Chapter 5

Estate Assets
5.1 Introduction ............................................................................................................... 5-6
5.2 Initial Steps in Dealing with Assets .......................................................................... 5-8
5.3 Identifying and Valuing Assets................................................................................. 5-9
5.3.1 Common Law Only: Reasons to Value Assets............................................................. 5-9
5.3.2 Quebec Only: Reasons to Value Assets .................................................................... 5-10
5.3.2.1 Quebec Requirements for an Inventory ................................................... 5-10
5.3.3 Different Values for Different Purposes...................................................................... 5-11
5.3.4 Valuation Methods ..................................................................................................... 5-11
5.3.5 Accrued Income ........................................................................................................ 5-12
5.3.6 Cost Information ........................................................................................................ 5-13
5.3.7 Valuation Dates ......................................................................................................... 5-13
5.3.8 Collecting Asset Information ...................................................................................... 5-13
5.3.8.1 Sources of Information ............................................................................ 5-13
5.3.8.2 Requesting Information from Third Parties .............................................. 5-14
5.3.8.3 Safety Deposit Boxes .............................................................................. 5-16
5.3.8.4 Privacy and Joint Accounts ..................................................................... 5-17
5.3.9 Location of Assets ..................................................................................................... 5-18
5.3.9.1 Common Law Only: Identifying Asset Location ........................................ 5-18
5.3.9.2 Quebec Only: Assets Included on the Inventory ...................................... 5-18
5.3.10 Safeguarding Assets ................................................................................................. 5-18
5.3.10.1 Safe Storage, Security, and Insurance .................................................... 5-18
5.3.10.2 Preventing Unauthorized Access to Accounts and Collecting Income.......5-19
5.4 Asset Categories ..................................................................................................... 5-20
5.4.1 Wages, Pensions, Death Benefits, and Annuities ...................................................... 5-24
5.4.1.1 Canadian Government Pensions ............................................................. 5-24
5.4.1.2 CPP/QPP and Other Federal Pensions in the Month of Death................. 5-24
5.4.1.3 CPP/QPP Spouse and Dependent Child Benefits ................................... 5-25
5.4.1.4 Other Pensions and Periodic Payments .................................................. 5-25
5.4.1.5 Wages and Other Employee Entitlements ............................................... 5-25
5.4.1.6 Death Benefits......................................................................................... 5-25
5.4.1.7 Veterans 5-26
5.4.1.8 Annuities 5-26
5.4.2 Other Income Sources............................................................................................... 5-27
5.4.3 Cash on Hand and on Deposit ................................................................................... 5-27
5.4.4 Fixed Income Securities: GICs, Savings Bonds, Treasury Bills, Bonds...................... 5-27
5.4.4.1 Guaranteed Investment Certificates (GICs) ............................................. 5-28
5.4.4.2 Government Savings Bonds .................................................................... 5-29
5.4.4.3 Treasury Bills .......................................................................................... 5-31
5.4.4.4 Bonds 5-31
5.4.5 Shares in Public Companies...................................................................................... 5-33
5.4.5.1 Ex-Dividends ........................................................................................... 5-34
5.4.6 Mutual Funds............................................................................................................. 5-35

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5.4.7 Loans Due to the Deceased .......................................................................................5-36
5.4.7.1 Promissory Notes .....................................................................................5-36
5.4.7.2 Agreements for Sale (Quebec: Instalment Sales) .....................................5-37
5.4.7.3 Recording Loans Due to the Deceased on the Inventory ..........................5-37
5.4.8 Income from a Trust ...................................................................................................5-37
5.4.9 Registered Plans ........................................................................................................5-38
5.4.9.1 Registered Retirement Savings Plans (RRSP) .........................................5-39
5.4.9.2 Registered Retirement Income Funds (RRIFs) .........................................5-41
5.4.9.3 Tax Free Savings Accounts (TFSAs) .......................................................5-41
5.4.9.4 Registered Education Savings Plans (RESPs) .........................................5-43
5.4.9.5 Registered Disability Savings Plans (RDSPs) ..........................................5-43
5.4.10 Life Insurance Proceeds .............................................................................................5-44
5.4.10.1 Life Insurance as an Estate Asset ............................................................5-44
5.4.10.2 Life Insurance Passing Outside the Estate – Beneficiary Designations ... 5-44
5.4.10.3 Other Life Insurance Benefits ...................................................................5-45
5.4.11 Collections and Other Valuables ................................................................................5-45
5.4.12 Real Estate.................................................................................................................5-46
5.4.13 Common Law Only: Deducting Liabilities for Purposes of Probate Fees and Taxes . 5-46
5.4.14 Vehicles, Boats, and Other Vehicles for Transportation ..............................................5-47
5.4.15 Personal Effects and Household Furnishings .............................................................5-47
5.4.15.1 Listing Personal Effects ............................................................................5-47
5.4.15.2 A Caution when Listing Jewellery .............................................................5-48
5.4.15.3 Prepaid Amounts......................................................................................5-48
5.4.16 Other Assets ..............................................................................................................5-48
5.4.17 Missing Assets ...........................................................................................................5-49
5.4.17.1 Unclaimed Property ..................................................................................5-49
5.4.17.2 Heir Locators and Unclaimed Property .....................................................5-49
5.4.17.3 Assets Identified in a Will..........................................................................5-49
5.5 Assets Passing Outside the Estate (Will Substitutes) and Transactions Made Prior
to Death .................................................................................................................... 5-50
5.5.1 Assets Owned Jointly .................................................................................................5-50
5.5.1.1 Co-ownership ...........................................................................................5-50
5.5.1.2 Joint Tenants with Right of Survivorship (JTWROS) .................................5-51
5.5.1.3 Common Law Only: Challenges with Assets Owned JTWROS ................5-51
5.5.2 Designated Beneficiaries of Life Insurance and Registered Plans ..............................5-52
5.5.2.1 Estate Is Default Beneficiary.................................................................... 5-53
5.5.2.2 Alternate and Survivor Beneficiaries ........................................................ 5-53
5.5.2.3 Transfer of Proceeds to Beneficiaries ...................................................... 5-53
5.5.2.4 Common Law Only: Trusts for Insurance or Registered Plan Proceeds . 5-53
5.5.3 Similar Considerations Will Apply Where the Proceeds of a Registered Plan Are to be
Held in Trust. Registered Plan Designations .............................................................. 5-54
5.5.4 Gifts ........................................................................................................................... 5-54
5.6 Transferring Assets to the Personal Representative (in Quebec: to the Estate) 5-55
5.6.1 Investments ............................................................................................................... 5-55
5.6.2 Real Property ............................................................................................................ 5-55
5.6.2.1 Common Law Only: Transferring Title to Executor................................... 5-55
5.6.2.2 Quebec Only: Transferring Title to the Liquidator..................................... 5-55

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5.7 Disposing of Assets ................................................................................................ 5-55
5.7.1.1 Disposing of Investment Assets............................................................... 5-56
5.7.1.2 Disposing of Real Property and Other Assets.......................................... 5-57
5.7.2 Conflicts of Interest .................................................................................................... 5-57

Figure 5.1: Quebec Only: Kinds of Property (arts. 899-907) .................................................. 5-21
Figure 5.2: Supplemental Content on Asset Categories ........................................................ 5-23
Figure 5.3: Jurisdictional Legislation Governing Beneficiary Designations in Registered Plans....
............................................................................................................................................. 5-58

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 Chapter 5

Estate Assets
Learning Objectives

Once the initial steps and urgent matters have been attended to, and the executor has
decided to accept the appointment or a person or corporate trustee has decided to
apply to administer an estate, the task of collecting information about assets, liabilities
and beneficiaries begins. The information must then be organized in a way that will
assist the executor to administer the estate efficiently and effectively in order to
minimize the risks of errors or loss. The information also forms the beginning of the
accounting to the beneficiaries.
This Chapter reviews the steps and considerations that must be attended to when
identifying, collecting, safeguarding, and selling estate assets. It also reviews steps that
may need to be taken with respect to certain assets passing outside of the estate. Upon
completing this Chapter, students will be able to:
• Discuss the reasons for determining the value of estate assets
• Identify the information required to prove a personal representative’s authority to
obtain information about a deceased’s affairs
• Classify the types of assets that may be owned on death by key characteristics
• List the sources of information to identify and gather information about estate
assets
• Determine the value of estate assets
• Prepare an inventory of estate assets
• Document details of assets passing outside the estate
• Identify the options and considerations for safeguarding estate assets
• Identify the options and steps required to dispose of estate assets
• Identify options for locating missing assets
• Demonstrate learning by applying rules and concepts to a given scenario

REMINDER: Terminology varies significantly between provinces, and even more

so with Quebec. For ease of reading, as terminology is defined one word or phrase is
selected for purposes of the materials in this course. Jurisdiction-specific
terminology is only used if required. See the Generic Terms Cheat Sheet for the full
list of generic terminology. 5-4
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 Estate Assets

5.1 INTRODUCTION
At its core, the personal representative’s responsibility is to collect assets, pay debts, and
distribute the remainder according to the deceased’s will or the applicable intestacy rules. This
Chapter and the two that follow deal with these core responsibilities:
• What are the assets? (see remainder of this Chapter)
• What debts and liabilities must be settled? (see Chapter 6 Estate Liabilities and Claims
Against the Estate)
• Who is entitled to the estate assets and how are the assets to be delivered or paid to the
beneficiaries? (see Chapter 7 Estate Beneficiaries)
A priority in any administration is to identify and secure all assets. Details about the asset must
be documented and values determined. The assets must also be brought under the executor’s
control.
In order to safeguard the assets, insurance may be required, assets may need to be moved to safe
storage, investments must be monitored, and cash balances require management.
Common Law: Although there are exceptions,1 the general rule is that all assets must be sold
once the executor has control so that debts and estate expenses can be paid, and distributions
made to the beneficiaries. In practice, the decision to sell or retain assets will usually depend on
the facts and circumstances of each estate, including market conditions.
Quebec: All estate assets must be brought under the liquidator’s control, including claims and
other receivables. The debts and other estate expenses, liabilities, and particular legacies must
then be paid, following which partition and distribution of the remaining property can be made.
Assets should only be sold to obtain sufficient liquidity to satisfy debts and particular legacies,
unless the testator has expressly directed otherwise.
The liquidator has powers of simple administration (art. 802). When the liquidator has not been
granted powers of full administration in the will, the rules governing simple administration
permit the liquidator to hold existing assets even if they do not qualify as presumed sound
investments in order to avoid an untimely sale (art. 1342 CCQ).
This Chapter reviews the many considerations and steps for dealing with the more common asset
classes.
Corporate trustees and law firms that specialize in estate administrations have checklists to guide
staff and ensure all steps are followed. Different assets require different treatment and the
information requested must be adapted to the asset. Template or precedent letters, including

1
For example, an asset is specifically gifted to someone or there are tax liabilities to be managed. See Chapter 7
Estate Beneficiaries.

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addresses for common requests, are used to ensure that all relevant information is collected and
customized to address unique provincial needs.
This Chapter reviews the general requirements of all jurisdictions to summarize estate
information. As noted in Chapter 4, corporate trustees and law firms have their own formats for
how to document and present the asset inventory and estate details. The information collected is
used for a variety of purposes. The level of detail varies for each purpose.
The summary document may be a formal document, prescribed by legislation, regulations, or
court rules. In some jurisdictions, and/or for different purposes, a customized format may be
developed and used. As a result, the documents have a variety of names (see 4.5.8.4 The “Estate
Summary”). The name used in this course to refer to the various documents is “estate summary”.
In this Chapter, “inventory” or “asset inventory” may also be used when referring to the list of
assets that are included in the estate summary. For study purposes, students are also responsible
for the name of any formal documents required in their jurisdictions as noted in the course
materials.
Common Law Only: The estate summary includes the inventory or listing of assets, as well as
other important information, including liabilities and beneficiaries. Often there is a cover page
with the deceased’s personal information, the location of the safety deposit box, and the name
and contact information for the estate solicitor. Some documents will record joint accounts as
well as insurance and registered funds passing outside of the estate to ensure that any applicable
transfer or tax issues are not overlooked. A sample estate summary is found on the STEP website
for students under “Student Resources.”
Quebec Only: In Quebec, as noted earlier (see Chapter 4 at 4.2.9 Account to Beneficiaries),
there are formal requirements for preparing an inventory and accounting to interested parties.
The requirements are set out below (see 5.3 Identifying and Valuing Assets).
The more detailed rules for determining the value of different kinds of assets are discussed in this
Chapter. The detailed rules for determining liabilities and identifying creditors are discussed in
the next chapter (see Chapter 6 Estate Liabilities and Claims Against the Estate). See also
Chapter 10 Estate and Trust Accounts.
Quebec Only: Although the inventory is mandatory, there is no official form for presentation of
the inventory. Students should review examples of inventories prepared in their offices.
Note on Terminology: As noted above, for purposes of this Chapter and the course, the inventory
required under Quebec law will usually be referred to as an “estate summary”, the term used for
the many different versions of the documents required and/or used across Canada. The term
“inventory” will only be used when writing specifically about Quebec rules.
The estate summary is used by the executor:
• as a basis for the application for the grant where required in common law jurisdictions,
• to prepare the deceased’s final tax return,
• to establish a starting point for the accounting to the beneficiaries, and

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• to monitor the collection of assets, disposition of assets, payment of debts, and

distribution of legacies.
A general description of the details that must be documented in the estate summary and/or for
other purposes are reviewed in this Chapter and the next (see Chapter 6 Estate Liabilities and
Claims Against the Estate). The level of detail required for the estate summary and/or other
documents will depend on the purpose of the document and the jurisdiction. For example, the
requirements for an application for a grant are extremely detailed in some jurisdictions, but the
information required for income tax purposes will be the same across jurisdictions. The
information required in order to attend to the administration includes details not required for all
third parties and/or beneficiaries. Corporate trustees, law firms, and Quebec notaries will have
their own templates and practices.
Executors should consider whether or not it is appropriate to have two versions of the estate
summary – one for internal working purposes with all relevant details that may be needed, and
one for the beneficiaries that does not share private beneficiary information and other
unnecessary details.
Where possible, students are encouraged to review the checklists and letters used by their office
or organization in the relevant jurisdiction and the estate summary document(s) that are used.

