If there is a house, then it is, but other than that, it may not be required at all.

      If the estate is quite small, a trust company may not wish to take it on, simply because their fees would eat up the small estate, and they don't want that any more than you do. If matters are simple, you might consider doing it yourself. There are kits available in some provinces.

      Lynne

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  14. Can the CRA come after the children of the deceased for unpaid debt if there was no money left in the estate at the time of death.

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  15. Here's a question. If someone passes away with no money in their estate and there is debt owed to the CRA, can the CRA come after the children for money owed?

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  16. Hi Lynne. My mother passed away over a year ago but recently I received a letter from revenue Canada saying she owes them money. There was no money in her estate when she passed away. Does this mean I am responsible for paying that debt with my own money?

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    1. Hi Mgf,
      Like you, I am an ordinary person trolling through here looking for answers, when your comments caught my eye.
      What do you mean your mother had "no money"? Was she old enough to be receiving a pension? Did she not have even a bank account?
      Presumably she did not own a house or a car. If she had been without an income for the previous tax year she would not be owing tax on income she did not make.
      Did you file a final income tax form for your mother? Do you have access to her previous years' tax information? Is there a phone number on the letter from CRA you can call to clarify?
      Did you apply for the Death Benefit after she died?
      You need to provide more details specific to your situation to get a really useful answer.

      Delete
  17. Hi Lynn
    My father recently passed & my Brother & are Executors = I being the one ding everything. Our parents borrowed $20k from my Brother years ago. However that Will it's null & void as my Dad has a new Will done & doesn't state directly about this loan. There's no paperwork about the loan either. I have all intentions of relaying my Brother. The original Will stated to repay my Brother upon their death. However, when I'm listing all the Liabilities & Assets do I even include this debt? Or after all creditors & debts are paid then it just comes off what's left and THEN e will divide the residue of the estate. ~ thanks Cher

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  18. I'm the executrix of my Dads estate. One of the creditors that my Father owes is stating that his account is now going into Collection and if I sign something it'll will essentially remove me from the calling list. I have no intention of signing anything and I've read in your blog (which is great & thank you very much) that creditors of the deceased will try to go after the heirs. This Kerstin also asked me when the estate will be settled & I started he's only been gone a month & the process takes time. They're daily interest charges are $7/day
    Am I correct to not sign anything?
    Thank you
    Cher

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    1. I have no idea what he wanted you to sign so honestly I couldn't say for sure whether you were right not to sign it. I can only guess that he wanted you to personally assume or guarantee the debt, in which case you were right not to sign it.

      I usually tell impatient creditors of an estate the following:
      - I agree to list them as a creditor of the estate
      - I want all paperwork that shows the amount of the debt
      - The estate will be in a position to deal with debts within 6 months, assuming probate is granted and assets can be called in by then
      - I will pay the amount of the debt up to the date of death but not anything that accumulates after the date of death.

      If they don't like that last bit, too bad. They should know better than to try to gouge an estate for daily interest charges when they know full well you don't yet have access to estate assets.

      Lynne

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  19. Thank you so very much Lynne! Great help! When I went there I told then I will not be signing anything! The person there said, in I spoke with my supervisor and was informed that your right you don't need to sign anything as you are not your Dad.
    Lynne do I need to inform them that will not be paying interest after my Father was deceased?
    I sure appreciate your blog and your help!

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  20. My brother passed away without a will. He was living with my parents so he had no assets of value (clothes) and perhaps some credit card debt. Does someone have to be appointed to cancel his documents and complete his final taxes, or can a member of the family do this. I have no clue what to do as there is no estate. Any help would be appreciated.

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  21. As an executor of an insolvent estate in BC, who should I pay first? Income Tax to CRA, money owed to landlord this month, or debts owed to the government of BC? Any help would be appreciated :)

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  22. Hi there. I am the executor of my Father in Law's will. He passed away recently. He owes a substantial amount from previous years to the CRA for back taxes but has next to nothing in terms of assets. There is minimal money, no home, no RSPS or investments of any sort. He has a car that's about it. (No spouse).
    Am I responsible for his CRA bill from prior years since there is not enough to cover it with what he has?
    I understand the creditor piece but CRA is daunting.

    Does his CRA debt transfer to me or any of his children?

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  23. My mother passed this past weekend . named me as executor and wished that all possessions divided equally between myself and my brother.
    She lived in a bachelor apt with simple furniture. She had less than $100 in her bank account.( not sure but I think her last CPP / OAS cheque still gets deposited )
    I have 6 weeks to vacate her apt. and no place to store anything.
    My brother said all he wants is computer and I was going to take the TV. ...my plan was to give away or donate the furniture.
    Unfortunately see had about $15,000 in credit card debt

    Do I have to hold onto her furniture TV & Computer in order to be not personalty responsible for her debts ???

    I don't have any money myself to store her stuff or even pay for a mover.

    It seems like undue hardship on me.

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    Replies
    1. Hi Gary,
      Yes, the estate gets to keep the CPP and OAS for the month your mom died, but nothing after that.

      The general rules is that you are not personally responsible for your mother's debts, even when the estate is not enough to pay them. Storage isn't much of a solution, I agree, because it costs money the estate doesn't have.

      I'd be careful about giving things away if they have even a small amount of value. Perhaps something like a garage sale could be arranged? There are always things in an estate that are going to be thrown away, such as used bed sheets. But there could be even a couple of hundred dollars in value in the furniture perhaps.

      I am talking about selling the furniture rather than giving it away simply because I want to make sure that you can honestly say to the creditors that you squeezed every possible cent out of the estate that you could. That way nobody can blame you for anything. All legitimate debts must be paid before beneficiaries get anything, so if you give away the TV and computer, you can be held liable for their value personally.

      Also be aware that credit card companies are famous for telling executors they are responsible for estate debts, but they are completely wrong. So long as you have used the estate to pay the debts to the extent that it can, you are NOT responsible no matter what they say.

