Chapter 6

Estate Liabilities and Claims Against the Estate

6.1 Identifying Estate Liabilities ..................................................................................... 6-4
6.1.1 Liabilities, Estate Expenses, and Claims Against the Estate ........................................ 6-4
6.1.1.1 Common Law Only: Executor’s Duty to Pay Debts .................................... 6-4
6.1.1.2 Quebec Only: Liquidator’s Obligation to Pay Debts ................................... 6-4
6.1.1.3 Estate Liabilities Versus Testamentary Expenses ..................................... 6-5
6.1.1.4 Other Claims Against the Deceased .......................................................... 6-6
6.1.2 Types of Liabilities and Establishing Amount Due ....................................................... 6-6
6.1.2.1 General Considerations............................................................................. 6-6
6.1.2.2 Sources of Information .............................................................................. 6-7
6.1.2.3 Household Bills and Other Regular Payments ........................................... 6-8
6.1.2.4 Medical, Pharmacy, Nursing, or Home Care Bills ...................................... 6-8
6.1.2.5 Credit: Loans, Mortgages, Lines of Credit, and Margin Accounts............... 6-9
6.1.2.6 Guarantees (Quebec: Suretyships) ........................................................... 6-9
6.1.2.7 Business Debts ....................................................................................... 6-10
6.1.2.8 Contracts for Services and Other Claims Against the Deceased ............. 6-10
6.2 Notifying Creditors .................................................................................................. 6-10
6.2.1 General Rules ........................................................................................................... 6-11
6.2.2 Common Law Only: Considerations When Advertising .............................................. 6-12
6.3 Settling and Disputing Debt and Claims ................................................................ 6-13
6.3.1 Verification of Specific Debts ..................................................................................... 6-13
6.3.1.1 The Burden of Payment........................................................................... 6-14
6.3.1.2 Joint or Shared Loans and Credit ............................................................ 6-14
6.3.2 Timing of Payment to Beneficiaries ........................................................................... 6-14
6.3.2.1 Common Law Only: When Legacies May be Paid ................................... 6-14
6.3.2.2 Quebec Only: When Legacies May be Paid ............................................ 6-15
6.3.3 Authority to Settle Amounts ....................................................................................... 6-15
6.3.3.1 Common Law Only: Settling Claims ........................................................ 6-15
6.3.3.2 Quebec Only: Settling Claims .................................................................. 6-15
6.3.4 Defences and Other Considerations .......................................................................... 6-15
6.3.4.1 Limitation Period Has Expired ................................................................. 6-15
6.3.4.2 Lack of Corroboration .............................................................................. 6-16
6.3.4.3 Claims for the Value of Services Provided ............................................... 6-17
6.3.4.4 Claims by Near Relatives ........................................................................ 6-17
6.3.4.5 Legacies to Creditors .............................................................................. 6-17
6.3.5 Disputing a Claim ...................................................................................................... 6-18
6.4 Rights of Spouses and Dependants....................................................................... 6-18
6.4.1 Spousal Rights .......................................................................................................... 6-19
6.4.1.1 Quebec Only: Spouse as Creditor of Support and Family
Patrimony Rights ..................................................................................... 6-19
6.4.1.2 Quebec Only: Additional Spousal and Dependant Rights ........................ 6-19
6.4.1.3 Common Law Only: Spousal Rights ........................................................ 6-19
6.4.1.4 Spousal Claim Deadlines ........................................................................ 6-20

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6.4.2 Dependant Claims ..................................................................................................... 6-21
6.4.2.1 Quebec Only: Dependants as Creditors of Support ................................. 6-21
6.4.2.2 Common Law Only: Dependant Rights.................................................... 6-21
6.5 Other Issues............................................................................................................. 6-22
6.5.1 Insolvency ................................................................................................................. 6-22
6.5.1.1 Quebec Only: When the Succession is Insolvent..................................... 6-23
6.5.2 Registered Plans and the Tax Liability ....................................................................... 6-24

Figure 6.1: Advertising for Creditors - Relevant Legislation by Jurisdiction ............................ 6-13
Figure 6.2: Statutory Provisions for Disputing Claims Against an Estate ............................... 6-18
Figure 6.3: Common Law Jurisdiction: Deadlines for Spousal Division of Family Property Claims
............................................................................................................................................. 6-21
Figure 6.4: Common Law Jurisdiction: Deadlines for Making a Dependant Relief Claim ....... 6-22

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 Chapter 6

Estate Liabilities and Claims Against the Estate

Learning Objectives
This Chapter reviews the steps required to identify and settle estate liabilities, manage
estate expenses, and settle the claims that may be made against an estate. The
Chapter also introduces students to the nature of claims that a spouse or dependant
may have against an estate. Upon completing this Chapter, students will be able to:
• Identify the types of liabilities that may be owed on death
• Distinguish an estate liability and an estate expense
• Identify sources of information to determine the amount of debts due on death
• Summarize steps for dealing with shared debts
• Summarize the rules for notifying creditors
• Summarize the options for defending claims against an estate
• Identify the limitation periods that may apply when defending a claim against an
estate
• Identify the types of claims by spouses and dependants that may impact the
estate distribution
• List the general order of priority for payment of liabilities, estate expenses, and
legacies if the value exceeds the value of the estate 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.