5.2 INITIAL STEPS IN DEALING WITH ASSETS

In addition to the initial steps outlined in Chapter 4, Initial Stages of an Estate Administration, an
executor’s first concern is to identify any other assets that require immediate attention to protect
them from loss, theft, or destruction. Examples include:2

• Changing locks to the apartment or home if there is any question as to who may have
access to the premises
• Disposing of or selling perishable goods
• Arranging to continue or terminate regular services
• Advising management companies and landlords of any expected delays in the estate’s
ability to make monthly payments
• Taking steps to protect the deceased’s business interests (see Advanced Topics in Estate
and Trust Administration (CETA 2))3
If the deceased had any pets or a farming operation with livestock or crops, arrangements for
their care should be made immediately.
As discussed in Chapter 4 (see 4.4.4 Acting Before Acceptance), if an executor named in a will
is considering whether or not to renounce the appointment, care should be taken to limit

2
Dealing with farm properties and livestock requires specialized knowledge and expertise. Dealing with estates that
involve farms is beyond the scope of this course.
3
This is the second course in the Certificate to Estate and Trust Administration program. Hereafter referred to as
CETA 2.

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 Estate Assets

activities to those intended to protect estate assets. Any action that takes control of an asset or the
administration may attract liability and/or require that the person accept the administration.
Inquiries to determine the nature and approximate value of assets are also permitted. When
carrying out these activities, one way to communicate that the executor is not assuming control is
to clearly indicate that although named as an executor, the protective steps are only an interim
measure until the executor accepts the appointment and/or that information is being gathered to
determine whether or not the executor should accept the appointment. If there is no will, anyone
making inquiries in order to determine if he or she should apply to administer the estate should
also make the purpose of the inquiries or instructions clear.
Quebec Only: Note that the law also protects acts performed by a person who believed, in good
faith, that he or she was liquidator of the estate. Article 793 provides that such acts are valid and
can be set up against third parties.
See Chapter 6 Estate Liabilities and Claims Against the Estate, for additional steps to be
considered when gathering information on liabilities and debts.

5.3 IDENTIFYING AND VALUING ASSETS

As noted above, an asset inventory is a key requirement for any estate administration. The
inventory identifies the asset and establishes a date-of-death value. Valuations serve many
purposes, which are discussed below.

5.3.1 Common Law Only: Reasons to Value Assets

Asset valuations are required in order to:

• Calculate probate fees or taxes where applicable (see Figure 4.2 Fixed Rate Probate Fees
by Jurisdiction, and Figure 4.3 Sliding Scale Probate Fees and Taxes by Jurisdiction in
Chapter 4).
• Determine the amount of insurance that may be required (subject to the caution below).
• Establish a deemed disposition value for the deceased’s final tax return (see Chapter 8
Personal Tax Returns Due on Death, and Estate and Trust Taxation (CETA 3)4). (The
asset values also become the new cost base for the estate.)5
• Assist with the calculation required if there is a division of family assets.
• Establish or inform the list price for assets that must be sold (see 5.7 Disposing of
Assets).
Asset valuations may also be required in order to calculate executor fees under an agreement or
when court approval of compensation is required (see Chapter 9 Compensation and Expenses).

4
This is the third course in the Certificate to Estate and Trust Administration program. Hereafter referred to as
CETA 3.
5
Deemed dispositions may not apply when the will establishes a testamentary spousal trust that meets the
requirements of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.). See CETA 3.

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Although the details required on the asset inventory for purposes of applying for a grant will vary
depending on the jurisdiction, the general structure of the inventory is the same – the assets are
listed by asset classes and all relevant details are included to clearly identify the asset, its
location, and how the value was determined. See sample estate summary on STEP website for
students under “Student Resources.”

5.3.2 Quebec Only: Reasons to Value Assets

As has been noted, it is a formal requirement to provide the heirs and successors with an
inventory (art. 794 CCQ) unless the heirs and successors have unanimously decided to exempt
the liquidator from making the inventory. If this occurs, the heirs and successors become
personally liable for debts of the estate, even if the debts exceed the value of the property
received (art. 799 CCQ).
Other reasons for a liquidator to value assets include:

• Establishing a deemed disposition value for the deceased’s final tax return (see Chapter 8
Personal Tax Returns Due on Death, and CETA 3). (The asset values also become the
new cost base for the estate.)6
• Assisting with the calculation required if there is a partition of the family patrimony (see
CETA 2).
• Establishing or informing the list price for assets that must be sold (see 5.7 Disposing of
Assets).
• Determining the amount of insurance that may be required. In Quebec, a liquidator is not
generally required to take out insurance unless required to do so by the terms of the will
(art. 1324 CCQ).
• Determining the fee to be charged where there is a fee agreement based on estate value.

5.3.2.1 Quebec Requirements for an Inventory

The inventory must contain:
• a description of the immovable and movable property and its value,
• a description of cash and other securities, and
• a listing of valuable documents (art. 1326 CCQ).
Only those personal effects of the deceased that are worth over $100 each must be described
individually (art. 1328 CCQ).
All property is presumed to be in good condition unless otherwise indicated (art. 1329 CCQ).
The inventory also contains a statement of liabilities and concludes with a recapitulation of assets
and liabilities. It is made by notarial act en minute or by a private writing signed before two

6
Deemed dispositions may not apply when the will establishes a testamentary spousal trust that meets the
requirements of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.). See CETA 3.

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witnesses (art. 1327 CCQ). The inventory generally contains a statement that it can be modified
upon discovery of other assets and/or liabilities.
Closure of the inventory is published in the RDPRM7 and indicates the place where it may be
consulted by interested persons. A notice must also be published in a newspaper distributed in
the locality of the deceased’s last address (art. 795 CCQ). The liquidator then informs the
following of the notice of closure of inventory and the place where the inventory may be
consulted:
• the heirs,
• the successors who have not yet exercised their option to accept or renounce their
benefits,
• the particular legatees, and
• the known creditors (if their claim is valid and they have not yet been paid).
The liquidator provides a copy of the inventory to the parties notified if it can be done easily (art.
796 CCQ).
The persons notified are entitled to contest the inventory or any item in it, or request a new
inventory (art. 797 CCQ). The inventory may be revised by agreement.
If the liquidator neglects to make the inventory and the heirs neglect to either make the inventory
or apply to the court to have the liquidator replaced or ordered to proceed with the inventory
within sixty days following the expiry of the six-month period for deliberation, the heirs are
liable for debts of the succession that exceed the value of the property they take (art. 800 CCQ).

5.3.3 Different Values for Different Purposes

When obtaining appraisals that require a professional opinion of value it is important to clarify
the purpose of the valuation. When valuing an asset for probate and/or income tax purposes, the
value is the amount which could be obtained in a sale on an open market. This is often called the
“disposition value” or “fair market value” (FMV). When valuing assets for insurance purposes,
the executor requires the replacement value, that is, what would it cost to rebuild or replace this
asset if is destroyed, stolen, or lost. Typical examples where values may be very different include
the deceased’s house or vacation home, jewellery, vehicles, and other personal and household
effects.

5.3.4 Valuation Methods

Different methods are used to value different types of assets. The methodology to be used will
depend on the circumstances. Factors to be considered include the cost, the purpose of the
valuation, and the risk of the valuation being challenged.8

7
“RDPRM” in English, the Register of Personal and Movable Real Rights.
8
Examples of situations where valuations may be challenged include: beneficiaries if assets are being divided
according to value, by the CRA, or in Ontario, by the Ministry of Finance under an audit of the Probate Tax paid.

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 Estate Assets

A number of practices have also evolved to guide executors on what is appropriate. In some
cases professional valuation rules must be followed. Guidance on what constitutes FMV is also
found in case law.
Valuation methods depend on the assets. General rules for the more common assets are:
• Publicly Traded Securities (stocks, bonds): Use the closing price on the date of death
or the last trading date.
• Mutual Funds: Use the closing price on date of death or last trading day where
available. This information may need to be obtained from the fund manager or a
representative.
• GICs, Canada Savings Bonds, and Other Fixed Interest Vehicles: Use the face value.
• Registered Plans: Ask for the valuation from the registered plan trustee who will apply
rules similar to those used for an estate.
• Real Estate Interests: Retain an appraiser with the appropriate qualifications for the type
of property. In some jurisdictions and for some purposes, a property assessment notice,
municipal tax evaluation, or a real estate agent’s opinion of value may be acceptable.
• Businesses: Retain qualified business valuators. Different approaches to the valuation
will be used depending on the nature of the business.
• Personal and Household Goods, Collections, Valuables: Specialists should be used
where appropriate; auctioneers can also assist; black book values are often used for
vehicles.
Quebec Only: Personal effects only need to be valued if they are worth over $100 each.
These methods are discussed in the sections that follow regarding the information and steps
required to deal with different asset classes.
NOTE: The date-of-death values will become the new cost base (or acquisition cost) for
the assets held by the estate. If the assets are sold, the capital gains or losses on the sale
are calculated using the new cost base. Accordingly, when the assets are recorded on a
corporate trustee’s accounting system, or on a brokerage firm or investment manager’s
account, these values should be used as the adjusted cost base (ACB) (see 5.3.6 Cost
Information).
If the assets are being transferred to a spouse or a spousal trust, the deceased’s original
ACB is retained unless an election to increase the cost base of the asset is made on the
deceased’s final tax return. These special ACB rollover rules are reviewed in CETA 3.

5.3.5 Accrued Income

In addition to determining the value of an asset at the date of death, if the asset produces income
such as interest, rents, or dividends, it will be necessary to calculate any accrued income that is
due to the deceased. If the income is interest or rental income the accrued income is calculated
on a pro rata basis from the date of the last interest or rent payment. See 5.4 Asset Categories, for
the details on how to calculate accrued income for each type of asset, where applicable. If the

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investment is shares in a company, it is necessary to determine whether the estate is entitled to

any ex-dividends (see 5.4.5.1 Ex-Dividends).
The amount of accrued income is reported as a separate asset of the estate on the estate summary
since it will be reported as income on the deceased’s final tax return and is not part of the asset’s
ACB (see Chapter 8 Personal Tax Returns Due on Death).

5.3.6 Cost Information

When gathering information about asset values, it is also important to gather details about the
purchase cost(s) and date of acquisition for tax purposes. Purchase cost is usually the original
amount paid. It is referred to as the cost base or adjusted cost base (ACB). The ACB is required
by the tax return preparer in order to prepare the final tax return(s). The information is usually
captured in a separate summary.
NOTE: The term “adjusted cost base” is a tax term. “Adjusted” is often included when referring
to an asset’s cost base because the original price paid may have been adjusted over the years. For
example, there may be a “return of capital” to shareholders, or mutual fund unit holders, and
value of the amount “returned” will be deducted from the cost base, resulting in a new or
“adjusted” cost base. Or a taxpayer may own depreciable property such as a rental building.
Special tax rules apply to depreciable property and are discussed in CETA 3.
“Cost base” and “adjusted cost base” may be used interchangeably in these materials.
If a will creates a testamentary spousal trust, the deceased’s ACB will usually become the cost to
the spouse or spouse trust for tax purposes. In this case there is no tax on death. For tax planning
purposes, elections may be made to increase the cost base (see CETA 3). However, the FMV
applies for all other purposes and is the value to be reported on the estate summary.

5.3.7 Valuation Dates

Generally, the date-of-death value for an asset is the value of the asset at the end of the day of the
date of death. When dealing with investments that trade on the open market, the value is the
closing price on the date of death, or if the date of death is not a business day, the closing price
on the last business day preceding the date of death.

5.3.8 Collecting Asset Information

5.3.8.1 Sources of Information

There are numerous sources of information that the executor may need to explore. As
noted above (see 5.1 Introduction), checklists and templates or form letters assist in this
process. The primary sources of information for assets, liabilities, and beneficiaries are
reviewed below.
Letters may be sent to:

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• Third Parties Holding Assets: These include banks and investment firms
holding cash, mutual funds, investments, registered plans, and life insurance.
Account statements also provide information and should be reviewed. Note that
the deceased may also have outstanding liabilities to these firms and the letter
will ask about these as well (see Chapter 6 Estate Liabilities and Claims Against
the Estate).
• Government Agencies: These include Canada Pension Plan, Old Age Security,
Veteran’s Affairs Canada, and Quebec Pension Plan.
• Canada Revenue Agency (CRA): The CRA can provide past returns and
assessment details.
• Sources of Periodic Payments: These include employers for outstanding wages
and benefits, pensions, and annuities.
Documents to be reviewed for information include:

• Personal Papers of the Deceased: Papers may be found in the home and/or a
safety deposit box. These papers may reveal assets, liabilities, beneficiary
information, and a number of other relevant pieces of information, including
loans to family, friends, or business associates. The documentation and records
available for these arrangements will depend on the relationships and amounts
involved.
• Contracts and Agreements for Services: These documents may establish legal
obligations, including separation or divorce agreements or court orders.
• Tax Returns: Past tax returns provide clues to assets that paid employment or
investment income. Inquiries may be required to determine why income sources
have stopped and/or to locate them.
It may be necessary to redirect the deceased’s mail to ensure nothing is overlooked.
Online accounts for billing notices, statements, subscriptions, and other accounts should
also be monitored.
Interviews may be required with a number of people including:

• Family Members: Close family members may have information to assist the
executor to identify or locate assets, liabilities, business activities, creditors, and
beneficiaries.
• Professional Advisors and Bankers: Lawyers (and in Quebec, notaries),
accountants, investment advisors, financial planners, and bank managers may
have relevant information about assets, taxes, business dealings, or legal matters.

5.3.8.2 Requesting Information from Third Parties

When requesting information, it will be necessary to establish the executor’s authority.
Common Law Only: Authority is generally proved with a certified (or notarized) true
copy of both the will and the proof of death (often a death certificate).

