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Thursday, September 17, 2015

Critical Financial Conversations You Should Have With Aging Parents

Not long ago, I was interviewed by Malcolm Morrison for an article in The Financial Pipeline. That article is called "Critical Financial Conversations You Should Have With Aging Parents" and is now online. Click here to take a look. As always, feedback is welcome. Just one correction to the article: Mr Morrison said that I practiced in NL for 30 years, which is not the case. I was called to the bar 29 years ago, but most of my career was spent in Alberta.


  1. The estate law tax thing really puzzles me:
    If estates are taxed at 48% or whatever it is, but RRSPs and RRIFs have beneficiaries, then if an elderly widower who has sold his home and car and rents an 'assisted living' unit - having rolled all his asset cash into his RRIF, leaving a small bank account into which go his pension cheques and RRIF deposits, --
    What happens when he dies intestate leaving only $3,500 in the bank account but $500,000 in a RRIF with his 5 children named as beneficiaries?
    The bank promptly hands out $100,000 cheques to all, -- but does this mean whoever gets stuck administering the estate has to cough up roughly $240,000 while the other 4 simply collect?
    What if the child who handled the necessaries was among Canada's many 'working poor'?
    If that's the law it doesn't make sense. Can that really be right, or have I missed some fundamentally obvious point?

    Terry Birtwistle

    1. Well, I don't know that it's "fundamentally obvious", but the point you've missed is that the executor of the estate does not have to pay the debt personally. The executor's responsibility is to pay the debts to the extent that the estate will cover them. This means he should maximize it by collecting anything owing to the deceased (including advances or loans to the kids) and applying for all available benefits. As you've noted, in this case, there will be significant tax liability outstanding once that is done. CRA has the ability to pursue the beneficiaries who received the RRIF to collect the tax from them. As I said though, the executor is not the one on the hook for it.


    2. Wow, thanks so much for clarifying that point. There is a lot of misinformation around about this, such as in an intestate (dies without a will) situation, whoever assumes the role of executor is responsible for everything to do with it.
      Who, then, claims the death benefit when it comes addressed both to the Estate and this person? It often arrives long after the final tax form has been filed.
      And is a Clearance Certificate necessary on a simple estate such as this one?
      Is it a legal requirement for a child or 'someone' to become a court-appointed executor on what is basically a non-estate?

      Your assistance is invaluable with the information you provide.
      Big HUGE thanks,

      Terry B.


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