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 Estate Liabilities and Claims Against the Estate

6.1 IDENTIFYING ESTATE LIABILITIES

6.1.1 Liabilities, Estate Expenses, and Claims Against the Estate
During an administration there are three general categories of liabilities, expenses, or claims that
may arise. They are:

• debts or liabilities due as at the date of death, including claims by others in respect of
contracts or other liability to third parties,
• legitimate expenses and liabilities incurred in the administration of the estate, and
• claims that may be made, or rights that may be exercised, by a spouse or dependant.1
This Chapter reviews the types of debts and expenses that may need to be addressed by the
executor. See Chapter 10 Estate and Trust Accounts, for further information on estate expenses.
The Chapter includes a short discussion on spousal and dependent claims. Further details on the
rights of spouses and dependants will be addressed in Advanced Topics in Estate and Trust
Administration course (CETA 2).2 CETA 2 also discusses issues that may arise regarding
liabilities related to business interests and potential environmental liability.

6.1.1.1 Common Law Only: Executor’s Duty to Pay Debts

The executor must pay all just debts and settle any legitimate claims prior to the final
distribution of the estate assets. “Just debts” are also referred to as “valid” or “proper”
debts. Case law provides guidance on what is a proper debt. However every situation is
fact specific. Ultimately the executor has a duty not to waste the estate. Therefore, the
executor must be satisfied that:
• when a debt or specific amount is claimed, all relevant details have been
reviewed and considered, and that the calculation of the amount due is correct,
• there are no reasons to dispute the claim, and
• when the claim is more general (e.g. for damages for breach of contract or
liability for an event that occurred prior to the deceased’s death), that the amount
settled upon, if not taken to trial, is fair and reasonable.

6.1.1.2 Quebec Only: Liquidator’s Obligation to Pay Debts

The liquidator has an obligation to pay the debts of the succession (be they debts of the
deceased, charges on the succession or debts of support) and legacies by particular title
prior to final distribution (arts. 776 and 804 CCQ).

1
The rights of spouses and dependants vary significantly across provinces. For example, in Quebec, there is a
division of the family patrimony before distribution. In most provinces there is a right to apply for a division of
family property. In Ontario, the surviving spouse may make an election to take under the will or under family law
rules. As noted, these rules are discussed briefly later in this Chapter and in depth in CETA 2 (infra, note 2).
2
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 Liabilities and Claims Against the Estate

Prior to payment, the liquidator must be satisfied that:

• when a debt or specific amount is claimed, all relevant details have been
reviewed and considered, and that the calculation of the amount due is correct;
• there are no reasons to dispute the claim; and
• when the claim is more general (e.g. for damages for breach of contract or
liability for an event that occurred prior to the deceased’s death), that the amount
settled upon, if not taken to trial, is fair and reasonable.
Debts of the succession and legacies by particular title are paid in priority. If the property
of the succession is sufficient, the ordinary public utility bills and outstanding debts are
paid as and when they become due, according to the agreed-upon terms and conditions
(art. 808 CCQ).
Any compensatory allowance owed to the surviving spouse and any other claim resulting
from partition of the patrimonial rights of married or civil union spouses are paid in the
same manner as other debts of the succession, with the agreement of the other heirs and
legatees by particular title or, failing that, as determined by the court (art. 809 CCQ). See
6.4.1 Spousal Rights for more information on compensatory allowances and other claims
of the spouse. See also 6.5.1 Insolvency.

6.1.1.3 Estate Liabilities Versus Testamentary Expenses

For purposes of an estate administration, there is a distinction between “estate liabilities”
(outstanding debts and liabilities), which are a charge against the assets owned at the date
of death, and the “testamentary expenses”, which are the costs of administration incurred
in the administration of the estate. Estate liabilities include outstanding bills and
liabilities at the date of death. It includes outstanding income tax liabilities up to and
including any taxes that are due on the final date of death tax returns (see Chapter 8
Personal Tax Returns Due on Death). These are typically listed on the estate summary
(“inventory” in Quebec) and they are paid from the capital (see Chapter 10 Estate and
Trust Accounts).
Testamentary expenses are incurred by the executor in order to administer the estate.
They are recorded in the accounts provided to the beneficiaries.
CAUTION: Although some expenses, such as property taxes or utility fees, are fixed by
third parties, many are not. Suppliers may have different ways of calculating the cost of
goods or services. Accordingly, expenses charged to or incurred by the estate must be
reasonable. If an estate expense is successfully challenged, the executor can be held
personally responsible for part or all of the expense if it was not necessary or is
determined to be excessive in the circumstances.
Estate expenses include a wide range of expenditures. Some of the more common
expenses are funeral expenses, appraisal fees, professional service fees, property
insurance premiums, security or inspection services to protect assets, probate fees/taxes,
property taxes, utility bills, and condominium fees.

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 Estate Liabilities and Claims Against the Estate

Quebec Only: Common expenses include legal expenses to apply for probate, fees and
costs to obtain will search certificates, notarial fees for the preparation of an inventory,
the registration of its closure in the RDPRM3 as well as registration of the designation of
liquidator and stipulation of unseizability (if applicable) in the RDPRM, and the cost of
publication of a notice of closure of the inventory in a newspaper.
Executor fees are also an estate expense. However, the fees must be specifically
approved. Fees can be fixed by an agreement with the testator, agreed to with the
beneficiaries, or approved by the court. (See Chapter 9 Compensation and Expenses.)
When there is an ongoing testamentary trust, decisions will be required as to whether an
expense should be charged against the income earned or the capital. See Chapter 10
Estate and Trust Accounts for more information on allocating expenses between income
and capital interests.