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Quebec Only: The documents required to prove a liquidator’s authority to deal with
property in Quebec are:
• the will search certificates;
• a certified copy of the will if notarial or, if the will is not in notarial form, the
probate judgment and court certified copy of the will, or certified copy of notarial
minutes of probate with will attached; and
• a death certificate.
If a lawyer or corporate trustee, acting as an agent for the executor, is writing on behalf of
the executor, permission to release information to the lawyer or corporate trustee will be
required. When writing the CRA on behalf of the executor, a form T1013 Authorizing a
Representative must be submitted.
If an asset is jointly or co-owned, the institution or transfer agent may have additional
steps or requirements before it will provide information. For, example, co-owner
approval may be required.
As noted above, inquiry letters must be customized to the type of asset, holder, or
institution to ensure all necessary information is collected. Template letters address these
matters and should include requests or instructions for the following, as applicable:

• The Registered Name on the Account. All names that have been used by the
deceased should be captured. This includes the deceased’s full legal name, a
shortened version, and all nicknames.
o Common Law Only: When applying for probate it is usually necessary to
ensure all of the names used on accounts or registered titles are included in
the application so that they are disclosed on the grant (or judgment, in
Quebec). Failure to include the name that is recorded on the account could
result in the grant (or judgment) not being accepted because it does not
identify the deceased owner by the name on the third party’s records.
o Quebec Only: It is customary to use a woman’s maiden name on official
documents (i.e. notarial documents). Therefore, both names should be used
when making inquiries.
• Balances: All balances, including accrued income and other amounts due to the
deceased, are required. Past statements should be requested if not already
available.
• Transmission/Transfer Requirements: The transfer agent or “holder” of the
asset may require their own documents or supplemental information, in addition
to the official documents (e.g. a court grant or notarial will from Quebec), before
the asset(s) or account balances will be transferred to the executor.
• Acquisition Costs and/or ACB: Purchase costs and/or the current ACB is
required to prepare the tax return (see Chapter 8 Personal Tax Returns Due on
Death, and CETA 3).

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• Interim Instructions: Interim instructions pending receipt of the grant or other

proof of the estate executor’s authority should be provided as appropriate,
including whether or not to accept future deposits, permit automatic withdrawals,
and sale of investments if an account was managed by a discretionary investment
manager. Dividend reinvestment plans should also be stopped.
• Account Statements and Tax Slips: A request should be made that all future
account statements and tax slips be redirected to the executor. If this cannot be
done immediately, the executor will need to collect statements and slips that were
issued and mailed prior to the grant being issued to ensure a complete record of
all transactions is available and can be reconciled to the estate summary and the
estate accounting.
Other letters may include:
• Canada Revenue Agency (CRA): A request to CRA may be made for copies of
past returns if not available in the deceased’s files or from an accountant, and/or a
status of account showing details of prior years’ assessments and amounts due to
or from the deceased.
• Mail Redirection: A request for mail redirection is advisable unless the executor
continues to live in the home. This ensures that no information is missed and does
not end up in the wrong hands. It also ensures that mail does not accumulate and
signal an extended vacancy at the home.
Generally, an executor cannot collect bank balances or titles to assets cannot be
transferred by the executor until proof of the executor’s authority (e.g. a grant of probate
or a copy of a notarial will) has been provided to the third party who controls ownership
or registration of title. Practically, this requirement usually takes some time. Therefore,
when the assets are received, the estate accounting will need to reflect any transactions
that occurred in the deceased’s accounts between the date of death and the date funds or
assets are received. (See Chapter 10 Estate and Trust Accounts.)

5.3.8.3 Safety Deposit Boxes

If the deceased owned a safety deposit box, it will be necessary to bring the keys to the
bank and arrange to list the contents in the presence of a bank employee.9 A copy of the
listing is usually left in the box. The contents of the box can be removed after the grant is
issued naming the personal representative.
If there is a joint owner of the box, the joint owner may need to be present or provide
written consent for the listing to proceed in the absence of the joint owner.

9
British Columbia only: As noted in Chapter 4, Initial Stages of an Estate Administration, s. 183 of The Wills,
Estates and Succession Act (S.B.C. 2009, c. 13) sets out the rules for accessing a safety deposit box.

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If the safety deposit box keys cannot be found, it will be necessary to drill the box. A
grant, a court order or other proof of the executor’s authority will be required before this
can occur.
British Columbia: The Wills, Estates and Succession Act10 sets out the rules for
accessing a safety deposit box.

5.3.8.4 Privacy and Joint Accounts

Executors may find that a third party is reluctant to share information when the deceased
owned an account with another person on the grounds that there may be disclosure of
personal information about the other party. However, the executor is entitled to all
information up to and including the date of death even where the asset goes to the
survivor by right of survivorship. For further discussion about privacy and anti-money
laundering matters which may arise, see Chapter 4 Initial Stages of an Estate
Administration.
Collecting information about jointly owned accounts (e.g. assets owned by the deceased
and at least one other person) and assets is important for a number of reasons.

• There may be tax reporting obligations for income earned until the date of death
or there may be deemed dispositions of the deceased’s interest to be reported.
• Tax reporting rules will require that the ownership is established for a variety of
reporting purposes.
• Common Law Jurisdictions: Increasingly it is important for the executor to
make inquiries to determine why an account is owned joint with right of
survivorship and
o whether or not it should pass to the survivor(s) according to the law or
account agreement, or
o if the survivor(s) are holding the account or asset on a resulting trust for the
estate.
• If the account or asset is held on a resulting trust it must be collected and
reported when applying for the grant. Otherwise it passes outside of the estate
directly to the survivor(s) upon proof of death. Quebec: The shares of co-owners
of property held in undivided co-ownership are presumed to be equal (art. 1015
CCQ). To rebut this presumption the survivor must produce evidence of
ownership in different proportions. The deceased’s share will form part of the
succession and the surviving co-owner will not receive the deceased’s share
unless he or she is entitled to the deceased’s share under the will or the intestacy
rules.
See 5.5.1 Assets Owned Jointly, for further review of the issues related to jointly owned
assets in common law jurisdictions.

10
Ibid., s. 183.

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5.3.9 Location of Assets

5.3.9.1 Common Law Only: Identifying Asset Location

When listing assets, the location of each asset jurisdiction is usually required.
When a grant of probate or grant of administration is required, the general requirement is
to report all personal property wherever located if the grant will be used to collect the
property. All real property interests in the jurisdiction must also be reported. Any
property (personal or real property) that requires a grant from another jurisdiction may
also need to be disclosed when applying for the grant. However, the property should be
clearly indicated as being outside the jurisdiction so that it is exempt from probate fees or
taxes.
For purposes of the estate summary, assets in another jurisdiction are often listed on a
separate page. This ensures that they are excluded when calculating probate fees and
taxes, and are easily identified when applying for a grant in the other jurisdiction.

5.3.9.2 Quebec Only: Assets Included on the Inventory

An application for probate of a will made in the presence of witnesses or a holograph will
does not include a list of the estate assets. However, an inventory will be required for the
administration. Assets in all jurisdictions are included in the inventory as the succession
constitutes a whole for the purpose of transmission, liquidation and partition, unless the
deceased had made a situs will (e.g. a will that deals with immovable or real property in
another jurisdiction).

5.3.10 Safeguarding Assets

As noted, the executor is responsible for safeguarding assets. There are a number of ways to do
this and some have been noted above. This section reviews the more common practices and
general considerations. Unique safeguarding needs for certain assets or asset categories are
addressed later in this course (see 5.4 Asset Categories).

5.3.10.1 Safe Storage, Security, and Insurance

Decisions about storage and security requirements are guided by the nature of the asset.
Cost and other practical issues must also be taken into consideration. Actions required
may include:
• Moving valuables to a vault with double custody or another secure place
• Arranging storage for art collections or other valuables that require special
facilities and/or climate control
• Arranging for storage of household goods pending probate and sale or
distribution if the premises are not secure or must be vacated
• Arranging for insurance on valuables, collections and jewellery

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• Arranging for insurance on homes, including vacancy permits if the home is

not occupied
• Ensuring that homes and other properties are appropriately prepared for the
different seasons and satisfy insurance requirements, including periodic
inspections
• Changing locks where others may have keys
• Arranging for security services for homes or other premises

5.3.10.2 Preventing Unauthorized Access to Accounts and Collecting

Income
Third parties responsible for bank and investment accounts must be notified of the death.
Each financial institution will have its own policies and procedures that it will follow. For
example, accounts will likely be frozen and requirements for releasing the assets will be
communicated on request. However, the executor should also:
• Give specific instructions regarding future deposits and withdrawals, including
whether or not transactions are to be permitted,
• Give instructions that no further trades should occur on an investment account,
and that any dividend reinvestment plans should be terminated so that dividends
are received as cash and no further share purchases occur,
• Give instructions redirecting investment income to the deceased if delivered by
mail so that cheques do not get lost, and
• Collect bank balances and transfer investments to an estate account as soon as
possible (usually upon receipt of the grant or other proof of the executor’s
authority). This may involve a physical transfer or reregistration of accounts or
certificates into the executor’s name.
If the deceased was receiving income or loan payments from individuals or other entities
that are not large financial institutions, or assets are being held by a third party, the holder
or payer should be instructed to redirect income payments and/or to not deal with the
assets without further instruction.
The executor will need to open an estate account to handle cash receipts and
disbursements. An investment account may also be required. The executor will want to
minimize the number of accounts maintained to avoid mistakes and additional time when
income tax returns and beneficiary accountings must be prepared.
If there is a corporate executor or trustee, an account may be opened on the company’s
trust accounting system. The account will hold all cash balances and investments and
record any non-financial assets. When customized trust accounting systems are used, all
transactions are recorded in one place. Special codes are used that allow the executor to
generate customized statements required in order to prepare income tax returns and to
account to beneficiaries.

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5.4 ASSET CATEGORIES

There are a number of classes or categories of assets. The two broad categories are:
• personal property, referred to as movables in Quebec and in the common law and
• real property, referred to as immovables in Quebec and the common law.
Real property includes any interest in land such as ownership of land, a house, or a condominium
(strata in British Columbia).
Common Law Only: Real property includes a mortgage held by the deceased as security for a
loan to a third party.
Quebec Only: Real property includes a “hypothec” that charges an object that is immovable
property (art. 2665 CCQ).
Personal property (movables) is everything else, including items and structures that can be
removed from the land. For example, a mobile home is personal property because it is not
affixed to the land it sits on. However, a house or other building is affixed and is included in the
valuation of the real property interest.
Quebec Only: See articles 899-907 CCQ for the definition and distinction between movable and
immovable property (see Figure 5.1 Quebec Only: Kinds of Property (Arts. 899-907)).

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Figure 5.1: Quebec Only: Kinds of Property (arts. 899-907)

TITLE ONE

KINDS OF PROPERTY AND ITS APPROPRIATION

CHAPTER I
KINDS OF PROPERTY

899. Property, whether corporeal or incorporeal, is divided into immovables and movables.
1991, c. 64, a. 899.

900. Land, and any constructions and works of a permanent nature located thereon and
anything forming an integral part thereof, are immovables.

Plants and minerals, as long as they are not separated or extracted from the land, are also
immovables. Fruits and other products of the soil may be considered to be movables,
however, when they are the object of an act of disposition.
991, c. 64, a. 900; 2002, c. 19, s. 15; 2016, c. 4, s. 122.

901. Movables incorporated with an immovable that lose their individuality and ensure the
utility of the immovable form an integral part of the immovable. 1991, c. 64, a. 901.

902. Integral parts of an immovable that are temporarily detached therefrom retain their
immovable character if they are destined to be put back. 1991, c. 64, a. 902.

903. Movables which are permanently physically attached or joined to an immovable without
losing their individuality and without being incorporated with the immovable are immovables
for as long as they remain there and ensure the utility of the immovable.

However, movables which, in the immovable, are used to operate an enterprise or to carry on
activities remain movables. 1991, c. 64, a. 903; 2013, c. 27, s. 28.

904. Real rights in immovables, as well as actions to assert such rights or to obtain
possession of immovables, are immovables. 1991, c. 64, a. 904.

905. Things which can be moved are movables. 1991, c. 64, a. 905; 2015, c. 35, s. 2.

906. Waves or energy harnessed and put to use by man, whether their source is movable or
immovable, are deemed corporeal movables. 1991, c. 64, a. 906.

907. All other property, if not qualified by law, is movable. 1991, c. 64, a. 907.

Assets can also be categorized by other features and characteristics. For example investments are
a broad category of assets but within that class, there are a number of different sub-categories.
These include:

• cash (e.g. bank accounts),

• fixed income securities (e.g. bonds, GICs, treasury bills),

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• equity investments (e.g. stocks or shares – investments in companies),

• mutual funds, and
• real estate.
Assets can also be held within different investment vehicles. For example:
• Registered plans may hold a wide range of different investments.11
• Private companies may be created to hold a portfolio of investments, or shares of an
operating company. They are referred to as holding companies.
The rules for pricing these assets or investment holding vehicles differ. Each asset type generates
different types of income for the investor as well (e.g. interest, dividends, mutual fund
distributions).
For purposes of preparing the inventory it helps to group assets based on the details that must be
recorded.
The next sections of this Chapter review the most common categories of assets (see Figure 5.2
Supplemental Content on Asset Categories for additional classifications)
Common Law Only: The estate summary found on the STEP website for students under
“Student Resources” provides an example of how many of these assets are reported. This is just
one example. Additional details may be required for an internal version for purposes of
preparing the tax return and/or for the application for the grant.

11
The “qualified investments” permitted in registered plans are defined in the Income Tax Act, supra, note 6.

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Figure 5.2: Supplemental Content on Asset Categories

IMPORTANT NOTE FOR STUDENTS

In 5.4, Asset Categories, many features of the more common investment vehicles are reviewed.
However, it is beyond the scope of this course to fully explain the nature and character of each type of
investment. In addition, the course does not review the different kinds of investment advisors available
in the marketplace or the principles that must be applied to establish an investment policy statement to
guide how funds should be invested for an individual, estate, or trust.
It is the student’s responsibility to become familiar with the more common investment vehicles
discussed in this course and how these investments are purchased and sold or redeemed. Students
should also understand the nature and basic rules that apply to registered plans (RRSPs, RRIFs,
RDSPs, RESPs, and TFSAs) and annuities. Prior to completing the Advanced Topics in Estate
and Trust Administration course (CETA 2), students are expected to be familiar with the general
steps required to determine an investor’s risk tolerance and investment objectives, which in turn
will inform the development of an investment policy statement to guide the choice of investments.
For an easy-to-understand resource to supplement the content in this Chapter, see The Investor
Education Fund website at GetSmarterAboutMoney.ca. The site is funded by the Ontario Securities
Commission and offers clear, concise basic information about the assets discussed in this Chapter,
ranging from bank accounts to different types of bonds, GICs, stocks, and mutual funds. It also covers
real estate, registered plans, annuities, and insurance. See the page Managing Your Money –
Investments for a list of the different investment vehicles. There is a link for each investment vehicle to
definitions, explanations, and examples. A review of the information about the investments on this list
will provide students with the minimum knowledge required for this course.
The Planning section of GetSmarterAboutMoney.ca (found below the list of investments) provides
information about the different types of investment advisors (Getting Advice), the process for making
investments (Investing Basics), and the Canadian income tax system (Understanding Tax). Students
who are not familiar with these topics are encouraged to review the material in order to prepare for
chapters that follow and future courses.
The British Columbia Securities Commission’s website (InvestRight website: About Investments) also
has good information and offers additional information on some topics. The site includes summaries of
the different types of investments and how they work.
The Canadian Securities Course, offered by the Canadian Securities Institute, provides a comprehensive
course for anyone entering the investment industry. Historically, it has also been mandatory education
for staff in trust companies who administer estates and trusts. More information about the course is
available on the website.
Clients may also hold more complex assets such as flow-through shares, hedge funds, income trusts,
principal protected notes, and options. There are a variety of websites that offer consumer education on
these types of investments, including the sites above. While these are not required knowledge for this
course, students are encouraged to visit these sites to learn more about these and other investment
vehicles and ways for investors to participate in the market.