      Lynne

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  24. Hi Lynne, I've been reading many of your posts and find the information extremely valuable. I've now got a question for you.
    I've been in a common-law relationship for 20 years and we're just now arranging our wills.
    My spouse has a daughter from her previous marriage (her previous spouse is deceased) and I have no children from my previous marriage.
    As we're writing our wills she has designated her daughter beneficiary to her RRSPs. My common-law spouse also has sole title to the home we live in.
    She is designating that her daughter and I will be 50%-50% owners of the house and that I can live in the house until my death or whenever I chose to leave.
    My understanding is that if she was to die that her daughter would receive the full value of the RRSP (~400k) and the estate would be responsible for the income taxes on that amount. If there are no other assets in the estate to pay the taxes does that mean the house would have to be sold to pay CRA or would the daughter as beneficiary have to pay the taxes.
    Thanks

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    1. You're correct that the daughter would receive the full amount of the RRSP and that CRA would look to the estate to pay the taxes. CRA has an option on how and where to get the taxes because the beneficiary (i.e the daughter in this case) and the estate are jointly liable for the payment of the taxes. So the CRA could go after either one. In practice, they go to the estate first and only to the beneficiary if there are no other assets. Because they have this option, I couldn't say for sure which way they'd go.

      Lynne

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    2. Hi Lynne, thanks for the reply, I appreciate it. I'd asked another question yesterday but I'm not seeing it here now, so I'll ask again if it's ok. In your opinion do you think a clause in the will stating that any taxes generated as a result of deregistering RSP's to an unqualified beneficiary will be paid from the funds of that RSP and not the estate? Would that be enforceable and defensible and compel the beneficiary to pay the taxes? Don't get me wrong, my relationship with my step-daughter is very good, she views me as her parent and I see her as my daughter. I'm just trying to cover all the bases here since, as you've mentioned elsewhere in the blog, money can make normal people behave abnormally sometimes.
      Thanks,
      Ian

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    1. Anything you can do about what? That they have to refuse? That they have to pay $450? I don't see why you'd have to refuse unless you're named in the will, which seems unlikely since you had no relationship with him. There's really not enough information in your question for me to know what you're trying to achieve.

      Lynne

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  27. Hi. My son in laws father passed away last September. There were just 2 beneficiaries of the estate, my son-in-law and his brother. Life Insurance and Pension was left to the ex wife. The brother and sister of the deceased took care of the funeral. At first they told the sons, they would talk to the ex wife about paying it. When the ex wife didn't respond they said it would come out of the estate. The estate closed 2 weeks ago and monies disbursed. The funeral costs were not taken out. The family is now threatening to sue for the cost of the funeral. Are they able to do this and win?

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    1. They should be suing the executor. It's the executor's job to pay the bills before paying the beneficiaries. Whoever was in charge of the estate made a mistake and if they can't get the funds back from the beneficiaries, they can bear the cost personally.

      Lynne

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  28. Lynne,

    Great website with lots of great info - very well presented. I am working to be named estate trustee for my mother's estate as she had no will - and have two questions.

    1) There is very little money in the estate and significant credit card debt. She does have some possessions that are in a house she shared with a sibling (and spouse and grandchildren). Can we "liquidate" the possessions by selling them to ourselves at an appraised value - to retain them - while paying out the portion of the debt that the sale would generate or do we need to actually sell the items?

    2) Some possessions were shared - as they were in the common household. How would we define which are hers and which were shared (and could therefore be considered outside the estate)?

    Thanks in advance!

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  30. Am I responsible for my husbands hidden credit line if there is anything owing on it? I'm the beneficiary to his estate but had no knowledge of this account. Found clues while searching.

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    1. You personally are not responsible for his debts. However, his estate IS responsible for his debts. Therefore assets of his estate must legally be used to pay off this secret credit line. Whether or not you knew about it has nothing to do with anything.

      You said you are the beneficiary of his estate, so I assume that means in his will (as opposed to joint ownership or designated beneficiary on registered assets). This means the debts - even the secret ones - have to be paid before you get paid.

      Questions like this make me glad I'm single.

      Lynne

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  31. The estate owes me 100 and some odd dollars. The executed also the POA does not answer my emails and was unwilling to pay me back prior to the person dying despite saying she would
    How do I get my money back?

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  32. The estate owes me 100 and some odd dollars. The executed also the POA does not answer my emails and was unwilling to pay me back prior to the person dying despite saying she would
    How do I get my money back?

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  33. My daughter recently passed away and the only thing she had of value was her car that I sold for $2100, her clothes and furniture. SHe owes $900 to income tax. Am I responsible for paying the debt to income tax

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    1. If you have sold her items and kept the money, then yes you should be paying the income tax. If you used her money to pay for a funeral, then no.

      Lynne

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  34. Lynne, my father passed away in January of 2015. He had sold his belongings before passing as he had a terminal disease and really had only his vehicle until he could no longer drive it. He was on OAS and CPP. He was poor. I recieved death benifit which paid for part of his cremation and service and I used his bank account money about 1000.00 to pay for the rest. Now CRA say the estate needs to pay 3000.00 my dad owed from taxes in 2012. Will I have to pay for that?

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  35. Hello Lynne
    My brother and I are executors of my mothers will.I am waiting for a clearance certificate for any income tax owing the Government.There is a 25,000 dollar holdback still in her estate account.My brother does not want to pay an outstanding bill to my wife who looked after her 24/7 in our home for 11 months.This money was paid by VA to my mother for her care.There was a verbal agreement for this between my mother and myself for this money to be paid to my wife.It wasn't an easy job because she had full blown dementia.
    Thank you

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    1. You haven't asked a question, but I'm guessing you want to know whether this bill should be paid. All debts of the estate should be paid as early as possible, and certainly before beneficiaries are paid. You said there is a holdback, which suggests there has already been an interim distribution. This makes me wonder why the debt hasn't been addressed before now.

      Is your brother saying it's not a real debt? Does he need paperwork, or a record of hours worked, or anything like that? Or is he saying the estate can't afford it because the holdback is needed for tax payment? It's a bit hard to talk about solutions when I don't know what the objection is.

      Assuming that it's a case of your brother not believing that it's a real debt and just saying an outright "no", your wife is going to have to take legal action against the estate to enforce her claim.

      Verbal contracts are binding, though of course the lack of a paper trail can make them hard to prove. Your wife could consult a lawyer to see what it would cost to pursue this. Alternatively, she could take it to small claims court herself.

      Most likely the matter will start with a demand letter against the estate, and if your brother agrees to the payment at that point, that would be the end of it. If not, it could end up in court.