6.1.1.4 Other Claims Against the Deceased

Other claims that might be made against the deceased include amounts due on a contract
or a claim for services provided. There may also be others, depending on the jurisdiction.
Common Law: A legal claim for a tort (wrongdoing or negligence).
Quebec: A “civil liability” claim (for a wrongdoing or negligence).
The deceased may also have a legal obligation under a divorce order or separation
agreement to make monthly support payments to a former spouse. Where the deceased
has any ongoing or regular financial obligations, it will be important to review the terms
of the order or agreement. If the order or agreement does not provide for how payments
will be satisfied in the case of death, the obligation may continue and it will be necessary
for the executor to seek legal advice to determine how best to fund the obligation.

6.1.2 Types of Liabilities and Establishing Amount Due

At the time of death the deceased may have a number of liabilities that need to be reviewed. The
inquiries required will depend on the liability. Different approaches may be required to establish
the amount due.

6.1.2.1 General Considerations

Corporate trustees and law firms will have a series of templates or form letters for use
when writing to the more common creditors. As with letters that inquire about assets,
letters to potential creditors should provide evidence of the executor’s authority and
request the details relevant for the type of debt. Proof of authority may be provided as
follows, depending on the jurisdiction.
Common Law: With a copy of the will and death certificate or the grant.

3
“RDPRM” in English, the Register of Personal and Movable Real Rights.

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 Estate Liabilities and Claims Against the Estate

Quebec: With a copy of the Notarial Will, or the probate judgment or notarial minutes of
probate, if applicable and the will search certificates.
The letter should also request that all future correspondence and any statements issued by
the creditor be redirected to the executor. This ensures that the executor can monitor bills
prior to closing the account, ensure that bills are paid when funds are available, and/or
deal with unauthorized transactions.
Examples of situations that may require attention include:
• Monthly or bi-monthly utility bills may need to be paid or arrangements made
pending the executor gaining authority over the estate funds.
• Credit card statements may need to be monitored until cancellation of the card is
confirmed to ensure that no unauthorized payments go through the account.
Where an outstanding debt carries interest, the executor will want to arrange payment as
soon as the debt has been verified, funds are available, and it is confirmed that there are
sufficient assets to pay all creditors.

6.1.2.2 Sources of Information

In addition to template letters, corporate trustees and law firms will have checklists that
identify the typical liabilities and ongoing expenses that must be dealt with. A wide range
of information sources will need to be used to identify these liabilities. Bank records,
statements, personal papers, income tax assessments, mail, and people in the deceased’s
life are all good sources of information. Here are some examples.
• Bank Records and Credit Card Statements: A review of these documents,
including the automatic withdrawals and pre-authorized payments, may identify a
number of regular expenses incurred by the deceased that need to be addressed.
They may include utilities, television, Internet services, phone, security systems,
and credit cards. These records may also reveal periodic payments.
• Mail: The deceased’s mail may also indicate the existence of a contract or a
regular service that needs to be cancelled and outstanding bills that require
payment. Often it may be necessary to redirect the mail to ensure that it reaches
the executor and to avoid it piling up outside the home if it is vacant. Redirected
mail will also assist to identify memberships, subscriptions, and other
relationships, financial or otherwise, that need to be attended to.
• Personal Papers: These may reveal insurance policies and/or other contracts that
the deceased has entered. Some may have automatic payments for premiums or
other fees due. Others may only invoice annually. Where the payments have been
made in advance, there may be a refund due and cancellation should occur as
soon as possible to maximize the refund. Where services are invoiced in arrears,
they need to be cancelled as soon as possible to avoid increasing the outstanding

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 Estate Liabilities and Claims Against the Estate

balance due. Personal papers may also include information about loan
arrangements with third parties.
• Income Tax Assessment Notices: These may reveal outstanding balances due
and/or quarterly tax instalments for the year.
• Family, Business Associates, Building Managers, and the Deceased’s Lawyer
and/or Accountant: These people may be able to identify other liabilities or
expenses that need to be addressed.
• Online Accounts and Services: Increasingly, executors need to be informed
about how to identify online services and accounts that may need to be
terminated. However, prior to termination, it will be necessary to also ensure that
all information and digital assets are preserved. Digital assets and related issues
are discussed in CETA 2.
Alberta: See Figure 4.4 Alberta Rules on the Role of the Personal Representative on the
personal representative’s core tasks, which includes identifying online accounts.

6.1.2.3 Household Bills and Other Regular Payments

Household bills need to be identified. Typical bills and regular payments include phone,
television, Internet, security systems, utilities, condominium fees, rents and leases,
insurance, property taxes, and subscriptions. Many are monthly but others may be bi-
monthly or less frequent.
Once these bills and payments are identified, the executor should:
• Consider immediate cancellation and/or diarize for future cancellation. For
example, if a home is vacant, telephone and television is no longer required, but
condominium fees or monthly rental payments must continue and it will likely be
prudent to maintain security system arrangements. Magazine and other
subscriptions can be terminated immediately to avoid new charges and/or collect
refunds if the subscription was paid in advance.
• Confirm the amount due and determine if interest is accruing on unpaid balances.
• Ensure that the outstanding balance is a proper estate liability. For example, if the
deceased’s adult child lived with the deceased and the bill relates to a phone or
Internet service used exclusively by the adult child, the expense is not a proper
estate expense. Similarly, if the deceased shared a credit card with another family
member, expenditures by and for the other person will not be a proper estate
expense.