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5.4.1 Wages, Pensions, Death Benefits, and Annuities

Prior to retirement a person may receive wages or other sources of regular income, including
government disability benefits. Upon retirement, employment income may be replaced by new
sources of income such as pension income and other periodic payments.
Pension sources include the Canada Pension Plan (CPP), or the Quebec Pension Plan (QPP) for
those who worked in Quebec. Other pension sources include government pensions from other
countries, employer pensions, and the federal Old Age Security (OAS) and Guaranteed Income
Supplement (GIS). If the deceased was a surviving spouse or common-law partner, he or she
may also be receiving survivor benefits, including the CPP survivor benefit. Pensioners may also
have purchased an annuity to ensure a steady source of income
Most pensions and annuity payments are deposited automatically in the pensioner’s bank
account. Therefore, it is important to notify the payer of the pension or annuity of the death as
soon as possible so that payments are terminated. Payments received into an account after the
date of death must be returned as soon as the executor has legal authority over the account.

5.4.1.1 Canadian Government Pensions

Canadians who contributed to the CPP or QPP can apply to receive monthly pension
benefits at age sixty-five. Applications for a reduced pension may be made beginning at
age sixty. Applications can also be deferred until age seventy. The pension amount
payable depends on the deceased’s lifetime contributions and when the payments begin.
If the deceased could not work due to a disability he or she may have been receiving a
CPP disability benefit.
Canadian citizens and legal residents who meet certain requirements are also entitled to
receive OAS payments. The amount of an OAS payment depends on the number of years
the individual lived in Canada after age eighteen. An application for OAS can be made to
ensure payments begin upon reaching age sixty-five. Applications may also be deferred.
See the Government of Canada website for more details.12 If a recipient’s net world
income for a taxation year exceeds a specified threshold a recovery tax is due and some
or all of the OAS must be repaid.
Canadians whose income is below a certain threshold may also apply for GIS payments.

5.4.1.2 CPP/QPP and Other Federal Pensions in the Month of Death

All federal and QPP pension payments are paid for the month. If a person dies before the
cheque is issued or an automatic deposit occurs, the estate will keep the payment and
report it on the estate inventory. For example, if the deceased died on the fifth of the
month, and automatic deposit is made on the twentieth, the amount of the cheque is
recorded on the inventory and is part of the assets at the date of death.

12
Government of Canada website – Old Age Security: http://www.esdc.gc.ca/en/cpp/oas/index.page?

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5.4.1.3 CPP/QPP Spouse and Dependent Child Benefits

When inquiring about the CPP, or QPP where applicable, the executor should determine
whether a surviving spouse or any dependent children may now be eligible for a survivor
benefit or the child benefit and may wish to assist the survivor or dependent child with
the application by providing proof of death and the necessary forms.

5.4.1.4 Other Pensions and Periodic Payments

The deceased may also be receiving a monthly employer pension or annuity payment.
Payments must be dated on or before the date of death. Any payments received after the
date of death by automatic deposit, or cheques dated after the date of death, must be
returned.
If the deceased received a government pension from another country, inquiries will be
required to determine whether or not the deceased’s estate is entitled to the payment.

5.4.1.5 Wages and Other Employee Entitlements

If the deceased was employed at the time of death, the employer’s human resources
department will be able to confirm whether the deceased was entitled to any benefits,
including final salary, bonuses, or vacation pay.

5.4.1.6 Death Benefits

CPP/QPP pension recipients are entitled to a death benefit. The amount of the payment
will depend on the number of years and the amount of the deceased’s contributions. The
maximum payment is $2500. The average as at July 2014 was $2294.07.13 If there are no
estate assets to administer or the executor does not apply, the person responsible for the
funeral expenses may apply for the death benefit. The surviving spouse or common-law
partner is the next in line, followed by the next of kin.
The estates of recipients of CPP/QPP survivor benefits do not receive a death benefit.
Employer pension plans must also be reviewed for possible entitlements for the
deceased’s spouse and dependants. The deceased’s estate may also be eligible for one of
the following benefits:

• a lump sum based on the contributions made to a pension plan while the deceased
was employed, plus interest,
• a lump sum based on an actuarial calculation, or
• a deferred pension benefit.

13
For a detailed review of the federal pensions, including the death benefit, and how to make applications, visit the
Service Canada website at http://www.servicecanada.gc.ca/eng/services/pensions/index.shtml. For information
about the QPP, visit the Quebec website at http://www.rrq.gouv.qc.ca/en/accueil/Pages/accueil.aspx.

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The employer’s human resources department should be able to confirm any pension
benefits.

5.4.1.7 Veterans
Veterans of Canada’s armed forces and their dependants may be eligible for burial,
pension, and other benefits if they meet the eligibility requirements. Veterans without
sufficient funds to cover their funeral expenses may be eligible for help from the Last
Post Fund. The local Veterans’ Affairs Office can be contacted for further information

5.4.1.8 Annuities
Annuities are periodic payments that continue for the annuitant’s life and are issued by
life insurance companies. Annuities may be purchased with the funds in an RRSP instead
of converting the RRSP to a RRIF. Annuities can also be purchased to address financial
commitments to third party creditors, including a former spouse, or to secure a future
income stream to an individual.
The cost of an annuity depends on the terms of the annuity contract, interest rates at the
time of purchase, the life expectancy of the annuitant, who will receive the payments, and
the monthly payment.
Annuity payments end upon the death of the annuitant unless there is a guarantee period
or it continues for the benefit of a surviving spouse. Payments received after the date of
death must be returned unless there was time remaining in the guarantee period. When a
guarantee period has not expired, the payments continue until the end of the period. The
executor may be able to elect to take a commuted lump sum amount in order to proceed
with distribution of the estate. A decision to take a lump sum will need to be carefully
considered. Each decision will depend on the circumstances and needs of the estate, the
interest of the beneficiaries, including the relationship to the deceased, and whether or not
there is a testamentary trust.
Example of an Annuity with a Guarantee Period
Ryan purchased an annuity that will pay him $1000/month for life beginning next month.
He is sixty-five. The annuity cost $100,000.14 If Ryan dies in an accident after two years
(having received $24,000), the estate receives nothing further.
However, if the purchase price included a guarantee period of five years, Ryan’s estate
would receive payments for another three years for a total of $36,000 (three years
@$12,000/year). Although the full $100,000 used to purchase the annuity was not
recovered, Ryan and his estate received a combined total of $60,000. If the $100,000
purchase price included a fifteen-year guarantee, then the estate would be entitled to
receive $12,000/year for thirteen more years for a total of $156,000.

14
The numbers in this example are used for illustration purposes only. They are not based on actual quotes or prices.

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In the circumstances, Ryan secured an income for himself of $1,000/month for life. If
Ryan had lived to age ninety, he would have received $12,000/year for twenty-five years
for a total of $300,000. The guarantee period allowed him to minimize the risk to his
estate.
Guarantee periods are usually offered for five, ten, or fifteen years. While a guarantee
period will add to the cost of the annuity, it can protect the estate from the risk of an
early, unexpected death.
If Ryan’s estate is entitled to payments under a guarantee period, the executor will want
to consider the implications for the estate. A commuted lump sum payment may be a
practical solution to allow the estate distribution to be completed. Decisions will be
guided by the amount that might be received, the beneficiaries, and the terms of any
testamentary trusts.

5.4.2 Other Income Sources

Other income sources may include rents from residential or commercial properties; investment
income from assets such as GICs, government savings bonds, bonds, shares in public companies,
mutual funds, loans; RRIF payments; and income from trusts. These sources of income are
addressed under the applicable asset descriptions below.

5.4.3 Cash on Hand and on Deposit

For purposes of the inventory, “cash on hand and on deposit” includes:
• physical money found on the deceased and/or in the home and
• cash balances on deposit at a financial institution.
The balance of a chequing account will be the balance at date of death. If the account is a savings
account, the amount due to the estate will be the balance at date of death plus accrued interest
earned between the last payment and the date of death. The financial institution will provide the
accrued interest balance, which is based on daily or other periodic balances over the period in
question.
Once cash has been collected, the executor should ensure that, where possible, it is held in an
interest-bearing account. Larger amounts might be invested in short-term GICs if the cash is not
required immediately.
Quebec Only: The type of investment that can be made with cash assets is limited to “presumed
sound investments” (arts. 1339-1344 CCQ) unless the terms of the will have conferred more
extensive powers of administration on the liquidator (art. 778 CCQ). The investment rules are
discussed in CETA 2.

5.4.4 Fixed Income Securities: GICs, Savings Bonds, Treasury Bills, Bonds
There are a variety of investment vehicles that offer investors a fixed return on the principal or
capital invested. These are reviewed below.

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NOTE: For tax purposes, accrued income on these investments is included in the value of the
estate assets and is reported on the deceased’s final tax return. Income earned after the date of
death is earned by the estate and is applied to expenses and/or distributed as required.

5.4.4.1 Guaranteed Investment Certificates (GICs)

GICs are issued by financial institutions for fixed terms from thirty days to five or more
years. The interest rate is an annual rate and may be paid annually or more frequently
(e.g. semi-annual, quarterly, or monthly). If a GIC is a compound interest GIC the
interest is added to the principal.
The principal amount invested in a GIC is returned to the investor on maturity.
Examples:
Interest payment options on $10,000 invested in a three-year GIC paying 2% per annum.
Assume the GIC is purchased on June 1.

• Annual payment:
o $200 will be paid each June 1.
o On the third anniversary, the $10,000 will be returned to the investor.
• Semi-annual payment:
o $100 will be paid on December 1 and June 1 each year for three years.
o On the third anniversary, the $10,000 will be returned to the investor.
• Compounded interest GIC:
o At the end of year one, $200 is added to the principle of $10,000.
o At the end of year two, 2% of 10,200 ($204) is added to the principal.
o At the end of year three, 2% of 10, 404 ($208) is added to the principal.
The GIC has matured, so $10,612 is paid to the investor.
If the investor died on July 15 in year three, the deceased’s estate will be entitled to the
principal and the interest accrued since the last payment on June 1st at the end of year
two.
The description of a GIC on the inventory should include:
• the issuer name,
• the principal,
• the maturity date,
• the interest rate, and
• the frequency of payment.
The accrued interest is calculated based on the number of days. To calculate the accrued
interest, follow these steps:
1. Count the number of days since the last payment, beginning with the first day
after the payment and including the date of death.

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2. Multiply the principal by the interest rate and the number of days and divide by
365.
Example:
• Jordan owned a $10,000 GIC 2% semi-annual pay, due June 1, 2018.
• Jordan died on March 5, 2017.
• The last payment was December 1, 2016.
• The number of days since the last payment is ninety-four days calculated as
follows:
o December (30 days) + January (31 days) + February (28 days) +
March (5 days)
• The accrued interest = $51.51 which is calculated as follows:
o 10,000 x 2% x 94 days/365 days (the number of days in the year)
There is usually a penalty for cashing a GIC early. Or, early redemption may not be
permitted. The one exception to these rules is on death. However, if it is possible to
continue to hold the GIC to maturity the executor may choose to do so if the funds are not
required for the administration and a better rate is not available.
In addition, while a GIC is normally not transferrable, it may be possible to transfer it to a
beneficiary. It will depend on the terms of the GIC contract.

5.4.4.2 Government Savings Bonds

Canada Savings Bonds (CSBs) and Canada Premium Bonds (CPBs) are issued by the
government of Canada.15 Some provinces also issue savings bonds. Each year a new
series of bonds is issued with a stated maturity date and interest rate.
Similar to a GIC, a principal amount is invested. The interest can be paid each year
(Regular bonds) or compounded (Compound bonds). Unlike GICs, the interest on savings
bonds is only paid annually unless it is compounded, in which case it is earned but not
received until the bond matures.
Savings bonds however, can be cashed at any time. Because the bonds can be cashed, the
interest rates are reset from time to time, so it is important to check the tables on the CSB
website to determine the current rate payable when calculating accrued interest.
Canada Savings Bonds are purchased through payroll plans. Canada Premium Bonds may
be purchased directly or through a bank or an investment account. The sales period is
early October to December 1.
Savings bonds are redeemable at any time subject to the following rules with respect to
interest:

15
For more information on CSBs and CPBs, see the website, which also includes information on the interest rate
and maturity dates for each issue: http://www.csb.gc.ca/home/

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Canada Savings Bonds: Interest is paid up to the end of the last month.
Example:
In 2014 Ellie purchased a $10,000 CSB paying 2% each November 1.
• An annual interest payment of $200 is paid on November 1, 2017.
• Ellie redeems the CSB on January 15, 2018.
• Ellie will receive $10,000 plus $33.33 interest for the months of November
and December 2017 ($200 x 2 months/12 months). No interest is paid for
January.
• If Ellie died on January 15, the same rules are used to calculate the
accrued interest for purposes of the inventory even though the bond hasn’t
been redeemed.16
Canada Premium Bonds: Interest is paid up to the last anniversary date.
Example:
In 2016, Dylan purchased a $10,000 CPB paying 2% each November 1.
• An annual interest payment of $200 is paid on November 1, 2017.
• Dylan redeems the CPB on January 15, 2018.
• Dylan will receive $10,000. No interest is paid for the months of
November and December 2017.
• However, if Dylan died on January 15, 2018, the “hardship” rules allow
for payment of interest up to the last month before death (e.g. for the
months of November and December) and the accrued interest to be
reported will be $33.33.17
Savings bonds are described on the inventory in the same way as a GIC. However, the
interest rate applied for the current year should be included along with the principal due
and accrued interest.
The requirements for transfer or redemption of CSBs and CPBs on death are found on the
CSB website. There is one set of rules for Quebec where notarial wills are the preferred
form.
There is a second set of rules for all jurisdictions outside Quebec for situations when a
grant may not be required. For example, under the rules as of June 2018, if the value of
the bonds is less than $75,000 and the sole beneficiary under the will or an intestacy is
the spouse, a notarial certified copy of the will, proof of death, and a completed transfer
form (2351) ETRF is required. The limit is $50,000 where the children or the spouse and

16
An alternative approach is to accrue the interest on a daily basis if the bond is not cashed in the month of death.
Since the interest for the month of January will be received, some practitioners will allocate the amount received
pro-rated to the date of death. Practices vary between firms and corporate trustees.
17
See the website for other hardship exceptions.