      Lynne

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  36. Hi Lynne,
    Thanks for all the great advice. My spouse passed away in 2017. All estate fees and debts have been paid. The estate account shows a balance of "zero".
    We have not filed income taxes for 2015 and 2016. My spouse owes just over $4,000 each year for 2015 and 2016. We traditionally pension split. My question is:

    If I choose to pension split for these two years, does this mean I am responsible for the tax owing for my late spouse?

    If I choose not to pension split, will the tax owed by the estate be waived as the balance in the estate account is zero?
    Please advise.

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    1. No, you won't be liable for your spouse's taxes just because you elect to split your pension. However, I'm not an accountant and I strongly advise you to bounce your question off an accountant who is versed in personal income tax.

      Lynne

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  37. My father recently passed away and has a car lease agreement in his name only. He has a few payments left on it. Is my mother responsible for paying these car payments. Any advice would be appreciated. Thanks

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    1. Assuming your mother wants to keep the car, the payments must be made. This would legally be a debt of the estate, not your mother personally, so the payments must be made from assets that had been your father's. If she doesn't want to make the payments, she can always arrange to return the car.

      Lynne

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  38. My mom does not want the car as she does not drive and the car is no good to her. So she wondered if she had to continue making payments on a car that she isn't even driving.

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    1. In that case, she should call the dealership and see about terminating the lease.

      Lynne

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  39. My sister's common law husband passed away two years ago. He told my sister that he put her name on his will and if she loaned him $100,000 he would add her name to his house title. She cannot find the will and he didn't add her name on title to the house they lived in. My sister has discovered that he owes $300,000 in back taxes to CRA, that he didn't file income tax for the last 2 years and that she has no right to their house and that her partner's 93 year old father, owns the house. Now the father's greedy sister wants her brother's house and is giving my sister grief. My question is, I read that she can claim spousal support from the "estate" and the house is the only asset in the "estate". My sister is disabled, on a small disability pension and can't even afford to move or pay rent. Basically, her deceased partner used up all of her real estate savings but didn't have a new will with her in it. Does spousal support take precedent over the CRA getting their back taxes? If yes, would their guidelines be the same as in the Ontario Divorce Act? The house is only worth $300,000, about the amount of back taxes owing. My sister is 63 but we have longevity in our family. Her partner has an income of about $1500 per month. In determining spousal support, would the CRA multiply his $1500 x 20 years of life? That would be $360,000.

    ReplyDelete
    Replies
    1. Wow. He really left her in a hell of a mess. Inheritance rules in Ontario do not especially favour common law spouses. She is allowed to claim dependent's relief, which means she is allowed to ask a judge to include her as a beneficiary of the estate based on need.

      In Ontario, there is no automatic right for a common law spouse to have any claim to the matrimonial home.

      Unfortunately, debts come before beneficiaries in an estate. You mentioned spousal support - is there a court order saying he is to pay support? Or an agreement signed by him to pay support? Even if there is, I do not believe that would outrank the CRA.

      A possibility that might bump your sister up from a beneficiary to a creditor is a claim for unjust enrichment. This means that the deceased and his estate are increased by $100,000 based on an unfair situation. Your sister would have $100,000 in the bank and her name on the house if he hadn't reneged on his promise. This would require the assistance of a lawyer, and I know money is tight. Do you or sister have access to a student law clinic at a law school? You might go there and at least have someone look more closely at the situation in the context of unjust enrichment.

      I don't do family/divorce law so I cannot comment on the Ontario divorce act.

      I can just imagine how stressful this must be for both of you. Best of luck.

      Lynne

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  40. Hi Lynne,

    For example. I have 1 million life insurance. My son is the Beneficiary of my life insurance. After I pass away, he will receive a lump sum payment of 1 million directly from the insurance company. This money does not go into my estate. If I have 1 million unpaid loan and my estate does not have enough asset to pay my debt, than it is the lender's bad luck right? Can lenders touch the money from the death benefit which my son had already received?

    ReplyDelete
    Replies
    1. No, creditors cannot claim the life insurance proceeds that are paid to your son.

      Whether they can figure out a way to sue him for something else is another matter. Your scenario does seem deliberately very unfair.

      Lynne

      Delete
  41. Hi Lynne, my father passed away with only two things in the will; the family cabin goes to my brother and I any residuals to a spouse support trust until step-mom dies then to brother and me.
    The joint owed house and joint bank accounts went right to step-mom and aren't in the estate. The taxes the estate owes are waaaaaaay more then the funds in it.
    If the estate has to sell the cabin to pay its debts are the remaining funds from the cabin sale now residual?

    ReplyDelete
    Replies
    1. Hi Cris,
      No the balance of the cabin sale funds should go to the beneficiary who was supposed to get the cabin.

      Lynne

      Delete
  42. hi Lynne,
    My husband passed away last month. And he left us with lots of debts like line of credit and credit cards with his name alone. He has a life insurance and I'm the beneficiary ( wife) . As a spouse am I responsible to pay all his debt? Or can they get money from the life insurance to cover all his debts. He only have car as a estate and it's not fully paid yet he still owe 5,000$. Just in case collection call me what should I do or tell them?

    ReplyDelete
    Replies
    1. Jessica,
      You are not required to use the life insurance money to pay your husband's debts. If you are a joint owner of a debt, then yes you have to pay it, but if it's just his debt, you do not.

      Most likely you WILL get calls from collection agencies but you will have to tell them there is nothing in the estate. This is not a lie; life insurance is not in the estate and is not available for creditors.

      If you have a small bit of money from the sale of the car then you should divide it among the debts proportionately, even if the creditors only get a few cents on the dollar.

      Lynne

      Delete
  43. Hi Lynne,

    My dad passed away in April 2016. He lived in a different city and we travelled to be by his bedside when he fell ill and ultimately made the decision to let him pass in peace. My sister and I were completely devastated and had no knowledge or experience with death in any way and at the time did not know how anything worked. We were the only 2 children along with his mom that were very close to him and talked to him daily. We knew he wanted a cremation and knew that we could not afford a service for him but were unaware of the CPP death benefit. We immediately decided to travel home and be with our children and my sister who was sick stayed behind as she was in the hlspital, and my brother who was very mean and ignorant to us stayed behind as well. We found out they had a viewing and a cremation but his ashes were to be placed with his ex gf's ashes so no urn was purchased. My brother automatically took charge and dealt with all my dad's issues as there was no will. My dad owned nothing, but everything he did have my brother took and would not allow us each some ashes for our lockets. He ordered death certificates and would not tell us why and said he did not receive the money for his cremation. We still have not afforded him a service or any kind of send off. My question is, is there a way to find out if my brother received the death benefit and what will happen to his cpp now that he passed and my mom has been divorced from him for over 20 years? If my brother received funds can we fight this? They literally took everything down to my dad's underwear and I know my dad would not want this, they wouldn't even talk to him when he was alive and I feel his memory is being trampled on. Any advice on this would be appreciated deeply.