6.1.2.4 Medical, Pharmacy, Nursing, or Home Care Bills

If the deceased was suffering from an illness or had medical needs prior to death, there
may be outstanding bills with a local pharmacy, ambulance services, or health-care

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 Estate Liabilities and Claims Against the Estate

related services. If applicable, inquiries should also be made at the residential facility
where the deceased lived for any outstanding accounts.

6.1.2.5 Credit: Loans, Mortgages, Lines of Credit, and Margin

Accounts
There are many ways to obtain credit today. For purposes of this course, the most
common are:
• credit cards issued by financial institutions and retailers,
• lines of credit with a financial institution,
• unsecured loans from financial institutions, retailers, and individuals for specific
purposes,
• “margin” accounts where an investor borrows against investments in an account
to make additional investments, and
• conventional mortgages to secure loans to purchase property, obtain lines of
credit, or fund borrowing for special purposes.
Each of these credit or loan arrangements is subject to the terms and conditions of an
agreement between the borrower and the lender. The agreement will document the:
• amount of the loan (principal) and schedule of repayment if applicable,
• interest rate, including method of calculation and payment frequency,
• due date for the balance owing or principal,
• renewal options if any, and
• security for the loan if any (e.g. a mortgage or other lien or charge against
personal property).
The deceased may have also purchased insurance to fund repayment of any debt
outstanding on death.
The lender will provide details as to the outstanding balance at the date of death, interest
rates that apply pending full payment, and the requirements to pay out or transfer the
debt.

6.1.2.6 Guarantees (Quebec: Suretyships)

A deceased may have also guaranteed a loan made to another person. Often this will
involve a loan from a financial institution to an adult child or family member, or a loan to
a business owned by the deceased. The executor will need to obtain a copy of the loan
and guarantee documentation.
Once the terms are known, including whether there was any security provided by the
deceased, a decision will be required as to whether or not full payment in satisfaction of

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 Estate Liabilities and Claims Against the Estate

the balance due should or can be made to bring the deceased’s obligations to an end. The
executor may need to explore options to ensure the debt is paid by the primary debtor or
is secured through other means. Negotiations with the lender and/or the primary borrower
may be required.
Quebec: Guarantors are called “sureties” in Quebec. A suretyship terminates on the
death of the surety (art. 2361 CCQ). The estate of the surety remains liable for debts
existing at the time the suretyship was terminated, even if those debts are subject to a
condition or a term (art. 2364 CCQ). As noted above, the liquidator may need to ensure
that the debt is paid by the primary debtor or is received by other means.

6.1.2.7 Business Debts

If the deceased operated an unincorporated business there may be additional business
related debts to be settled. Business assets are addressed in CETA 2.

6.1.2.8 Contracts for Services and Other Claims Against the Deceased
Contracts for personal services cannot be enforced against an estate.4 Personal services
include anything that the deceased might be contracted to do personally, or that required
participation by the deceased and cannot be done by another person. An example is found
in the case cited for this rule where the deceased was contracted to write a book.5
Individuals may also advance claims against the deceased’s estate for goods or services
provided to the deceased. Any claim that is not based on a formal agreement in writing
that can be verified must be scrutinized carefully. The executor will need to ensure that
sufficient evidence is provided to validate the claim itself and the amount due, and must
determine if the claim is within the applicable limitation period. Legal advice may be
required. See 6.3.4 Defences and Other Considerations.

6.2 NOTIFYING CREDITORS

An executor will be liable to creditors if proper debts are not paid. In addition to the sources of
information noted above, most jurisdictions have a way to give notice to potential creditors.
Common Law Only: Executors will usually advertise for creditors.
Quebec Only: The liquidator publishes a notice regarding the closure of inventory (art. 795
CCQ).
The notice process allows the executor to ensure that potential claimants have an opportunity to
learn about the death of the testator and bring forward any claims that have not already been
identified. The notice helps to bring closure to the question of potential liabilities and in most
jurisdictions protects the executor from liability if a claimant comes forward after the estate is
distributed.

4
Widdifield at para. 3.5.9. See art. 1441 CCQ.
5
Marshall v. Broadhurst (1831), 1 Tyrwhitt 349.

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 Estate Liabilities and Claims Against the Estate

Common Law Only: Where legislation does not offer protection, advertising is often
recommended in order to minimize the risk of future liability to the executor.
Quebec Only: Publication of the notice of closure of inventory fulfils a dual function. It informs
creditors and ensures limited liability for the heirs. The notice of closure of account also
operates to discharge the liquidator and sets the starting point for prescription (limitation
periods) purposes.

6.2.1 General Rules

Where Canadian jurisdictions provide statutory protection to executors who advertise for
creditors or post a notice to creditors, there are a wide range of rules that may apply. Some
jurisdictions require an executor to advertise or post a notice.6 Others do not require a notice or
advertising, but legislation provides protection from liability if the executor decides to do so. In
these situations, requirements may be set out in the legislation.7 Some require only one notice.
Others require multiple notices. The notice may need to be posted in the provincial Gazette or
local papers. Some prescribe the information that must be in the notice. Where the rules are not
set out in the legislation practices have developed to guide executors on what is appropriate for a
given situation.8 See Figure 6.1 Advertising for Creditors – Relevant Legislation by Jurisdiction
for a list of the relevant legislation and overview of the nature of the rules.
Although there are jurisdictional differences, there are three general requirements for an effective
notice or advertisement.
1. The notice/advertisement should be in the jurisdiction where the deceased lived
and/or conducted any business. It may be necessary to consider multiple jurisdictions.
2. The notice/advertisement must indicate that after the date set out in the notice the
estate may be distributed. The date set must allow for a minimum period of time
within which claims can be made. If there are multiple advertisements, the date
selected must be counted from the date of the last publication.
3. All jurisdictional rules, if any, must be complied with in order for the
notice/advertisement to be effective for purposes of ensuring that the executor will be
protected from future liability. This often includes the information to be
communicated, the date after which the estate may be distributed and how to make a
claim.
The purpose of the time period set out in the notice is to allow the creditor time to advance a
claim. Distributions must not be made until this date has passed. However, if a claim is advanced