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children are the sole beneficiaries. The threshold is reduced to $20,000 where there are
other relatives, a common-law spouse or same-sex partner. For full details students may
refer to the Bank of Canada business rules found on the CSB website. A copy of the
business rules in place at June 2018 can also be found on the STEP website for students
under “Student Resources.” However, students should ensure that no updates have been
issued before relying on these rules.18

5.4.4.3 Treasury Bills

Treasury Bills (or T-Bills) are short-term money market instruments issued by the
Government of Canada for up to 365 days. They are purchased through a broker. Unlike
a bond or GIC they are purchased at a discount. There is no interest payment. Rather, on
maturity, the investor receives the face value of the T-Bill. The difference between the
purchase price and face value is the interest earned. T-Bills can be sold before maturity.
The purchase price of a T-Bill depends on current interest rates.
Example:
• Sarah purchases a $100,000 T-Bill for $97,000 that comes due in ninety-one
days.
• On maturity, Sarah will receive the original $97,000 plus $3,000, which is treated
as interest.
• If Sarah sells the T-Bill or dies before the maturity date, the price will depend on
current interest rates. The calculation of the price requires a special formula and
can be obtained from the broker.
When a T-Bill is reported on the inventory, the price at the date of death is recorded
along with the accrued interest. The broker can provide this information. In addition, the
face value of the T-Bill and maturity date should be recorded.

5.4.4.4 Bonds
Bonds are issued by all levels of governments and corporations. In effect the bond issuer
borrows from the investor. Bonds can be purchased on the open market through a broker.
The price will fluctuate after the initial release depending on current interest rates. Bonds
can be purchased at par, at a discount, or at a premium. An example of each is set out
below.
Example:
Ava purchased a $100,000 Government of Ontario bond, 5% semi-annual pay, due
October 1.

18
The link to the Bank of Canada Business Rules is available here: http://www.csb.gc.ca/canada-savings-bonds-
program/services-bond-owners/transferredeem-from-a-deceased-owner-all-provinces-except-quebec/. This link also
provides the guides to dealing with Savings Bonds as well as the Quebec rules.

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Purchase at par:
If Ava purchased the bond at par, Ava paid $100,000 and the price paid is shown as
$100. She will receive 5% interest ($5000) annually. However, because it is a semi-
annual pay, $2,500 will be paid on April 1 and $2,500 will be paid on October 1.

Purchase at discount:
If Ava purchased the bond at a discount, she paid less than $100,000. The price is
determined by current interest rates. If the current rate of return for bonds maturing in
October 2016 is 6%, Ava will only pay $83,333. The price is shown as $83.33. The
annual interest payment of $5,000 is the equivalent of a 6% return on Ava’s investment of
$83,333.19

Purchase at premium:
If Ava purchased the bond at a premium, she paid more than $100,000. Again, the price
is determined by current interest rates. If the current rate of return in the market is 4%,
Ava would pay $125,000. Ava’s return of $5000 is now 4% on her investment of
$125,000.20
If Ava dies before the bond matures, the price of the bond on the date of death is used to
determine the date-of-death value. Accrued interest will be calculated from the last
payment date. If Ava dies on April 10, the accrued interest is calculated in the same way
that GIC accrued interest is calculated:
• The last payment was on April 1.
• The number of days for purpose of calculating accrued interest is nine days
(exclude the payment date of April 1 and include the date of death April 10).
• The accrued interest is $123.20 ($100,000 x 5% x 9/365 days).
The information required on the inventory includes:
• name of issuer;
• description of bond, including the face value, series information, and/or other
descriptors or features;
• interest rate as stated in the bond description;
• payment frequency (usually semi-annual);
• maturity or due date;
• price of the bond on the date of death;
• accrued income details:
o number of days since last payment beginning with the first day after the
payment and including the date of death.

19
Note that when the bond matures, Ava will have a capital gain of $16,666.67, the difference between the purchase
price and the principal due on maturity.
20
When this bond matures, Ava will have a capital loss of $25,000, the difference from what she paid and what she
received on maturity.

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o accrued interest amount.

5.4.5 Shares in Public Companies

Shares or stocks represent an investment in the ownership of a company itself, that is,
shareholders own an interest in the company. Shareholders earn income from the investment in
the company when the company pays dividends. There are different classes of shares and each
class has its own set of rights. Some have voting rights. Some are entitled to specified dividends.
Companies issue different classes of shares. The two main types of shares are:
1. Common Shares: Common shareholders share in the profits of the company if and
when there are profits to be shared and the directors decide to declare a dividend. On
the wind up of a company the common shareholders share the net proceeds after all
debts and preferred shareholders are paid. The value of the shares depends on the
current net value of the company. Common shareholders have voting rights and elect
directors to run the company. The directors appoint the officers (president, secretary,
and treasurer) to manage the day-to-day operations.
2. Preferred Shares: Generally, preferred shareholders do not have voting rights. They
receive fixed dividends. The dividend rate may also float. If a company cannot pay
the dividend in a given year, the dividend due may be cumulated and carried forward
for payment in future. The price of preferred shares is more stable than common
shares because of the dividend entitlement and preferred shareholders have a priority
over common shareholders on a bankruptcy or liquidation. Preferred shares often
come with other rights such as a right to convert to common shares or to ask the
company to redeem the shares at certain times.
This course is only concerned with shares traded on the public stock exchanges – public
companies. Private companies are dealt with in CETA 2.
For purposes of valuing public shares, an executor can obtain the price from a variety of sources,
including the newspaper and online sources. The investment firms where the deceased held the
account may also look up the prices for the executor.
For purpose of the estate inventory, the description of a stock holding should include:
• name of the company,
• type of share and any description attached to it (e.g. features such as being redeemable or
convertible), including the stated dividend rate for preferred shares,
• market price at the close of business on the date of death or the last business day before
the date of death,
• number of shares, and
• value of any ex-dividends.

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5.4.5.1 Ex-Dividends
In addition to determining the market value of the shares, it is important to determine
whether or not there are any ex-dividends due to the deceased. Ex-dividends are another
type of accrued income that must be included on the inventory, or the annual accounting,
as the case may be.
There are four important dates after a dividend is declared:
1. Declaration Date: the date the dividend is announced.
2. Ex-dividend Date: (see below)
3. Record Date: the date the shareholders of record entitled to the dividend are
determined.
4. Pay Date: the date the dividend is paid.
These dates are important because dividends are not paid on the same day they are
declared and shares might be sold or purchased before the payment date. Accordingly, it
is important to know who is entitled to the dividend – the seller or the purchaser.
In order to prepare the dividend payments to shareholders, there must be a cut-off date to
know who should receive the dividend. This is the record date. The record date can be up
to a month or more before the payment date. If the purchaser will receive the dividend, in
theory the price will be higher than if the seller will receive the dividend.
When public company shares are sold, the new shareholder of record will be recorded on
the company register within three days after the trade date. It is often referred to as T+3
(trade date plus three business days).
The “ex-dividend” date is used to determine whether the purchaser receives the dividend.
A purchaser who buys the shares on or after the ex-dividend date will not receive the
dividend. It is paid to the seller. If shares are purchased before the ex-dividend date, the
purchaser receives the dividend.
In the case of an estate, the “seller” is the deceased and the trade date or date of sale is the
date of death. Dividends due to the deceased at the date of death become part of the
capital of the deceased’s estate and are recorded as accrued income. If the deceased was
not entitled to the dividend, it becomes income to the estate (the “purchaser”) in the first
tax year following the date of death. Some examples are provided below to illustrate
these rules.
Example:
A dividend of $1.50/share is declared for all shareholders of ABC Ltd who are
shareholders of record on March 5. The dividend pay date is March 30. The ex-dividend
date is March 3.

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Declaration Ex-dividend Date Record Date Payment Date

Date
February 4 Tuesday, March 3 Thursday, March 5 Monday, March 30

Scenario #1:
• Ethan owns one hundred common shares of ABC Ltd. He dies on March 4, a date that
is after the ex-dividend date.
• The shares are worth $25 each at the close of business on March 4.
• The inventory will show one hundred common shares in ABC Ltd at $25 each for a
total value of $2500.
• Because Ethan died after the ex-dividend date, the inventory will also show Ethan’s
entitlement to the $150 dividend payable on March 30, 2015 (100 shares x
$1.50/share). The amount is shown separately and will be reported as income on
Ethan’s final tax return.
Scenario #2:
• Abby dies on March 2, a date that is before the ex-dividend date.
• The share price is $26/share.
• The inventory will record the one hundred shares valued at $2600. The dividend is not
included because it is paid to the “purchaser” (the estate).
• The executor will report the $150 dividend on the first T3 tax return for the estate
which begins the day after the date of death (see Chapter 8 Personal Tax Returns Due
on Death).

5.4.6 Mutual Funds

Essentially, a mutual fund is made up of a pool of funds contributed by a number of investors.
The money invested is used to purchase a portfolio of investments in accordance with the
investment policy for the fund. Each investor is allocated his or her pro rata share according to
his or her contribution. The investor’s interest is said to be unitized and each investor holds a
number of units. Most mutual funds in Canada are created as trusts. Mutual funds can also be
created using a company structure. The units of a mutual fund company are referred to as shares
and distributions are referred to as dividends.
Mutual funds allow investors with smaller amounts to invest to obtain better diversification and
to gain access to investments that might not otherwise be available or affordable. The
investments in a mutual fund are managed by a professional investment manager and each
mutual fund is described by its investment objectives and the type of investments purchased. The
different types of funds include short-term money market investments, longer term fixed income
funds invested primarily in bonds, equity focused funds comprised of stocks from a specific

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country or region, or a mixed asset class portfolio focused on achieving a balance between
income and capital growth returns.
When the mutual fund is a trust, the units are purchased from the mutual fund dealer or
authorized representatives. If an investor wishes to sell the units, they must be redeemed. Units
are not traded on the stock exchange. The unit value is based on the net asset value of the fund at
the end of the trading day.
There are two types of income distributions from a mutual fund. The first is the more frequent
(monthly, quarterly) distributions of income that is comprised of the interest and dividends
earned for the period. The second is an annual distribution of net capital gains realized in the
year. If the mutual fund is a company, the latter is referred to as a capital gain dividend.
For purposes of the inventory, the executor will record:
• name of the mutual fund,
• number of units or shares held,
• price at the end of the day on the date of death, which is often available on public listings
or can be obtained from the dealer,
• market value,
• any accrued income based on a prorated allocation of the first income distribution
payment received after the date of death, and
• distributions of net capital gains are not included in accrued income. They should be
reported by the taxpayer who owns the units on the date the payment is received.
Unlike shares, there is no transfer of ownership, so there are no ex-dividend type rules.

5.4.7 Loans Due to the Deceased

The deceased may have lent money to family, friends, or business associates. The loans may take
many forms. The more common types of loans that may be identified are reviewed below. For
further information about loans to the deceased generally, see Chapter 6 Estate Liabilities and
Claims Against the Estate.

5.4.7.1 Promissory Notes

A promissory note documents a loan. The borrower acknowledges a loan and promises to
repay the loan on the terms set out in the note. The note sets out the interest rate and sets
the terms as to how and when the loan will be repaid. It may also document the security
that has been put in place.
Some promissory notes are payable on demand. In these situations there is no regular
payment schedule. Other loans may require monthly interest payments or establish a
repayment schedule that includes principal and interest.
Common Law: Any security for the loan will be in the form of a mortgage registered in
the land registry or land title office, or a charge registered against personal property in
the applicable provincial registry for personal property security.

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Quebec: A hypothec to secure performance of the debtor’s obligations may be in the

form of a movable or immovable hypothec (arts. 2660 & ff. CCQ). Repayment of the loan
may also be guaranteed by suretyship (arts. 2333 & ff. CCQ).

5.4.7.2 Agreements for Sale (Quebec: Instalment Sales)

If a deceased sold a property or asset to a third party and agreed that the purchaser could
pay the purchase price over time, the arrangement should be documented in an agreement
for sale. The agreement will set out the terms for payment of the purchase price,
including interest and a payment schedule. It will also set out when title or transfer of
ownership will occur and any security arrangements that are put in place.
Quebec: See articles 1745-1749 CCQ for more information regarding instalment sales.

5.4.7.3 Recording Loans Due to the Deceased on the Inventory

The executor will need to review all documentation to determine the terms of any loan
arrangements between the deceased and a borrower or purchase under an agreement for
sale.
If the borrower provided security for the loan by way of a mortgage on land (or a
hypothec in Quebec21), then the mortgage (or hypothec) should be recorded on the
inventory as an interest in a real property (an immovable in Quebec).
The executor must determine the balance of principal due and the status of interest
payments to ensure everything has been collected. If no payments have been made
recently, it is important to quickly investigate whether or not limitation periods may be
running and a claim must be made to protect the loan. See Chapter 6 at 6.3.4.1 Limitation
Period Has Expired, for more information on limitation periods and promissory notes.
The borrower should be advised to redirect payments to the executor and should be asked
to confirm the amount of the debt outstanding.
When listing the loan, the details to be included are:
• name of the borrower,
• amount due, including both principal and any unpaid interest,
• interest rate,
• accrued interest,
• the nature and details of any security put in place, and
• term (due date).