    ReplyDelete
  44. Hello Lynne.
    Many thanks for managing this candid and informative exchange board.

    I have been made Personal Representative of my Grandfather's estate and have been granted Probate through the courts. While reconciling debts/assets it is clear to me that there are not enough liquid assets (cash and/or items) to cover expenses, debts and that which has been willed to the beneficiaries.

    The stated beneficiaries (in the will) are my mother who should receive $10,000 and my uncle who has been willed the title of the farm property on which Grandfather lived. The value is around $250,000. I should inherit remaining assets.

    If the title is turned over to my uncle as willed, there is no other asset value to settle expenses and debts ... let alone pay my mother $10,000.

    I guess the question I have is whether I have the authority to liquidate the farm property to pay everything ... then distribute residual cash assets or does the designated asset (the farm property) have to be given over to the uncle despite there not being enough to pay all other expenses and debts?

    ReplyDelete
  45. Hi Lynne, Great blog.

    Vancouver, BC - I received an inheritance from a friend, who passed away back in 2012.

    Two years later (summer 2014), the executor, verbally told me that he may have overpaid me, and shorted other beneficiaries, but he didn’t give me any figures. After that I didn't hear from him on this issue for another two years in the fall of 2016 (three and a half years later). By that point the money was depleted. I told him it was gone. He threatened to sue me, but I never received any official or written notification at all regarding the accounting error. I did recently receive a release form, which the executor wants me to sign in the Fall of 2017, it now shows an accounting statement, including payments, errors made, and any shortfalls.

    From what I understand, signing the release form means i have read the accounting statement, and that I cant make any further claims against the estate or executor.

    My questions to you; can the executor, or other underpaid beneficiaries go after me, as an overpaid beneficiary, for the overpayment in error, more than 4 years later? Should I sign the release form?

    Thanks so much,
    KF

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    Replies
    1. Hi KF,
      Obviously I can't advise on whether you should sign the release, since that would be foolish based on only a couple of paragraphs of information. However, I can tell you the general rules around a situation like this.

      The executor has made a mistake. You have not. He's the one who is on the hook here. Of course he is trying to rectify the mistake by reversing his actions, as anyone would. If you feel like helping him out by returning part of your portion, then do so. If not, it's up to him to try to fix this mistake as best he can.

      I assume that no releases were signed back in 2012 when the executor distributed the estate. I'm not sure what he thinks he is accomplishing by sending a release now but I think he is attempting to get evidence of your agreement that you were overpaid. Why would you sign anything that you don't agree with?

      I also believe the executor has waited too long to try to fix this. It's not reasonable to come back five years after making a distribution to expect there to be anything left to recoup.

      The other beneficiaries have no cause of action against you. If they have a complaint, it's against the executor. The executor may wish to attempt to sue you for it, but I cannot see that getting far.

      Lynne

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    2. Thank you so much Lynne. This is very helpful advise.
      KF

      Delete
  46. Hi Lynne
    I am hoping to find some direction in my husband's estate situation.
    Could you please help .
    His mother passed away in 2015 and named my husband executor of the Estate. She had a common-law partner (Ontario) with whom she had joint bank accounts and joint ownership of the property. Prior to her death (in 2012) they have disposed a property and money were deposited to their joined account however they never reported Revenue Canada about Capital gains (gains of nearly 1 million dollars).
    Estate was very small (only 40K + cabin in province of Quebec). No probate was done on the Will.
    My husband diligently did his mom last 2015 year taxes and got a clearance certificate.
    Later in the process he has found that in previous tax years there was no mentioning of "sold" property, no Capital gains and was advised to go through VDP and to disclose the sale of the property and Capital gains for 2012. Just recently he received a paper stating that there is amount owing on the 2012 tax year. We expect it to be huge amount.
    The money from sale of the property went directly to joined bank account (common law) , who also did not pay his portion and greatly benefited from sale of the property. Who would be legally expected to pay this huge amount of debts. After receiving Clearance my husband spent entire 40K on renovations to the cabin.
    Would my husband be expected to sell this cabin ? Or would Revenue Canada go after joint account where the funds were deposited and after common-law who sheltered entire amount without paying first Revenue Canada?

    ReplyDelete
  47. In the case of a suicide, is the estate debt handled differently?

    ReplyDelete
  48. Hi Lynne
    Im the executor for my late brother's estate. There has been an unsecured LOC debt from BMO that existed since his death 1.5 yrs ago. Amount was $22000. BMO recently wrote off the debt a month ago because I advised their collections dept that the estate has been insolvent for quite some time .I had to pay secured debt first. There was nothing left after that. The big secured debt that took most of the money (outside of funeral costs, legal fees, executor fee etc) was child support. BMO confirmed that they wrote off the debt but then a week later, I received a letter from their in house lawyer, demanding payment for the debt, likely because I would not provide them with any documentation of where/how the money was distributed. I did not feel comfortable sending them any personal information from my brother's estate, so why am I getting a threatening letter, after they confirmed they had written off the debt. Am I now personally responsible for the debt?

    ReplyDelete
    Replies
    1. If you won't tell them what you used the money for, no wonder they are asking you to pay the debt. If you were in their shoes, you'd do the same. An executor is personally liable for estate debts if he or she pays out people who are not supposed to be paid out. They aren't just going to take your word for it that you did the right thing. Just send them a copy of the payment you made for the child support.

      Lynne

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    2. Well I still don't understand why they sent me a threatening letter from a lawyer AFTER the bank wrote off the debt. If they wrote it off, file closed. So I dispersed the rest. They can't have it both ways?? What's the point of a write off then?