6
These include Saskatchewan, Nova Scotia, and Prince Edward Island. In Quebec, CCQ, arts. 794 and 795 set out a
different process for ensuring notice.
7
For example, in these provinces, the requirements are set out in legislation if the executor decides to advertise:
British Columbia, Alberta, Manitoba, Newfoundland and Labrador, Yukon, Northwest Territories, and Nunavut.
8
For example, in Ontario, s. 53(1) provides protection to the executor who advertises, but guidance is found in the
case law. For a review of the different requirements and approaches, see Widdifield at para. 3.2. Note that New
Brunswick does not appear to have any legislation. Therefore, executors will decide what is appropriate in the
circumstances to minimize risk of personal liability.

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 Estate Liabilities and Claims Against the Estate

at a later date, or the executor learns of a new claim, and funds remain in the estate, the claim
must be dealt with. Where the executor has advertised in accordance with the applicable rules, he
or she will be protected from liability to any creditors who come forward after the estate assets
have been distributed. Most legislation includes a provision that permits the creditor or other
claimants to recover assets of the estate of the deceased person from the person who received
them.9

6.2.2 Common Law Only: Considerations When Advertising

Subject to specific requirements in order to ensure the executor can be protected from liability,
the executor must also consider the best methods to advertise and the costs. For example, a local
paper may not have broad enough circulation for some estates. A national paper may be too
expensive and unnecessary for others.10 One may also have to consider the most appropriate
jurisdictions depending on where the deceased lived and may have carried out business. Every
situation will require some judgment where there is discretion. Online publishing of legal notices
(using NoticeConnect - www.noticeconnect.com/) was approved by the Superior Court of Justice
in Ontario in 2017.
Example #1: If the executor has been acting as an attorney under an enduring power of attorney
for a number of years, the executor should have an in-depth knowledge of the deceased’s
financial situation and any potential liabilities. If the deceased had no business dealings and a
relatively simple lifestyle, costly advertising may be inappropriate.
Example #2: If the deceased was a business person and had numerous business dealings or
worked in more than one jurisdiction, a broader advertisement in a national paper may be
appropriate.

9
The following text is found in most statutes: “This section does not prejudice the right of a creditor or other
claimant to recover assets of the estate of the deceased person from the person who received them.”
10
For example, see Re Egan Estate, [1994] O.J. No. 84, 1994 Carswell Ont 2730 (Ont. Gen.Div.) as summarized in
Widdifield at para. 3.2.3. An advertisement in the Globe and Mail in this case was found to be unnecessary and the
cost was ordered to be refunded to the beneficiary.

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 Estate Liabilities and Claims Against the Estate

Figure 6.1: Advertising for Creditors - Relevant Legislation by Jurisdiction

Jurisdiction Legislation
British Columbia Wills, Estates and Succession
Act, S.B.C. 2009, c. 13, s. 154
Alberta Trustee Act, R.S.A. 2000, c.
T-8, s. 38 and Surrogate
Rules, Alta. Reg. 130/1995
Saskatchewan Administration of Estates Act,
S.S. 1998, c. A-4.1, ss. 32-33
Manitoba The Trustee Act, R.S.M. 1987,
c. T160, s. 41
Ontario Trustee Act, R.S.O. 1990, c.
T.23, s. 53
Quebec CCQ, arts. 794-795
New Brunswick No legislation
Newfoundland and Trustee Act, R.S.N.L.1990, c.
Labrador T-10, s. 24
Nova Scotia Probate Act, N.S.S. 2000, c.
31, s. 63
Prince Edward Island Probate Act, R.S.P.E.I. 1988,
c. P-21, ss. 17 and 47
Yukon Trustee Act, R.S.Y. 2002, c.
223, s. 47
Northwest Territories Probate Rules ss. 39-40
Probate, Administration and
Guardianship Rules of the
Supreme Court of the
Northwest Territories,
SOR/79-515 NT
Nunavut Trustee Act, S.Nu. 2013, c. 20,
s. 47
Summary of Requirements
If advertise, requirements are
prescribed
If advertise, requirements are
prescribed. Form NC34 may be
used
See requirements to advertise in
newspaper
If advertise, requirements are
prescribed
See case law for guidelines
See prescribed requirements to
publish a notice of closure of
inventory in the register of
personal and movable real rights
(RDPRM) and in a local
newspaper
Executor discretion
Court determines what is
sufficient
6 months’ notice in Royal
Gazette
6 months’ notice in Royal
Gazette after grant is issued.
Registrar posts notice
Court determines what is
sufficient
Court can provide directions or
see prescribed requirements for
voluntary advertising
Court determines what is
sufficient

6.3 SETTLING AND DISPUTING DEBT AND CLAIMS

6.3.1 Verification of Specific Debts
As noted above, the executor must pay “just” or proper debts. The law requires the claimant to
“corroborate” the claim by providing evidence to support the claim. The executor must then
review that evidence. For example:
• Credit Cards: Ensure that the last expenditures appear to be correct; if there is a second
cardholder, determine who is responsible for the charges incurred.
• Promissory Notes and Loans: Verify the principal already paid and balance
outstanding; determine the interest rate and how it is calculated.