5.4.8 Income from a Trust

If the deceased was a life tenant or income beneficiary of a trust entitled to the trust’s net income
each year, there may be an amount due to the estate. The trustee should be asked to prepare an

21
See art. 2660.

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accrued income statement for the beneficiary’s estate detailing the income earned and paid in the
trust’s current tax year, and identifying all accrued income to the date of death. The accrued
amounts are calculated using the same valuation rules for accrued income for a deceased
person’s estate. (See 5.3.5 Accrued Income, and the relevant sections for income from different
types of assets below.) The trustee should be asked to send the accrued income amount upon
receipt of the grant, or other proof of the executor’s authority, and all relevant tax information
slips when available.
Example:
Grace is the income beneficiary of a testamentary trust. She receives the net income each year.
The trust holds ten stocks that pay interest semi-annually. It also has shares in ten different
companies. The trustee pays Grace the accumulated interest and dividends on hand at the end of
each calendar quarter. Grace died on April 15. The trustee must send the executor of Grace’s
estate a statement indicating the amount paid on March 31, the amount of interest and dividends
received between April 1 and April 15, and the accrued income at April 15 (e.g. accrued interest
and the amount of any ex-dividends at April 15). Once the executor of Grace’s estate has
provided the proof of his or her authority, the trustee will send the executor the amounts on hand
at April 15, plus the total of the accrued income. All income received after Grace’s death (less
the accrued income) is payable to the next income beneficiary, or to the capital beneficiaries if
the trust is distributable.

5.4.9 Registered Plans

Registered plans are established under the Canadian Income Tax Act. They are vehicles to allow
Canadians to save money for different purposes and to defer income tax on income and gains
earned. The full details of each type of plan is beyond the scope of the course. Students are
referred to the GetSmartAboutMoney website or Canada Revenue Agency website for more
details. Quebec students can refer to the Revenu Quebec website.
There are several types of registered plans, each with different rules.
1. Registered Retirement Savings Plans (RRSPs)
2. Registered Retirement Income Funds (RRIFs)
3. Registered Education Savings Plans (RESPs)
4. Registered Disability Savings Plans (RDSPs)
5. Tax Free Savings Accounts (TFSAs)
Common Law Only: All provincial and territorial jurisdictions have legislation that permits
owners of RRSPs, RRIFs, and TFSAs to make beneficiary designations of the RRSP, RRIF, or
TFSA. As a result, the plan assets pass outside of the estate and generally will not be subject to
the claims of creditors. The legislation also permits designations in a will.

Quebec Only: Designations are only permitted for plans that qualify as annuities (arts. 2445-
2452 CCQ) or as a valid trust. The designated beneficiary need not exist at the time of the
designation. It is sufficient that the designated beneficiary exist at the time his or her right

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becomes payable or, if the designated beneficiary is conceived but not born, that he or she be
born alive and viable (art. 2447 CCQ). The designated beneficiary must be a natural person.

See Figure 5.3 Jurisdictional Legislation Governing Beneficiary Designations in Registered

Plans at the end of this chapter for the legislation in each jurisdiction. Students are encouraged
to review the legislation to become familiar with any special restrictions that may apply to
registered plans.

Registered plans hold a variety of investments including cash, GICs, bonds, shares, and mutual
funds.
When a plan owner dies, information about the registered plan can be obtained from the trustee
for the plan, or through the financial institution where the plan was established. Key pieces of
information to watch for include:
• The Value of the Plan at the Date of Death. This is calculated by the trustee of the plan
and follows similar rules for determining market values and accrued income.
• Designated Beneficiary(ies):

Common Law Only: Plan beneficiaries may be identified in the plan application form or in
a will. Where the designation is in the will, the plan should already be in existence. The will
cannot refer to future plans. If there are designations in the plan documentation and in a
will, and the names are not the same, guidance will be required to determine which one
prevails. The dates of the documents, and details of any revocations, will be required. If a
will has been revoked, and later revived, it is unlikely that any beneficiary designations will
be revived. Note as well that the deceased may have arranged for the beneficiary to be a
person who will hold the plan proceeds on trust. The terms of the trust may be in the will or a
separate trust document.

Quebec Only: If the plan is an insurance-issued product, the designation of beneficiary(ies)

may be made in the insurance policy or in another writing that may or may not be in the form
of a will (art. 2446 CCQ).
In the sections that follow, the unique features of each of these plans are discussed. The more
detailed rules about the taxation of plans on death and tax on certain amounts earned after the
date of death are addressed in CETA 3.

5.4.9.1 Registered Retirement Savings Plans (RRSP)

RRSPs allow Canadians to set aside money for retirement. Contribution limits are set by
the federal government and are based on the taxpayer’s employment income. When a
contribution is made, there is a corresponding deduction on the taxpayer’s income tax
return. While the money and investments purchased remain in the plan there is no tax on
the income earned or capital gains realized. When the plan holder withdraws funds, the
investments in the plan are usually sold and cash is paid to the plan holder. The amount
received must be reported on the plan holder’s income tax return for the year it is

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received. If there are withdrawals, or a contribution is not made in a given year, the
contribution room is not lost and funds can be contributed at a later date.
Contributions to an RRSP can continue until December 31 of the year the contributor
turns seventy-one. However, the RRSP can be converted to a RRIF or an annuity at any
time before then. The CRA calls the taxpayer an annuitant.
If funds are withdrawn from an RRSP, the amount withdrawn is included in the
taxpayer’s income in the taxation year of the withdrawal. On death, the tax rules impose a
deemed disposition and the entire value of the plan, including accrued income, is deemed
to have been withdrawn.
Common Law: Unless there is a designated beneficiary, the FMV of the plan on the date
of death must be reported on the inventory.
Quebec: Unless the designation is valid and the plan passes outside the estate, the FMV
of the plan on the date of death must be reported on the inventory.
Details to be noted include:
• name of the institution where the plan is held,
• type of registered plan (e.g. RRSP, RRIF, TFSA, RDSP, RESP),
• plan number, and
• valuation.
If there is a valid designated beneficiary, the information about the plan is included on the
page listing assets passing outside of the estate where this page is included. This helps
ensure the plan is not ignored for administration purposes and assists with preparation of
the tax return.
Quebec: Although rare, if there is a designated beneficiary, the RRSP would not be
included on the inventory.
Note: Whether or not there is a designated beneficiary, the full amount of an RRSP is
also included on the deceased’s final tax return. Elections to defer the tax may be possible
in certain situations where the proceeds of the plan are transferred to:
• the deceased’s spouse or common-law partner,22
• a child or grandchild who is financially dependent on the annuitant, or
• an RDSP.
These rules are discussed in CETA 3.

22
Note that “common law partner” is defined in the Income Tax Act. As a result in jurisdictions that do not
recognize relationships that have not been registered, the surviving partner (e.g. a de facto spouse in Quebec) may
still be recognized for purposes of dealing with registered plans.

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5.4.9.2 Registered Retirement Income Funds (RRIFs)

A RRIF can be opened any time up until the end of the year when the taxpayer turns
seventy-one. RRIFs are funded from RRSPs and other registered pension plans.
New documentation is required to open a RRIF. There are no tax consequences triggered
when registered funds are transferred to a RRIF.
The new documentation allows the taxpayer (the annuitant) to identify his or her spouse
as successor annuitant. The annuitant can also designate one or more others to be
beneficiaries of the RRIF.
Quebec: See 5.4.9 Registered Plans regarding beneficiary designations in Quebec.
Each year the annuitant must withdraw a minimum amount from the RRIF. The amount
received is reported as taxable income. The amounts paid out increase each year.
If funds remain in the account at the time of the annuitant’s death, and there is a
successor annuitant, there will be no tax consequences. The successor receives all future
payments. A number of elections also exist for certain qualified beneficiaries.23
If there is no successor annuitant, the fund is dealt with in the same way as an RRSP and
the entire amount is included on the inventory of estate assets. If there is a designated
beneficiary/successor annuitant, the plan proceeds pass outside of the estate and the plan
is reported on the inventory page that lists assets passing outside of the estate. In either
situation, the full value of the RRIF is reported as income on the final tax return.

5.4.9.3 Tax Free Savings Accounts (TFSAs)

Canadians may transfer specified amounts of cash each year to a TFSA. The amount is
set by the federal government. It is not tied to income and there is no deduction from
income in the year of the contribution. If a contribution is not made in a given year the
taxpayer will have “contribution room” in future years. A taxpayer who opens the TFSA
is called a “holder”.
Example: Luke contributed the maximum amounts to his TFSA from 2009-2012
($20,000). However, he did not contribute in 2013 or 2014 ($5,500 per year). In 2015
Luke can contribute $9,000 for the years he did not contribute as well as the limit set for
2015.
The money in a TFSA can be invested in a wide range of investments subject to the
qualified investment rules. The interest, dividends, and capital gains accumulate in the
TFSA tax free. The holder is not taxed on the amounts withdrawn. If original

23
The details of the various options and elections for qualified beneficiaries who are not a spouse or common-law
spouse are beyond the scope of this course. See CRA website “Death of a RRIF Annuitant” for more information.
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrif-ferr/dth-eng.html. Further details are also provided in CETA 3.

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contributions are withdrawn, the contribution room remains open for future contributions
at a later date. However, accumulated income amounts cannot be re-contributed.
Generally, a TFSA ceases to exist on the death of the TFSA holder. However, some
special rules apply:24
Common Law: A TFSA holder can designate a spouse or common-law partner (a
“survivor”) to be a successor holder. In this situation, the TFSA can continue and the
survivor’s contribution room for his or her own TFSA is not affected. Although a TFSA
plan ceases to exist unless a spouse or common-law partner is a successor holder, the
proceeds will pass outside of the estate when a beneficiary designation is made in the
plan documentation or a will.
Quebec: A designation of the spouse is not possible, however, the proceeds may be gifted
to a named beneficiary as a particular legacy in a will.
Common Law:
Example:
The TFSA contribution maximum for the years 2009 to 2012 was $5000
($20,000).
In 2013 the TFSA limit was increased to $5,500. As at the end of December 2014
the total TFSA contribution room is $31,000.
Liam’s contributions are as follows:
• $5,000 in 2010, $4,000 in 2012, and $3,000 in 2013 for a total of
$12,000.
• Liam’s has $19,000 of unused contribution room.
• In 2014 Liam contributes to his TFSA and uses up his remaining
contribution room.
• Income earned in the TFSA over the years adds up to $1,000.
• Liam dies in 2015. He named his wife Jade as a successor holder (in
Quebec, he makes a particular legacy of the TFSA to his wife). Although
Jade already has her own TFSA with $25,000 in contributions, Jade
becomes the owner of Liam’s TFSA and the entire TFSA, including the
accumulated income, will remain in a TFSA for Jade. She may withdraw
funds from the account without tax consequences.
If Liam had designated his only son Noah as the beneficiary (or in Quebec, if it
was a particular legacy in the will) then Noah will receive the proceeds of the

24
If the spouse or common-law partner was not designated as a successor holder, there is an opportunity to make an
exempt contribution to a TFSA without regard to the survivor’s contribution limits. The contribution must be made
no later than December 31 of the year following the date of death. See CETA 3.

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TFSA tax free. If Noah has his own TFSA and only has $10,000 contribution room
available, Noah may contribute $10,000 to his own TFSA.
If the beneficiary of a TFSA under a will (whether designated or named in the will) is a
qualified donee (e.g. a charity or other entity authorized to issue a tax receipt), a tax
receipt for the value of the TFSA will be issued to the estate if all other requirements are
satisfied.
Common Law: For purposes of the inventory, if the TFSA passes outside of the estate
the details will be recorded on the page listing assets passing outside of the estate. The
details of the assets held in the TFSA are otherwise reported as with any registered plan.

5.4.9.4 Registered Education Savings Plans (RESPs)

RESPs offer a way for parents, grandparents, or other relatives to save for the future
education of children and grandchildren. The person who establishes the plan is called a
subscriber. The person(s) who will benefit from the plan is referred to as the
beneficiary(ies).
There are a number of rules, including contribution limits, how the funds can be used,
and how long the plan can remain in place. Plans can be established for one child or all of
the children in a family. The federal government also contributes to RESPs up to certain
limits. As a result, the rules on withdrawals are strict and timing can be important.
From an estate perspective, the important point to note is that RESPs do not provide for
designating a beneficiary on the death of the subscriber or the beneficiary. And, the
beneficiary for purposes of definitions relating to RESPs is not entitled to the RESP
proceeds if the subscriber dies.
Most plans provide for the appointment of a successor subscriber in the event that the
RESP is still in place when the subscriber dies. If there is no successor, or the RESP is
not otherwise dealt with in the will, the RESP will be treated as if the assets belong to the
estate. Therefore, it is important to determine whether or not the fund belongs to the
estate, and if it does belong to the estate, whether any funds must be repaid to the
government. The details of these rules are beyond the scope of this course.

5.4.9.5 Registered Disability Savings Plans (RDSPs)

RDSPs are long-term savings plans for Canadians with a disability. Eligibility is
determined based on eligibility for the Disability Tax Credit under the Income Tax Act.
The person with the disability is the beneficiary of the plan. Contributions may be made
by the beneficiary or by others. The contributor is referred to as the “plan holder” and is
the one responsible for managing the investments in the fund. The income earned on the
investments in the RDSP accumulate tax free.
The beneficiary is the only person who can withdraw the funds. There can only be one
plan and the lifetime contribution limit is $200,000. There are no annual limits and there

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is no deduction from the plan holder’s income in the year of the contribution.
Contributions can be made until the beneficiary turns fifty-nine. When the beneficiary
turns sixty, regular payments must begin or the entire RDSP must be used to purchase an
annuity.
The federal government may contribute a Canada Disability Savings Grant (CDSG) to
the RDSP based on the beneficiary’s “family net income”. The CDSG is a matching
Grant deposited into the RDSP. The entitlement is subject to a number of rules. Some
plans are also eligible for a Canada Disability Savings Bond (CDSB). Entitlement to
CDSB contributions are based on income. CDSG and CDSB grants end the year after the
beneficiary turns forty-nine.
If the beneficiary no longer qualifies for the disability tax credit, the plan must be closed
by December 31 of the following year. If the beneficiary dies the RDSP must also be
closed by December 31 of the following year. CDSG and CDSB contributions made
within the last ten years must be repaid to the government and the beneficiary’s estate
receives the remaining funds. There is no provision for designating further beneficiaries
of the RDSP.
For purposes of a plan holder who is not a beneficiary, the RDSP does not form part of
the plan holder’s estate and does not need to be reported on the estate inventory. When
the beneficiary dies, the RDSP proceeds will belong to the beneficiary’s estate.

5.4.10 Life Insurance Proceeds

5.4.10.1 Life Insurance as an Estate Asset

If the deceased named the estate as the beneficiary of a life insurance policy, the
insurance policy proceeds will be paid to the estate when the executor provides a copy of
the grant or other proof of the insured’s death, and any other required information. The
inventory should indicate the name of the insurer, the policy number, and the proceeds
due to the estate.