      Delete
    3. I'm guessing that the lawyers weren't satisfied with the write-off, since the bankers would not be familiar with (or care about) whether the estate was properly disbursed. It's always a pain to get mixed up with red tape.

      Lynne

      Delete
  49. Hi Lynne,
    Thank you for all the great I information.
    I live in Ontario and my brother is in BC. He is quite ill and I understand he had named me executor of his estate. As he is over 65 he will not have any life insurance and I doubt he has any money in the bank. I suspect he has credit card debt.
    Can I legally decline to act as executor? He lives in an apartment and doesn’t have much in the way of assets. I will need to travel to BC to look after his things.

    Is it possible to fly out and clean out the apartment and look after his funeral, etc?
    Thank you.

    ReplyDelete
    Replies
    1. Hi Karen,

      Any executor can decline the job as long as he or she does so before doing any executor work.

      Does it make sense to clean out his apartment and arrange his funeral if you have declined to act as his executor? Those are, after all, executor's duties. If a creditor finds out that you cleaned out your brother's place and didn't pay them what you could even though you're named as executor in the will, you might be held personally liable.

      I don't suppose arranging the funeral would be a problem as the funeral homes will take instructions from next of kin. As for the apartment, I couldn't say whether the landlord is going to let you in to remove items without legal authority. That leads you back to the executorship, which gives you legal authority.

      I get the feeling that it's the issue of debt that is bothering you. If you act as executor, you don't become personally responsible for his debt as long as you use the estate to pay debts as far as it will go.

      I don't think that acting as executor by cleaning out his place but saying "I'm not really the executor" is going to work. The will names you so unless you completely back out and do nothing, you're the executor.

      Lynne

      Delete
  50. Hi Lynne,
    My Mother past last April in a terrible way...I became the executive of her estate to which ...is now spent. It occurred to me that I did not do her taxes! What will happen? What do I do?

    ReplyDelete
    Replies
    1. The best idea is probably to do her income tax return and file it. If there is an amount owing and you didn't keep anything back from the estate to pay the tax, you will have two choices. You can try to get the funds back from the beneficiaries to whom you paid them (good luck with that) or you can pay it yourself. You CAN be held liable for her taxes if there was money in the estate that was paid out to beneficiaries.

      Lynne

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  51. Hi Lynne , I live in Manitoba and my boyfriend lived in Kenora Ont his whole life with his mother in there home and took care of her until her death a year ago at 100 years old . He was the executor and sole beneficiary of the will and if he passed it was passed to his brother. Well my boyfriend didnt finish taking care of her will but did pay the funaral . Now on my 60th birthday he has fixed and left me as the executor and sole beneficiary of his will. There are about 10.0000 in bills plus the funeral. I was his girlfriend for 40 years a d he always took care of me . There is a big estate involved and he is owed 750.000 by busnuisse partner. Now because he didn't finishing his mother's estate it names his brother the executor . Problem is he is also close to dying and has dementia. So do I have any rights here ?

    ReplyDelete
  52. Hi Lynne - quick question (hopefully)..is the estate legally obligated to pay out-of-statute unsecured debts where no judgement exists? A relative has passed and has outstanding debt that has been essentially dormant for 15 years. He was a resident of Ontario where I understand the limitation period to be two years to litigate.
    Thanks,

    ReplyDelete
    Replies
    1. The executor must pay legally enforceable debts. If the limitation date has passed on an unsecured debt (and I haven't checked on that, so I don't know for sure whether it has) then he does not have to pay it.

      Lynne

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  53. Hello Lynne,
    There is a home held in my mother's name that my brother has paid for and lived in for 5 years. If the estate (not including the house) ends up having a negative balance... to prevent the sale of the house can the benifitaries offer to pay all outstanding debts out of pocket or is the executor required to sell the house? Keeping the home is agreed upon by all benifitaries but the executor seems to want to cause problems and not act in the best interest of all the benifitaries. Any info you can provide would be appreciated.

    ReplyDelete
    Replies
    1. Hi Mike,
      The executor is not required by law to sell the property in these circumstances in order to cover debts. The debts can be covered, as you say, by agreement from other sources.

      I am wondering about the terms of the will, though. Perhaps the executor's concern is that he is supposed to distribute the estate to all of you and not just to one of you. He may just be trying to follow the will. If this is the case, it can still be done as the family wishes by having everyone direct the executor in writing to give their share to the brother who is getting the house. They should also sign Releases once that is done.

      Lynne

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  54. My mother died recently with no will. She was on odsp/cpp with very little income. She lived in an apartment with no assets and nothing worth of any value. Most of her belongings were donated or thrown out. Landlord (family friend was notified of her death) We arranged a small service and cremation. She had about $1097 in her bank account and about $4967 in a LIRRSP fund she was paying into. She did not leave beniferies on that fund which left me her daughter to look into having her chequing acct switched into an estates account. That way the funds cheque could be deposited into the estate of ____ to cover the cost of her funeral. The bank allowed me to do this calling me an Estate Representative. Sighting 'It is not your intention to apply for Certificate of Appointment of Estate trustee/Letter of Administration/Letter of Probate/Judgement of Probate. You declare that the deceased had not married or divorced since the date of last will (if any) and that there is sufficient assets to meet all liabilities of the estate.' continues to say that if any beneficiary they will be paid. Bank revokes the designation made by the Bank.'You also agree that this is indemnity will be binding in you, your heirs, personal representative, successors and assigns' I am the contact on this account and at this point I have only gone in and asked the bank to make a bank draft payable to the funeral home to pay off of the cost of her funeral. Leaving $564 in the account. She has debt. Am I obligated to pay out the remaining amount in the estates account to any of these debts owing? I do not expect to receive any money of the estate account as she has more debts then assets. A letter was received address to her estate about a credit card in collections from years ago and letter from the government wanting a $63 trillium payment back. She has a student loan from years ago but I am not sure what she owes on it. I am pretty sure the bank (whom she had a credit card with) already took the amount she owed on that credit card when they transferred funds from the chequing to an estates acct. As far as I know all her bills were paid up and they were notifyed of her death. I guess what I am wondering is if I am not a legal executor that does not possess nor do I plan to apply to the courts for letters of adminstration. Do I have to pay out the little bit of money left in the estates account to any of these debts like an exceutor would be required to do? Or does the money just sit there and if the creditors really want it they apply to the courts to have what ever little money is left after banking fees?