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 Estate Liabilities and Claims Against the Estate

• Contract for Services: Verify the terms of the contract for services; confirm that the
services were provided.

6.3.1.1 The Burden of Payment

Generally speaking the liabilities of the estate are paid from the residue. If that is
insufficient, then legacies may be reduced (see Chapter 7 Estate Beneficiaries). However,
where a debt is secured by an asset (e.g. a mortgage or a charge against personal
property), it will be necessary to determine who bears the burden of payment. If the will
is silent, the executor will look to legislation or case law for guidance. The general rule
under the common law is that, subject to a contrary intention in the will, the legatee is
entitled to take personalty free of any charge. But the beneficiary, who receives a devise
(gift of an interest in realty) that is encumbered by a debt, will become responsible for the
debt. Legislation has altered these rules in a number of jurisdictions and legal advice will
often be required to determine who bears the burden of payment in a given set of
circumstances.11
Quebec: If the legacy is immovable property charged with a hypothec, the legatee by
particular title is only responsible for assuming payment of the hypothec if the deceased
has expressly so provided.

6.3.1.2 Joint or Shared Loans and Credit

From time to time the deceased may have shared the debt with a spouse, family member,
or another person. For example, two or more people may co-sign a loan agreement and
the mortgage documentation to purchase a home. A couple or two family members may
also share credit cards. Liability for the debt will need to be resolved between the estate
and the other borrower/debtor. Where security such as a mortgage has been granted,
negotiations may be required with the lender to release the deceased’s estate from further
liability. Each situation will need to be reviewed in the circumstances and within the
context of the estate distribution.

6.3.2 Timing of Payment to Beneficiaries

6.3.2.1 Common Law Only: When Legacies May be Paid

Once the executor has received the grant, confirmed that the assets exceed liabilities, and
collected any liquid assets, any debts that are accruing interest should be paid as soon as
possible and confirmation of payment (e.g. the creditor’s acknowledgement of receipt)
should be filed with the estate records.

11
Students are not responsible for the legislation in their province for exam purposes, but should familiarize
themselves with their legislation, if any, and always confirm the proper treatment for a particular situation. For
two very different examples of amendments to the common law rules see s. 32 of the Ontario Succession Law
Reform Act and s. 47 of the British Columbia Wills, Estates and Succession Act. See also s. 29 of Alberta’s Estate
Administration Act, which generally follows the common law when there is a mortgage on the property.

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 Estate Liabilities and Claims Against the Estate

Generally, the executor has the executor’s year to settle the estate. If debts are paid later
than the year, the delay must be justified. Where the debt did not carry interest, interest
may become payable after the executor year.

6.3.2.2 Quebec Only: When Legacies May be Paid

See 6.1.1.2 Quebec Only: Liquidator’s Obligation to Pay Debts and related chapter
references regarding timing and priority of payment of debts.

6.3.3 Authority to Settle Amounts

6.3.3.1 Common Law Only: Settling Claims

Where there is a claim against the estate, the will usually grants the executor express
authority to settle and compromise claims. The legislation of many jurisdictions also
includes a power for the executor to settle claims. Although some matters may need to
proceed to trial, litigation can be costly and take some time to resolve. The power to settle
the claim allows the executor to come to a fair settlement and protects the executor from
liability. However, when settling, the executor must still be prudent and may require
some legal advice to ensure that the settlement is reasonable.

6.3.3.2 Quebec Only: Settling Claims

Unless authorized to do so by the terms of the will, the liquidator may not settle and
compromise claims. Even where he or she is permitted to do so, it is important to recall
that the heirs must accept the final account of the liquidator, which will divulge whether
claims have been settled for less than their face value. Consequently, it is prudent to
obtain the consent of the heirs prior to negotiating a settlement.

6.3.4 Defences and Other Considerations

When a debt or claim is presented, in addition to verifying the authenticity and accuracy of a
claim, the executor should also consider whether the debt or claim is enforceable. There are a
number of potential defences, particularly with claims that are not regular bills. Each is reviewed
briefly below.12

6.3.4.1 Limitation Period Has Expired

One of the first considerations is whether or not the claim is out of time. Depending on
the nature of the claim, and the jurisdiction, claims may need to be brought within as little
as two years or as many as fifteen. The time from which the clock starts to run will
depend on the nature of the claim and the facts. The executor should consult a
professional who can provide advice on the applicable limitation period and the
requirements to properly dispute the claim.

12
For a detailed discussion of the requirements to corroborate a claim and the various defences, see Widdifield at
para. 3.5.