5.4.10.2 Life Insurance Passing Outside the Estate – Beneficiary

Designations
If the policy proceeds are designated to be payable to one or more named beneficiaries,
the funds will pass outside the estate and the policy should be listed on the estate
summary page for assets passing outside of the estate.
A beneficiary designation must be in the policy. Provincial and territorial legislation also
permit designations in the insured person’s will. If the designation is in the will, it must
specifically reference the issuer and the policy number.
A beneficiary designation may name a person(s) as trustee to hold the funds for the
benefit of other person(s).

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Legal advice may be required to confirm that a designation in a will qualifies as a

beneficiary designation and the proceeds pass outside the estate.
Common Law: The law permits a designation in favour of person(s) being a trustee(s).
The designation may be in the policy or in the will. The terms of the trust may be set out
in the will or another trust document. The trust is considered a testamentary trust for tax
purposes.
Quebec: If the insurance proceeds are payable to the trustee of a testamentary trust, the
proceeds will fall first into the estate and must be listed in the inventory.
If the insurance proceeds are payable to a named beneficiary pursuant to a valid
beneficiary designation, whether in the policy or in the will, the proceeds do not form
part of the succession of the insured (art. 2455 CCQ). Consequently, the proceeds are not
listed in the inventory. Advice may be required to confirm that the will has a valid
designation and that it is not a particular legacy.
Although rare, it is possible for the designation to be made to an existing trust. However,
unlike the common law, the trust must already be in existence.
If a life insurance policy is missing or cannot be found, assistance may be obtained from
the OmbudService for Life and Health Insurance website.
Generally, life insurance proceeds that pass outside of the estate are exempt from claims
by creditors.25

5.4.10.3 Other Life Insurance Benefits

The deceased may also have had life insurance under a group insurance plan through his
or her employer or other organizations he or she belonged to, such as alumni and
professional associations. If the deceased was involved in a car, plane, or train accident,
or while on vacation, he or she may also have life insurance coverage under an
automobile club or by a credit card issuer. The executor will need to review personal
papers and make the appropriate inquiries.

5.4.11 Collections and Other Valuables

Collections and other valuable items such as artwork will require an appraisal by a qualified
appraiser for the assets being valued. The cost of the appraisal will be an expense of the estate.
The inventory listing will note the description provided by the appraiser, the value, and could
include the appraiser’s name and contact information.

25
Creditor rights only arise if the estate is not solvent and cannot pay its debts and liabilities. These situations are
beyond the scope of this course.

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5.4.12 Real Estate

Real estate should be valued by a qualified appraiser for the type of property. The Appraisal
Institute of Canada has two designations.26
1. Canadian Residential Appraiser (CRA): A person holding a CRA designation is
qualified to offer valuation and consulting services and expertise for individual,
undeveloped residential dwelling sites and dwellings containing not more than four self-
contained family housing units.
2. Accredited Appraiser Canadian Institute (AACI): A person holding the AACI
designation is qualified to offer valuation and consulting services and expertise for all
types of real property.
In certain circumstances an alternative approach to obtaining a valuation of a residential property
may be appropriate. For example, in some jurisdictions a recent municipal assessment is
considered representative of the FMV.
It may also be sufficient to obtain an opinion of value from a real estate agent, especially if the
property is the deceased’s principal residence and the spouse will be the beneficiary or it will be
held in a spousal trust. However, one will need to be sure the valuation is based on the market
value at the date of death and not a proposed listing price, and is well supported, should there be
any dispute as to the value at a later date if the valuation is required for other purposes.
When a property is a multi-unit residential property and includes rental income, or could be a
revenue-generating property, other valuation considerations may need to be taken into account.
An AACI is recommended.

5.4.13 Common Law Only: Deducting Liabilities for Purposes of Probate Fees
and Taxes
If the deceased has an outstanding loan that has been secured by a mortgage against property
owned by the deceased, it is the practice in all jurisdictions to deduct the outstanding mortgage
value from the value of the property for purposes of calculating probate fees or taxes. However,
the debt does not reduce the value of the estate for purposes of executor compensation. Some
executors and lawyers will show the liability on the estate summary page where the real estate is
listed; others will show it on the liability page.
In some jurisdictions, liabilities secured against personal property may also be eligible for
deduction when calculating probate fees. The estate solicitor will provide guidance on this.
Alberta: The fixed probate fees are based on the net value of the estate after deducting all debts
and liabilities.

26
See website for more information and to find an appraiser for the type of property owned by the deceased.
http://www.aicanada.ca/membership-categories/

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Northwest Territories and Nunavut: The fixed probate fees are based on the value of the
estate. When calculating the value, the liabilities and debts against property in the territory are
deducted.

5.4.14 Vehicles, Boats, and Other Vehicles for Transportation

Cars, motorcycles, motorboats, bicycles, and watercraft can have a range of values depending on
the age, model, and condition. A variety of sources may need to be considered to determine the
fair market value.
One source for valuing a car is the Canadian Black Book. The information is now online and can
be searched by province and postal code.27
Other vehicles and modes of transportation may require inquiries of retailers of the particular
asset to determine the FMV.
The inventory should identify the vehicle make and model, year, serial identification number, the
date-of-death value, and the source of the valuation.

5.4.15 Personal Effects and Household Furnishings

Personal and household furnishing are a broad category. Household furnishings generally include
anything associated with the enjoyment of the home. Personal effects are items that are personal
to the deceased including clothing and jewellery. The distinction will only be relevant if the will
deals with each category differently.
Quebec: The distinction between personal effects and household furnishings is relevant if there
is partition of the family patrimony. It is also relevant for the inventory: only those personal
effects that are worth over $100 each are described individually in the inventory (art. 1328
CCQ). Household furnishings can be described as a universality (art. 1326 CCQ).
If the value of these items is nominal a valuation will not be required and the inventory will note
“of nominal value”. However, there may be furniture, jewellery, and other equipment such as
electronics or tools that do have sufficient value to be marketable. An auctioneer can be hired to
provide a disposition value for these items. Unless there are specific items worth identifying in
the inventory, the appraiser’s name and contact details, date of appraisal, and a total value for a
group of assets may be provided. The estate records will have the detailed listing.

5.4.15.1 Listing Personal Effects

Often, especially for a corporate trustee, it will be necessary to visit the deceased’s home
or place of residence to not only review personal papers but to also remove any valuables
for safekeeping and list the household furnishings and personal effects. If an auctioneer
cannot attend at the same time to make a listing and prepare a valuation, it is prudent to

27
See website at http://www.canadianblackbook.com/.

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visit with a second person and to make a listing on site. Photos of items in the location
where they are found can be helpful in this step.
The listing can become an important record if family members ask questions about items
that were not located. When such questions arise, the executor is at risk of allegations of
theft. It is for this reason that a second person is always present.
Where there is personal property with significant value, it may also be necessary to
determine the original cost for purposes of the deceased’s final income tax return (see
CETA 2).

5.4.15.2 A Caution when Listing Jewellery

When listing jewellery or any other item that may have value, it is important to only
describe the item. While markings can, and should, be noted, it is prudent to not use
words that could suggest the item is more valuable than it is. For example, a ring should
be described as “a gold-coloured ring with a dark blue stone and two small clear stones”.
Do not say “a gold ring with a sapphire and two diamonds”. Or, describe a necklace as “a
sixteen-inch string of white pearl-like stones”, rather than “a sixteen-inch string of
pearls”. It is for the appraiser to confirm the material and quality of the item.

5.4.15.3 Prepaid Amounts

Prepaid amounts include items such as newspaper and magazine subscriptions, club
memberships, home insurance, and car insurance. It may also include utilities. Some of
these amounts will be eligible for a refund for the unused portion. The amount due will
depend on the contract terms. Each contract should be explored to determine the estate’s
entitlement and/or possible liabilities that may be outstanding (e.g. for a cell phone
contract, or gas or electric heating bills).

5.4.16 Other Assets

There are numerous other assets and unique investment vehicles that may need to be identified
and listed. For example, points on loyalty programs should also be investigated. While they may
not have a FMV to be reported, it may be possible to transfer the points to certain family
members.
Generally, the guidelines discussed above can be used to report other assets. The key questions
to be addressed in the description and other considerations include:
• What is the value at the date of death?
• How was the valuation determined?
• What type of income does the asset pay and is there any accrued income?
• What unique features of the asset may require special attention?
• What is required to transfer ownership to the estate or others?
CETA 2 will look at business interests and discuss considerations for other types of assets.

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5.4.17 Missing Assets

An executor may have reason to believe that assets are missing. For example:
• A will leaves a specific gift to someone. It will be necessary to attempt to determine what
happened to the gift if it cannot be found (see Chapter 7 at 7.12 Lapse of Legacies).
• A tax return reveals that in the past year income was earned from an investment or asset
and there is no information to suggest that the asset was sold or transferred as a gift. Tax
slips may provide information on where more information might be found.
• Jointly held accounts, revealed in personal papers or a tax return, no longer exist at the
date of death, or have been emptied recently. It will be prudent to determine why the
account no longer exists, particularly if the deceased was incapable in the year prior to
death.
• A family member or beneficiary tells the executor about an asset or personal item that
they believed existed but is no longer owned by the deceased.

5.4.17.1 Unclaimed Property

In addition to the sources noted above, the Bank of Canada holds unclaimed balances
where there has been no activity at a federally regulated bank or trust company for ten
years. It includes deposit accounts, bank drafts, certified cheques, deposit receipts, money
orders, GICs, term deposits, credit card balances, and traveller’s cheques. The names can
be searched online.28 Balances of less than $1000 are held for thirty years. Balances over
$1000 are held for one hundred years. At the end of the relevant period, the funds are
transferred to the Bank of Canada.
British Columbia, Alberta, and Quebec also have unclaimed property offices that hold
property that is for other financial institutions and assets. The Office of the
Superintendent of Bankruptcy Canada also holds unclaimed property.

5.4.17.2 Heir Locators and Unclaimed Property

Executors should be alert to heir locators who may have matched unclaimed property to a
deceased person. The contracts that an executor will be asked to sign include significant
fees. Executors should be satisfied that they have conducted their own thorough searches
before entering such agreements.

5.4.17.3 Assets Identified in a Will

If the will includes a legacy of a specific asset that cannot be located, further inquiries
into when it was sold may be required if the deceased was incapable and was represented
by a substitute decision-maker. In some provinces if the substitute sells a specific gift in

28
See the website here http://www.bankofcanada.ca/unclaimed-balances/. Searches are by name and jurisdiction.

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the will, the beneficiary may be entitled to receive an amount equal to the proceeds of the
sale. The rule does not apply if the money was needed to care for the adult.29

5.5 ASSETS PASSING OUTSIDE THE ESTATE (WILL SUBSTITUTES)

AND TRANSACTIONS MADE PRIOR TO DEATH
Chapter 3, The Law of Wills, identified a number of ways to transfer assets outside of a will. In
these circumstances the deceased is generally assumed to have:
• received competent legal advice,
• understood the legal and tax implications of any transfers or actions taken,
• ensured that the action was completed in accordance with all relevant laws, and
• satisfied any other requirements that may apply.
However, it is increasingly becoming more important for an executor to scrutinize transfers and
designations diligently to ensure that the assets subject to these transfers and designations do not
belong to the estate, particularly where there is serious doubt that the deceased had the necessary
capacity to enter into the transactions in question. Where the arrangement is legitimate, it is
incumbent on the executor to assist the new owner to finalize the transfer. If there are questions,
further inquiries may be required or steps taken to recover the asset(s).

5.5.1 Assets Owned Jointly

Jointly owned assets were discussed in Chapter 3, The Law of Wills. When assets are registered
in the name of more than one person it is important to determine the legal nature of the
ownership and to be precise with the language used.
In common law jurisdictions, there are two forms of ownership. Each is treated very differently
for purposes of an estate administration. It is for this reason that terminology must be used
accurately. Many in the public mix the words and concepts and care should always be taken to
ensure the correct form of ownership is determined.

5.5.1.1 Co-ownership
For purposes of this course, “co-ownership” refers to a shared ownership where each owner has
full rights to a specified share of the asset and those rights pass under the will or succession
rules. The terminology differs between common law jurisdictions and Quebec as set out below.
Common Law Tenants in Common: Where property is owned as tenants in common each
owner has a specified share of the title. It may be equal (e.g. 50/50) or one owner may have a
greater ownership (e.g. 60/40). The income and gains or losses are shared in accordance with

29
This rule can be found in the British Columbia Wills, Estates and Succession Act, S.B.C. 2009, c. 13, s. 48, and
applies to guardians, attorneys, and representatives. S. 19(3)(d) of the Power of Attorney Act also addresses this
situation. The rule is also found in Ontario’s Substitution Decisions Act, 1992, S.O. 1992, c. 30, ss. 35.1 and 36, and
applies to both property guardians and attorneys.

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the share of ownership. Importantly for an executor, the deceased’s share is included in the
estate. It does not pass outside.

Quebec Undivided Co-ownership (arts 1012-1037): Where two or more people own an account
or asset together the shares of property held in undivided co-ownership are presumed to be
owned equally (art. 1015 CCQ). The fruits and revenues of the undivided property accrue to the
co-owners in proportion to their respective shares unless there is provisional partition or
another agreement with respect to their periodic distribution (art. 1018 CCQ). Costs of
administration and other common charges of the property are paid by the co-owners in
proportion to their respective shares.
The steps required to transfer the deceased’s title or ownership will depend on the circumstances.
If the joint owner is the sole beneficiary of the estate the deceased’s share can be transferred to
the beneficiary in accordance with the relevant rules for distributions (see Chapter 7 Estate
Beneficiaries).
If the beneficiary is a stranger, or funds are needed to pay liabilities, the circumstances will guide
the next steps. For example:
• the asset may have to be sold and the proceeds divided,
• the other owner may purchase it from the estate,
• it may be possible for the deceased’s title to be transferred to the beneficiary, or
• where the asset is an investment account, it may be possible to divide the holdings in
accordance with the ownership.

5.5.1.2 Joint Tenants with Right of Survivorship (JTWROS)

As noted in Chapter 3, The Law of Wills, if an asset or account is held in the name of
more than one person as joint tenants with right of survivorship, when one owner dies,
the survivor(s) becomes the legal and beneficial owner and the asset or account is not
included in the estate. Quebec does not have the legal concept of joint with right of
survivorship in its law.
Quebec Only: Quebec does not recognize joint ownership with right of survivorship.
Therefore, any asset or account in Quebec will be dealt with in the same way as an asset
or account owned in undivided co-ownership. If a Quebec domiciliary holds property in a
common law jurisdiction, it may belong to the estate if it is movable property, and the
liquidator should make enquiries especially if the residual heir and the surviving joint
owner are different. Further discussion of this matter is beyond the scope of this course.