    ReplyDelete
  55. Hi Lynne,

    What happens to the equity in a house after a spouse dies & the house is sold? My dad passed away last fall & the month to month expenses were above and beyond what my mom could manage on her own so it was necessary for her to sell the house quickly. There was about $200K in equity in the house which my mom wants to use towards a smaller more manageable house. Prior to selling, we were advised that my mom is automatically entitled to ownership of the property as the surviving joint tenant so it was recommended to complete the title transfer prior to selling as it would make the selling contract smoother. We did that, listed the house, it sold quickly & she paid out the mortgages that were in both hers & my dad's name. Because the title had already been transferred to mom, does any of the $200K net equity become part of the estate or is it all my mom's?

    ReplyDelete
    Replies
    1. Because your parents were joint owners of the house, your father's equity was never going to be part of his estate. It doesn't matter whether the title was transferred to her name alone first. Joint ownership means that when one dies, the other one owns the whole thing.

      Lynne

      Delete
    2. OK, thanks. My concern was I am now finding out my Dad had some outstanding unpaid CRA taxes. His estate is insolvent now - didn't have any investment accounts & bank account didn't have much money. The money that was in the account was used for funeral expenses and to float the monthly bills as the mortgage & other utility costs exceeded what my mom gets monthly for pension/OAS/CPP - hence the quick sale. Nothing has been dispersed through the will - there was nothing to disperse. We did sell some un-needed furniture etc, but that money was also used to go towards monthly mortgage & bill payments. I just wanted to make sure that Revenue Canada cannot go after my mom saying that she needs to repay this debt with the proceeds she got from the sale of the house. She did pay out the debts that were in both their names & attached to the title of the house (mortgage & LOC) after the sale, so I think everything has been taken care of appropriately.

      Delete
    3. The other thing I am unsure of is what about all their other 'stuff' - furniture, jewelry, appliances, china, electronics, etc. Majority were gifts from my dad to my mom over 50 years of marriage. All the other stuff has was jointly purchased/owned by them. Nothing is getting distributed to anyone other than my mom (nothing written in the will saying so & so will get this painting, etc so everything is remaining in my mom's possession). Can the CRA claim that these possessions should become part of the estate to pay taxes owing? I'm not sure how anyone can prove ownership of this stuff and they are not things distributed by the will - it was all stuff my mom has had all along.

      Delete
    4. Bonnie, you seem to have an awful lot going on. While I am more than willing to address your questions, I'm concerned about you relying on snippets of information on a blog rather than sitting down with someone who can give you one-on-one advice after getting all the details from you. It would be safer for you and the estate if you discussed these questions not piece by piece but as a whole with a lawyer in person.

      Lynne

      Delete
  56. Hi Lynne,
    Thanks for your response. We have a difficult situation on our hands with an executor Who is not acting in the best interest of all benifitaries. My question is do things like life insurance, investments, and pensions need to be used to pay the estate debts if they have direct benifitaries that get transferred outside of the Will? Is there any options for the executor to enforce this? We (all the benifitaries) fear the executor is attempting to bring as much as possible into the estate to get a heafty compensation and does not care about the impact it has on the benifitaries.

    ReplyDelete
    Replies
    1. If an insurance policy, pension, or registered investment directly names a beneficiary and that beneficiary is alive, then the money goes to the beneficiary. It does not go into the estate. It is not handled by the executor. The executor cannot choose to say those items are in the estate and cannot charge a fee based on them.

      In my experience the executor will not be able to get an insurance company or a bank to pay the funds to the estate where the estate is not named.

      Lynne

      Delete
  57. Hi Lynne
    My father died in January with a will leaving 50% to me and 25% each to my two brothers. The house - worth approx $640k was also left to one of my brothers because he'd essentially paid for it over the years.
    That brother took out a mortgage in 2013 for an amount exceeding the value of the house and the amounts he paid my parents. He has now claimed that he is owed $737,000 to be paid by the estate or he has the right to everything.
    I was executor but resigned when it all went to hell. The estate had not been probated and i did not have access to the assets/accounts.
    All i'd done was get bills paid directly by the bank - copying the estate lawyer who had prepared my Dad's will. No beneficiaries (ie my brothers and me) have received payments.
    My brothers and I do not get along and they have been determined to see me inherit nothing. The brother who gets the house (he's paid for it so no issue there) is very wealthy and I am not. He knows I cannot afford to hire a lawyer.
    My brothers are saying the estate is insolvent but I know it's trickery of sorts using this financial instrument of a mortgage taken out after the house was fully paid for.
    I have correspondence between my Dad and my brother which proves exactly how much he paid over the years to my father (about $480K).
    The remaining funds in my father's accounts were about $70k at time of death. With all the bills that had to be paid, now only about $55k. I think it is incredibly wrong and unfair that my brother is able to 'bankrupt' my father's estate to deprive me of approx $20k.
    What can I do?
    Thank you.

    ReplyDelete
    Replies
    1. If you don't hire a lawyer, your options may be limited. All of our rights that are violated are enforced through the courts. If you pay a lawyer to carry this question all the way to a court hearing, you could well lose the entire $20,000 to legal fees.

      You said that you renounced as executor but you didn't say whether anyone else took on the job. Without an executor there is nobody legally able to make any decisions, commitments, or payments on behalf of the estate. If one of your other brothers decides to apply for the job, that could really be a bad idea. You need someone who will be neutral between all of you beneficiaries. If there is no relative or family friend who would be neutral, consider asking the Public Trustee for your province to step in and act as the executor.

      No, your brother doesn't get to bankrupt the estate. It is true that all debts must be paid first, but he does have to establish and prove the debt. He can't just say it or claim it and assume that everyone will accept his claim without proof.

      Perhaps this is something that you and your brothers could mediate. That would involve all of you going to a meeting (or series of meetings) with a neutral mediator to see if you can work out the issues without going to court. This has advantages, since it's way faster than going to court and is only a fraction of the cost. However, it can be pretty tough to do those sessions with people you don't really get along with.

      Start with trying to get a neutral executor.

      Lynne

      Delete
  58. Hi Lynne.

    Awesome website, you're helping a lot of people deal with such a difficult time in their lives!