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 Estate Liabilities and Claims Against the Estate

The important point for the executor is to not acknowledge a debt that is unenforceable.
Common Law: A claim may be statute barred under the applicable Limitation Act or
other governing laws, meaning that the time for making a claim has expired.
Quebec: A claim may be prescribed meaning that the time for making a claim has
expired.13
If the debt cannot be enforced, and the executor acknowledges it, the executor may be
personally liable for the unnecessary payment. One of the most common situations that
an executor may come across is a loan to the deceased from a family member or other
close relative or friend.
Example:
Owen borrowed $10,000 from his mother Zoey ten years ago. The loan was evidenced
by a promissory note. The promissory note indicates the amount of the loan, the
interest rate, and the repayment terms. Although promissory notes may include a
repayment schedule (e.g. monthly, quarterly, annual payments), including interest,
many do not. In this example, the note was “payable on demand”. For the first two
years Owen paid the interest due on the balance. Each payment to Zoey represented
an acknowledgement by Owen of the debt he owed to Zoey. However, Owen made no
further payments and Zoey has not demanded payment or asked him to confirm the
amount due. When Owen dies, the $10,000 is still due to Zoey plus interest. Legal
advice will be required to determine whether or not the estate should acknowledge this
debt.
NOTE: Where the deceased is the lender (see Chapter 5 Estate Assets), the
executor must ensure that limitation periods do not expire.
Example: If the deceased has made a loan that has not been acknowledged
within the last two years, the applicable limitation period must be determined
and the executor should ensure that a demand for payment is made before the
limitation period expires.

6.3.4.2 Lack of Corroboration

Where the details of a claim are not clearly documented in an agreement and evidence of
the exact amount due is not easily verified, the executor must ensure that the claim is
corroborated (or proved). Generally, independent evidence is required to support the
claim. This requirement has been incorporated into the legislation of some provinces.
Where it has not been included, executors may look for guidance in the common law.14

13
See CCQ art. 2921 and following for the rules.
14
For an example of legislation see s. 13 of Ontario’s Evidence Act, R.S.O. 1990, c. E.23. Other provinces with
legislation include Alberta, Yukon, and Northwest Territories. In Quebec, see CCQ beginning at art. 2857. For
more information, see discussion of these rules and case law in Widdifield at para. 3.5.1.

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6.3.4.3 Claims for the Value of Services Provided

It is not uncommon for an executor to receive a claim from a family member, friend, or
another acquaintance for services provided to the deceased. These situations are less
formal and often there is no written agreement between the person and the deceased.
Common Law Only – Quantum Meruit Claims: When the services are services that
one would normally pay for, the law implies a promise to pay the value of those
services.15 This is often called a quantum meruit claim.
Quebec Only – Unjust Enrichment Claims: A liquidator may receive a claim for unjust
enrichment from a person who has impoverished him- or herself for the enrichment of the
deceased. In such a case, the claimant may be entitled to indemnification for his or her
impoverishment (arts. 1493-1496 CCQ).
Example: A neighbour comes to the deceased’s home once a week to do light
housekeeping tasks that the deceased is no longer able to do. Generally, one would
expect to pay for cleaning services by a stranger (non-family member).
The executor must ensure that the services were provided, that the value being charged
for the services is appropriate, and that there are no circumstances that suggest the
services were offered gratuitously and without intention or expectation of payment (see
6.3.4.4 Claims by Near Relatives).

6.3.4.4 Claims by Near Relatives

When there is a relationship between the deceased and the claimant, there may be a
presumption under the law that the services were provided out of love and affection or for
mutual convenience. Each situation must be examined on the facts, including the nature
of the relationship (e.g. husband/wife, parent/child, aunt or uncle/niece or nephew), the
nature and duration of the services, and whether the claimant lived with the deceased.
Where the law requires that the presumption applies, the claimant will bear the burden of
proof and must show that there was an intention or promise by the deceased to pay the
claimant. The executor should seek professional advice to determine whether or not to
dispute the claim.

6.3.4.5 Legacies to Creditors

If the deceased leaves a legacy in the will to a creditor but is silent on a debt owed to the
creditor, it is necessary to determine whether or not the legacy was made in order to
satisfy the debt.
Common Law: The general law is that if the legacy is a sum of money equal or greater
than the debt, then the legacy is paid in satisfaction of the debt. However, the courts have
set out a number of exceptions16 and at least two jurisdictions have abolished the rule.17

15
Widdifield at para. 3.5.6(a).

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 Estate Liabilities and Claims Against the Estate

Quebec: An heir coming to partition must return to the mass (e.g. the succession) the
debts he or she owed to the deceased, unless released therefrom by the testator (art. 879
CCQ). A legacy made to a creditor is not presumed to have been made as compensation
for his or her claim (art. 748 CCQ). See Chapter 7 Estate Beneficiaries for further
discussion on the various rules that can apply.

6.3.5 Disputing a Claim

When an executor disputes a claim or has notice that there is a potential claim, it will be
necessary to take steps to address the claim so that the administration can proceed. Guidance
from the estate solicitor may be required.
Statutory Rules: A number of provinces have specific provisions in their legislation that allow
the executor to give written notice to the claimant. The notice states that the claim is disputed or
rejected and sets a deadline for bringing an action to enforce the claim. These jurisdictions and
the applicable legislation is set out in Figure 6.2 Statutory Provisions for Disputing Claims
Against an Estate. Students are encouraged to review the applicable sections.18
Figure 6.2: Statutory Provisions for Disputing Claims Against an Estate
Jurisdiction Legislation
British Columbia Wills, Estates and Succession Act, S.B.C. 2009, c. 13, s.
146
Alberta Estate Administration Act, S.A. 2014, c. E-12.5, ss. 24-26
Saskatchewan Trustee Act, S.S. 2009, c. T-23.01, s. 75
Manitoba The Trustee Act, R.S.M. 1987, c. T160, s. 53
Ontario Trustee Act, R.S.O. 1990, c. T.23, ss. 44 and 45
Nova Scotia Probate Act, N.S.S. 2000, c. 31, s. 63
Prince Edward Island Probate Act, R.S.P.E.I. 1988, c. P-21, s. 12
Quebec CCQ, arts. 777 and 1316

6.4 RIGHTS OF SPOUSES AND DEPENDANTS

The rights of spouses and dependants differ from estate liabilities. They are claims or rights that
may or may not need to be addressed. These rights and the relevant rules are dealt with in more
detail in CETA 2. They are described briefly here to introduce students to the potential
implications for an estate administration. The relevant limitation (prescription in Quebec) periods
are noted as they can have a significant impact on the administration timelines.