5.5.1.3 Common Law Only: Challenges with Assets Owned JTWROS

Historically, joint ownership with right of survivorship required the “four unities” (see
Chapter 3 The Law of Wills). For a number of reasons, testators today may decide to add
a child or other close relative or friend to a bank account or investment account.
Sometimes property title is changed to add a second owner as a joint tenant with right of

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survivorship. These actions may or may not be taken with the necessary legal and/or tax
advice. Sometimes they are deliberately taken as part of a well thought out estate plan. It
is the executor’s responsibility to determine why an asset is owned joint with right of
survivorship and, if there are questions, to investigate further.
Generally one of three scenarios will apply. (See Chapter 3 The Law of Wills, for a
discussion of the presumptions that apply.)

• If the testator added a spouse or a minor child to the title or account, there is a
presumption of advancement (e.g. an intention of a gift of the remainder if the
testator dies first). On death, the spouse or minor child will become the legal
owner and will become the beneficial owner unless the presumption is rebutted by
an interested party. The asset or account will be listed on the estate summary page
for assets passing outside of the estate.
• If there was no intention to “gift” the right of survivorship, the survivor will not
take beneficial ownership. Rather the survivor holds the asset or account for the
estate. The value must be included in the inventory for probate fee/tax purposes.
• If the testator added an adult child there is no presumption of advancement (or
gift) and the burden falls on the adult child to prove that the deceased intended the
child to take the legal and beneficial ownership on the testator’s death. The law
continues to evolve around this issue. Accordingly, legal advice should be
obtained whenever there is a concern about whether a jointly owned asset
properly belongs to the estate.30
Joint accounts can be a very contentious and difficult aspect of an estate administration.
The executor’s responsibility is to make inquiries, consider the information and evidence,
and, where necessary assert the estate’s rights to collect the asset(s). When a joint asset or
account is determined to belong to the deceased, it must be included in the inventory and
is subject to probate fees/taxes where applicable.
Where an asset is determined to be held in a true joint tenancy with right of survivorship,
the estate summary will usually indicate this to ensure full disclosure and to ensure all
necessary tax reporting is addressed.

5.5.2 Designated Beneficiaries of Life Insurance and Registered Plans

See Chapter 3 The Law of Wills, for a discussion of beneficiary designations generally. See also
5.4.9 Registered Plans and 5.4.10 Life Insurance Proceeds.
Generally, when there is a designated beneficiary of a life insurance policy or registered plan, the
assets pass outside of the estate (art. 2455 CCQ). The assets are not subject to creditor claims or
probate fees (where applicable), and are not included in the estate that is subject to claims by
dependants. Creditor protection status for registered plans is more limited in some jurisdictions.

30
For example, see the recent Ontario Court of Appeal case Sawdon Estate v. Sawdon, 2014 ONCA 101 (CanLII).

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The executor should review the designation in the plan or in a will to ensure that it meets all the
necessary requirements and is clearly identified. If there is any concern that a designation in the
policy or will is not valid, or has been revoked, the insurer or plan trustee should be notified
immediately to ensure the proceeds are not transferred to the beneficiary named until the issues
are resolved.
Some of the more common scenarios are noted below.

5.5.2.1 Estate Is Default Beneficiary

If no beneficiary is designated, or the designated beneficiary dies first and no alternate
beneficiary is named, the proceeds will fall into the estate to be administered under the
will or on an intestacy. The proceeds will be subject to probate fees/taxes where
applicable and lose creditor protection.

5.5.2.2 Alternate and Survivor Beneficiaries

Where the first named beneficiary is not alive to take the plan proceeds, the
documentation must be reviewed for alternate beneficiaries. If the original designation
was to two or more people and one has predeceased, legal advice may be required to
determine whether or not the survivor takes the entire proceeds.

5.5.2.3 Transfer of Proceeds to Beneficiaries

Once copies of the life insurance policies are obtained, the executor will often assist the
beneficiary by contacting the company to initiate payment. Proof of death will be
required. If there is a named beneficiary, the proceeds from the policy will usually be
available in about thirty days and paid directly to the named beneficiary.
Quebec: The insurer is bound to pay the sums insured and any other benefits provided in
the policy in accordance with the conditions of the policy within thirty days following
receipt of the proof of death (art. 2436 CCQ) unless there is contestation of the named
beneficiary.
When a registered plan must be transferred to a beneficiary, the executor may need to
provide additional information to help facilitate the transfer.

5.5.2.4 Common Law Only: Trusts for Insurance or Registered Plan

Proceeds
In lieu of designating a person as the beneficiary of an insurance policy or the proceeds of
a registered plan, a testator may name a trustee to receive insurance proceeds and hold the

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funds in trust for one or more beneficiaries. The funds remain outside the estate and are
not available to creditors. This may occur in one of two ways31
1. A trust is established within the terms of the will to receive the proceeds of
insurance. Although the terms of the trust are in the will, the proceeds do not form
part of the estate and are not included for purposes of calculating probate
fees/taxes.
2. A trust document is prepared that creates a trust that comes into existence when
death occurs and the life insurance is paid to the trustee.
If the designation is in the will and the insurance proceeds are to be held in trust, care
must be exercised to not only separate the value in the estate inventory, but to also keep
the insurance proceeds outside the estate account.

5.5.3 Similar Considerations Will Apply Where the Proceeds of a Registered Plan
Are to be Held in Trust. Registered Plan Designations
Registered plans have been reviewed in depth (see 5.4.9 Registered Plans). It should be noted
that registered plans do not have the same level of creditor protection as life insurance proceeds
in some jurisdictions.32
Note that a plan designation in a will may still be valid even if a will has been revoked. Each
situation must be reviewed and legal advice may be required.

5.5.4 Gifts
An executor should consider inquiring into any gifts made by the deceased in the year before the
date of death for two reasons.
1. Tax Implications: If the gift was a property, investment(s), or other valuable, there may
be a deemed disposition that must be reported on the final tax return.
2. Gifts in Suspicious Circumstances: The prudent executor will make inquiries into
transfers in the year(s) preceding death when there are “red flags”. These may include:
• large transfers during the period leading up to the death or
• large (or multiple) transfers or unexplained changes of ownership during the period
when the deceased was declared or believed to be incapable.
It may be necessary to challenge the transfer. Legal advice will be required.
Quebec: Gifts made before death (liberalities) may be important when partitioning the family
patrimony or calculating the support claims for a surviving spouse or dependant (creditors of
support). These rules are discussed in detail in CETA 2

31
For further reading on insurance trusts see Waters beginning at p. 568 and the articles referenced in the footnotes.
See also L Frostiak, J Poyser and G Chow, A Practitioners Guide to Trusts, Estates and Trust Returns 2014
(Toronto: ThomsonCarswell).
32
It is beyond the scope of this course to review the creditor protection rules of life insurance and registered plan
designations.

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5.6 TRANSFERRING ASSETS TO THE PERSONAL

REPRESENTATIVE (IN QUEBEC: TO THE ESTATE)
Once a grant is obtained or proof of the executor’s authority is obtained, the executor must take
steps to gain control of the assets. The third party requirements to release assets will depend on
the nature of the asset.
Common Law: The executor will transfer the assets into the executor’s name to be held in an
estate account.
Quebec: The liquidator will transfer the assets to an account in the name of the estate.

5.6.1 Investments
When investments are held with an investment company in a book-based system, a copy of the
grant or proof of the executor’s authority is usually required.
If the deceased holds a physical stock certificate, it will be necessary to also send a completed
declaration of transmission to the transfer agent in order to transfer ownership to the executor. If
the certificate is to be transferred to a beneficiary, a Security Transfer Form is also required.
These requirements will usually be set out in the transfer agent’s response to the initial inquiry
letters.
If the deceased held stocks and had set up a dividend reinvestment plan, it will be necessary to
stop the reinvestment of dividends as soon as possible.

5.6.2 Real Property

5.6.2.1 Common Law Only: Transferring Title to Executor

Real property may be transferred into the name of the executor once the grant is issued.
The estate solicitor will assist with this process.

5.6.2.2 Quebec Only: Transferring Title to the Liquidator

It is prudent for the liquidator to transfer immovable property from the deceased to the
liquidator. A notary can assist with this process.

5.7 DISPOSING OF ASSETS

As noted in Chapter 4, Initial Stages of an Estate Administration, the general rule is that an
executor must call in (collect) all assets, pay expenses and debts, and distribute.
In addition to liabilities and estate expenses, specific cash legacies must also be paid (see
Chapter 7 Estate Beneficiaries). Therefore, the first priority is to ensure that, if necessary, liquid
assets (those that are easily sold) are sold or collected in order to be able to fund these payments
or distribute the assets.
Quebec: See arts. 776 and 781 CCQ.

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A second consideration is the need to sell any assets that are “wasting” or at risk to avoid any
further loss to the estate. These assets may include high risk volatile shares or any other
investment that is at risk in the current market. These challenges can be problematic for
executors given the law that may apply to a particular estate.
Common Law: The general rule is also that assets should be converted to cash unless they are
a legacy to a beneficiary. This avoids the risk of loss pending distribution.
Quebec: The liquidator should not convert to cash unless required to pay debts and particular
legacies. The liquidator’s powers to invest and sell estate property are limited by the rules
governing simple administration of the property of others (arts. 802 and 1301-1305 CCQ).
Article 1305 also gives an administrator powers to alienate property with the permission of the
beneficiaries (or the court). It also gives the administrator authority alone to alienate property
that is perishable or likely to deteriorate rapidly.
However, wills often provide exceptions to this rule and/or give the executor discretion as to
timing of the sale of assets:
Common Law: Often, wills include a power to retain the assets. This raises new issues to be
considered. Questions that arise may include: when should the asset be sold? Are there tax or
other reasons not to sell? Does the power to retain the assets continue indefinitely? The
executor’s duty is similar to that of a trustee and it is not appropriate to speculate on when a
“better” time may occur. The law on the power to retain and the duty to convert are discussed in
CETA 2.
Quebec: A testator may modify the liquidator’s powers in the terms of the will (art. 778 CCQ).
However, if a liquidator decides to sell assets, the liquidator should sell “without legal
warranty”, especially immovable assets. “Without legal warranty” means that the liquidator
should not make any warranties about the state of the property.

5.7.1.1 Disposing of Investment Assets

Prior to selling investments that are not needed for expenses or that are not at risk, and
where the executor is required to sell, or has authority to sell, the executor should
consider whether or not to offer the investments to the residuary beneficiaries in kind (see
Chapter 7 Estate Beneficiaries).
When there are investments to be redeemed such as GICs and mutual funds, the executor
will give instructions to the broker or dealer where the investment is held. If investments
are to be sold, instructions will be given to a broker, advisor, or investment manager
where the assets are held. If the executor is a corporate trustee, this will usually be
handled in-house by investment specialists.

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5.7.1.2 Disposing of Real Property and Other Assets

When the executor must sell other assets, including property, collections, and other
valuables, there are a number of steps and considerations, some of which have been
discussed earlier in this chapter. The general duties of the executor are to:

• Determine Sale Price: Is an updated appraisal required to determine the

current market value and to help inform the decision on the list price?
• Ensure Proposed Sales Commissions Are Appropriate: Are the sale
commissions fair and consistent with industry practice?
• Identify the Best Market for Offering the Asset for Sale: The executor
must seek to ensure an open market is used in order to obtain the best price.
For example, best practice when selling real estate is to use Multiple Listing
Service (MLS). Other assets may need to be taken to a special collector’s
auction or marketed through a specialist who has access to the potential
buyers. Household goods and other items from the home might be sold
through an auction house.
A specialist in selling the particular asset should be retained to provide advice and assist
with the listing and sale in order to ensure that the asset is made available to a broad
market to obtain the maximum value. Generally, private sales would not be prudent as
they do not truly test the market value. Failure to allow the asset for sale on the open
market opens the executor up to criticism by the beneficiaries and a challenge to the final
price. If it can be shown that the true market price was higher, the executor could be held
liable for the difference.

5.7.2 Conflicts of Interest

As a fiduciary, an executor must avoid placing him- or herself in a position of conflict of interest
where he or she may be in breach of duty of loyalty (Quebec: see art. 1310 CCQ). For example,
an executor may not purchase property from the estate or sell property to the estate, even for
FMV (Quebec: see art. 1312 CCQ). Such a transaction must be authorized in the will or be
approved by all of the beneficiaries. Where the executor enters such a transaction it may be set
aside by the court and/or the executor may need to account to the beneficiary(ies) for any profit
made.
This rule applies to staff working for a corporate trustee. Company codes of conduct will usually
address this issue as well.

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Figure 5.3: Jurisdictional Legislation Governing Beneficiary Designations in Registered Plans

Jurisdiction Legislation*
British Wills, Estates and Succession Act, S.B.C. 2009, c. 13, Part 5
Columbia
Alberta Wills and Succession Act, S.A. 2010, c. W-12.2
Saskatchewan The Queen’s Bench Act, 1998, S.S. 1998, c. Q-1.01, ss. 72-75 as
amended
Manitoba The Beneficiary Designation Act (Retirement, Savings, and Other
Plans), C.C.S.M., c. B30
Ontario Succession Law Reform Act, R.S.O. 1990, c. S.26, ss. 51, and 52
Quebec Civil Code of Québec, S.Q. 1991, c. 64, arts. 2445-2452 (for plans
issued by insurance companies only)
New Brunswick Retirement Plan Beneficiary Act, S.N.B. 1982, c. R-10.21, s. 2
Newfoundland Pension Plans Designation of Beneficiaries Act, R.S.N.L. 1990, c. P-
and Labrador 5
Nova Scotia Beneficiaries Designation Act, R.S.N.S. 1989, c. 36

Prince Edward Designation of Beneficiaries Under Benefit Plans Act, R.S.P.E.I.

Island 1988, c. D-9
Yukon Retirement Plan Beneficiaries Act, R.S.Y. 2002, c. 197, as amended
SY 2012, c. 15
Northwest Retirement Plan Beneficiaries Act, R.S.N.W.T. 1988, c. R-6
Territories
Nunavut Beneficiaries Designation Act, R.S.N.W.T. 1988, c. R-6, as
duplicated for Nunavut by section 29 of the Nunavut Act, S.C. 1993,
c. 28
* The relevant section numbers are provided when the applicable legislation is found in
a larger statute.

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