    I was wondering how to find out who the executor or administrator of an estate is - the deceased owes money and I wanted to contact whoever's dealing with the estate (in Alberta).

    Any suggestions you can offer is appreciated. Thanks!

    ReplyDelete
    Replies
    1. My first suggestion would be to go to the probate court and search the deceased's name. If anyone has applied for probate or administration, the document is public information and you can get the name from it. As a bonus, you can also see the estate inventory to see if there is anything there for you to collect against.

      If nothing shows up, search for the deceased's obituary online. Read it to find out his or her next of kin. That person is probably the executor or administrator, or can tell you who is.

      Lynne

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  59. The executor to my mom's estate owed money to mom which she never paid back before my mom passed away. I want know if I can put in a claim against her estate to claim the money she owed as part of our inheritance? Thank-you

    ReplyDelete
    Replies
    1. You as a beneficiary have the right for that debt to be repaid to the estate. No question.

      As for putting in a claim, the process is not that clear. The usual method of having a debt repaid is for the executor to try to collect it on behalf of the estate. Obviously that's not happening here.

      Perhaps you should write a letter to the executor (you must have a paper trail in case this ever gets to court) requesting that the debt be repaid ASAP. If she refuses, you might consider putting a caveat against the estate that will force her to stop until the court can hear what your issue is.

      Just be aware that if she does not agree to repay the funds, the only way to break the stand-off is by going to court. Even with the law on your side, it's a long, expensive process. I'm not suggesting you let it go - not at all - just that you go into this with your eyes open.

      Lynne

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  60. I am the executor of my Mother's estate. I was away at our winter home when mom got sick. I flew home to be with her before she died. Two days after she passed, I went to the bank with the Death Certificate (in December). I am also a joint account holder. The bank representative told me to come back when I was planning to return to the country (in April) because if she accepted the Death Certificate our accounts would be frozen. I though ok...I'll do that just in case the money might be needed (less than $2,000) When I returned I went back to the bank with the death certificate and Will. They created a separate estate account. Now they are telling me I have to repay $1,440.00 before they will open up the estate account so I can pay for my mother's ashes to come from the funeral home. One issue is my mother did not name a beneficiary on her RIF which is all that is in the account. So the $1,440.00 was the minimum yearly payment for the RIF. To add to the confusion, my sister is named in the will. My sister, however, is a ward of the Province and cannot receive any money without jeopardizing her benefits. If she receives any money it has to be repaid to the Province. So while I am trying to get the bank to open the estate account up to pay for mom's ashes so I can have a service of some sort, they are demanding the repayment that I don't have before they do so. This all seems so wrong as I followed the instructions of their representative. What do I do now?

    ReplyDelete
  61. Hi Lynne,
    My husband passed away eight months ago. I just learned he owes CRA taxes. My question is can CRA take my survivors pension, his locked in pension, or his life insurance to pay the CRA taxes. There is no money in his estate I’ve lost our family home our car and everything what can I do about CRA and the owes taxes?
    Thanks Sue B

    ReplyDelete
  62. Lynne, my husband recently passed. I am beneficiary to his TFSA. He has unsecured credit card debt with the bank. I realize if there is not enough funds in the estate to pay this debt I am not obligated to pay the credit card, however, if I am still linked to the bank and I have a line of credit and credit card in my name solely can not paying my husbands sole debt with the bank impact the way they deal with me? (cancel my card or line of credit for not being able to pay my husbands debt with them?).

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  63. My step mom passed away and i am the executor . she was in bankruptcy when she died, there is no money in her estate but there is some equity in the the house but if the trustees get paid there is little to no money for beneficiay's . what can i do?

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    Replies
    1. Hi Lisa,
      Unfortunately, you don't have any choice in the matter. The trustee in bankruptcy have the right to sell the house to realize the equity, then use the money to pay off the debts. If there is anything left, they'll give it back to you to divide among the beneficiaries, but you are right that there might be little or nothing left.

      Lynne

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    2. Even if she did her two counselling session and 9 months of payments. Can i negotiate for a lesser payout with trustees?

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    3. Absolutely you can negotiate with the trustees. What do you have to lose?

      Lynne

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  64. My mom recently passed and named myself as executor and beneficiary of her rrsp. I know I have to pay her owing taxes with the rrsp money. Question is do I have to pay her credit card debt with the rrsp money? The rrsp was left in my name and not to the estate.
    The bank suggested I use the death benefit to pay off the debt...should I have used it to pay off debt?

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    Replies
    1. Yes, I'm sure the bank would suggest that. They know full well that you are not required to pay your mother's credit card out of the RRSP funds. The RRSP is not in the estate and you do not have to use it for any of her debts. The tax is different, because you as the recipient of the RRSP are jointly liable for that tax along with the estate. But the debts? Nope.

      Lynne

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  65. My Dad passed away recently and named me executor. The estate does have any assets except a joint bank account for my mom and dad, but does owe a credit card solely in my Dad's name. The bank is telling that the estate needs to keep paying the minimum payments or they will take the money from the joint account. I thought the joint account belonged to the surviving person? Can they freeze or take the money? The amount is under $3000 but it a lot for my Mom as a pensioner.

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    Replies
    1. Have your mom empty the account and open one at another bank out of the reach of the current back.

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  66. Hi Lynn, My Dad recently passed and named me executor. He had a joint bank account with my mother, and owed a credit card in his name alone when he died. He has no other assets. We are receiving funeral assistance from the city, and they want the death benefit given to them. When I notified the bank of his passing, they want the estate to keep paying the minimum payment and for the estate to give them a letter showing he was insolvent. They also indicated that they could take the money from the joint account to pay the credit card that was solely in my Dad's name. Can they do that? I thought the bank account went to the sole survivor of the account.

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  67. here is a question and a half for you... my sister recently passed away intestate. There are are no spouse and no children. My mother is deceased, which leaves the estate to the man who helped bring me into this world. The thing is, our family split up 41 years ago and the three youngest went with my mother, whom after a time could not take care of us ... When asked by the courts, my father said he did not want us, this includes my sister who passed away. Now, since we were made wards of the court they became our legal gaurdian, including my sister's, how does the intestate succession act chapter 7 come into play? Does the estate go the the province because they were her legal gaurdian, does it go to the siblings since the father lost parental rights when he refused to take his child or does it in fact go the biological father? and if so, can that be challenged?

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    Replies
    1. Check your province's intestate laws. each province has a different succession plan. In NS, for example, "If the intestate left no spouse or children, then the intestate’s parents stand to inherit. If no parents survive the intestate, then the intestate’s brothers and sisters inherit. If no siblings, then nephews and nieces inherit. If no nephews or nieces, the law computes inheritance based upon the degree of consanguinity (blood relatives). Grandnephews and grandnieces, grandparents, first cousins and the like are considered in order of how closely they are connected by blood to the intestate. "

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  68. My husband recently passed away, and he left a will, naming me as executor, but there were no assets other than an ATV and older boat which he left to me and I gave to his daughter. There was no life insurance. He left a considerable amount of credit card debt in his name only. I know I'm not responsible for his credit card debt, but I'm not sure how to proceed with his creditors. I do not have any funds of my own to pay a lawyer or trustee. Do you have any advice for me?

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    Replies
    1. You cannot give away assets when there are debts to be paid. You should have sold the ATV and boat and used those funds to pay the debts. If the creditors want to, they can sue you personally for the value of the boat and ATV.

      Lynne

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  69. Hi Lynn. My mother passed away last year here in Canada. She was just a tourist and was only here for 3 months before she died. She had an insurance as a tourist but that had been maxed out with still some bills unpaid. My mom left no will and no money in her estate being just a tourist. I was told that I was not liable for her debts since I did not sign anything in this regards. There is this one hospital that kept on calling for her regarding the unpaid bill although I mentioned to them once that my mom has passed away. Do you have any advice for me please?

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    Replies
    1. You're not personally responsible for your mother's debts, whether she was a tourist or whether she lived here. Her debts are hers. I find it hard to believe there wasn't even one cent in your mother's estate since she could afford a 3-month vacation. Apparently the unpaid hospital feels the same way. If there is any money at all in her estate, it should be directed to the payment of her debts.

      Lynne

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  70. Hi Lynn, I am liquidator and only heir to my father estate. At the time of his death he was under protection of Curateur Public de Qu├ębec. They handled the succession and they paid all debts and then gave me the rest .I applied and received release from both Canada and Quebec. And suddenly now, I received a new invoice/debt no one ever knew about from a hospital he was treated at 3 years ago. A big amount too $11333.00. Can I refuse to pay? Why did they not present this bill when the estate was being settled?

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    Replies
    1. It sounds as though the bill was not rendered while the Curateur Public was handling the funds. If it had been, they would have paid it.

      The releases you received are for taxes only. All they say is that the estate doesn't owe any provincial or federal tax. They do not apply to any other aspect of the estate.

      Did you advertise for creditors in the paper or online? If so, you are protected against this new bill if they are outside the time limit you put in your advertisement.

      If you did not advertise, you as liquidator have to deal with the bill. Assuming it's a valid bill, of course. You can tell them that all assets of the estate have been distributed already and see if they go away, but I would suspect that they'll try to collect on a large amount like that.

      There isn't a time limit for rendering a bill that I know of, though I am no expert with collections laws.

      Maybe try settling for a lesser amount based on the fact that they did not send it promptly and you as liquidator already settled the estate.

      Lynne

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  71. (repeat questions because 1st time I put it in wrong place.
    Hi Lynne,
    Simple Question. If after paying the basic funeral bill there isn't enough money to pay probate lawyer in full who is responsible to pay the lawyer? Only 500$ but trying to avoid a conflict between two family members. Is it the executor? or Son?

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    1. I assume that if it was necessary to go through probate, there has to be some asset of value in the estate. All debts of the estate, including the probate lawyer, need to be paid before beneficiaries get anything, so this might mean that assets need to be sold.

      I don't know what role the son you mentioned plays in this scenario but I assume (again) that he is the beneficiary. He doesn't get to inherit until the bills are paid.

      If it is a situation where, for example, the only asset is a house and you don't want to sell a house to pay a $500 invoice, then ask the person who is inheriting the house if he or she will pay it. If they will not, then the executor goes ahead and sells the asset.

      Lynne

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  72. I suppose I should take my question out?

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  73. My husband passed away 2 1/2 months ago. Our house has been paid through mortgage insurance and I recently received an insurance claim. I know I'm responsible for joint debts. The problem is that my husband was receiving long term disability payments for awhile before he retired. I am receiving letters now stating that that GWL disability overpaided him over $7000. His name only were on the payments, my name was not involved. Am I responsible for paying this back? My husband did not have a will. Thanks.

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    1. You are not responsible for anything that you did not directly sign for. If he was overpaid they can make a claim against the estate but nothing outside of that. if there are any assets solely in the estate then GWL could attempt to recover from that. They would be considered an unsecured creditor.

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  74. Hi Lynne. I had a cousin who died 6 yrs ago leaving 4 children with her husband. He died in June leaving 3 dependant children. He did also have an estranged wife - separation with a pending divorce and he had a live in girl friend.

    Here is what I need help with. I have assumed responsibility of the dependant children. I have been living in the family home with them since the day after their father died. I made this decision so that the children could stay in their home, at least until his estate is settled. The hope is that the kids will get to keep their home. My thoughts are that I will stay until they are all of age to decide what to do with the asset. The youngest is 10.
    At first his mother was executor, and now 6 months later I learn that his widow just took over this responsibility. My biggest concern is whether or not the kids will be able to keep the house. I know the mortgage is secured but I hear that there is unsecured debt. Can the unsecured creditors force the sale of the home?

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  75. "Tooj over" ? If she wasn't named in a will as the executor she cannot take over, she would have to be appointed by the court. If no one has been appointed by a will then anyone can petition to administer the estate. Without a will or proper assignment by a court she has no authority to do anything.

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    1. I agree, Paddy. The widow cannot just take over if the mother was his executor. I think there may be a gap in the information you've been given. Was his mother actually named as his executor in the will? Was the will probated? If so, the widow could not take over without a court order. Now, on the other hand, if the mother didn't want to be the executor, she might have renounced before the will went to probate. That would leave it open for someone (i.e the widow) to apply to be administrator.

      You are not quite correct by saying that "anyone" can petition to administer the estate. There is a hierarchy set out in the legislation that says who has the right to apply. A married person's spouse is always first.

      Lynne

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