16
For a review of the case law and exceptions, see Widdifield at para. 3.5.7.
17
See s. 53 of the Wills, Estates and Succession Act in British Columbia; s. 110 of the Wills and Succession Act in
Alberta. While students should review their legislation, for exam purposes students are only responsible for the
basic rules noted in this section.
18
The details of each jurisdiction are not examinable.

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 Estate Liabilities and Claims Against the Estate

6.4.1 Spousal Rights

All jurisdictions have legislation that provides for a spouse to make one or more claims or
elections that could impact on the estate assets or value that will remain for distribution. The
nature of a spouse’s claim(s) will depend on the jurisdiction; whether there is a will; and whether
the spouses are legally married, recognized as common-law partners under the applicable
legislation, or separated.

6.4.1.1 Quebec Only: Spouse as Creditor of Support and Family

Patrimony Rights
The obligation of support between married or civil union spouses and relatives in the
direct line in the first degree survives after death under certain conditions (arts. 585 and
684 CCQ). The contribution of the deceased for support is based on a needs and means
test and must be claimed within six months of the date of death. The Civil Code sets out a
formula to calculate the maximum amounts of the contribution of support for a spouse, a
former spouse, a descendant, or a parent in each situation, taking into account existing
support payments and the value of the succession (arts. 684-695 CCQ).
These rights of spouses and certain relatives to claim an amount for support are broadly
covered under the generic term “dependants’ relief”

6.4.1.2 Quebec Only: Additional Spousal and Dependant Rights

There are a variety of additional rules to be noted. They include:
• In Quebec, subject to the rights of the surviving spouse, the heirs may ask for
preferential allotment of the immovable that served as the residence of the
deceased (art. 857 CCQ).
• It is also important to note that in Quebec, a “de facto spouse” often referred to as
a “common-law spouse” has no claims for support or division of property.
• Finally, the following deadlines must be diarized where applicable:
o support payments must be claimed within six month of the date of death (art.
684 CCQ);
o partition of the family patrimony and the matrimonial regime (where
applicable must be initiated within three years of the date of death – art. 2925
CCQ); and
o renunciation to partition of the family patrimony must be entered in the
RDPRM within one year of the date of death, failing which the renouncing
spouse is deemed to have accepted (art. 423 CCQ).

6.4.1.3 Common Law Only: Spousal Rights

Generally the rights that a spouse may have include one or more of the following:

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 Estate Liabilities and Claims Against the Estate

• The right to apply to vary the terms of the will if the will does not leave adequate
provision for the spouse. Spouse is defined in each jurisdiction. For purposes of
this course these rights are referred to as “dependant relief legislation”.
• The right to elect to receive the spouse’s share of the matrimonial property under
family law legislation as if the marriage or common-law relationship had
terminated (e.g. a division of family property). This election may be in lieu of (or
in addition to) taking under the provisions of the will. For purposes of this course
these rights are referred to as “spousal elections”.
• A right to make an election in respect of the family home. The nature of the
elections vary by jurisdiction. For purposes of this course these rights are referred
to as “family home elections”.
• In the case of an intestacy, a right to make a claim for a greater share of the estate
pursuant to the applicable dependant relief legislation. For purposes of this
course, where applicable, these rights are referred to as “intestate spouse claims”.
Division of family property legislation on death is found in all jurisdictions except British
Columbia, Alberta, Prince Edward Island, and the Yukon. Dependant relief legislation is
found in all jurisdictions.
Whether or not a common-law spouse has a claim under one or more of these rules
depends on the jurisdiction. It will be necessary to review the rules for dependant relief
claims, spousal elections, family home elections, and intestate spouse claims. For
example, in Ontario the common-law spouse does not have rights to family property but
can make a dependant’s relief claim whether or not there is a will. In British Columbia
spouses have no rights under family law legislation, but all spouses (married, common-
law, and same-sex relationships) are recognized under intestacy laws and if there is a
will, the spouse may apply to vary the will in order to make a dependant relief claim.
Spousal claims can impact the entitlements of other beneficiaries and the value of those
entitlements. It can also delay distribution. Therefore, the executor must:
• identify those individuals who are or may qualify as a spouse,
• identify the nature of the spouse’s potential claims or rights,
• ensure that all required notices are provided to start the running of the clock, and
• diarize the expiry date.

6.4.1.4 Spousal Claim Deadlines

Where a surviving spouse has one or more potential claims against the estate, the
executor must determine the claim deadlines. Some deadlines run from the date of death.
Others run from the date of the grant. Distributions should not be made until the relevant
deadlines have expired.

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 Estate Liabilities and Claims Against the Estate

See Figure 6.3 Common Law Jurisdiction: Deadlines for Spousal Division of Family
Property to identify the deadlines for spousal elections to divide family property. For the
list of deadlines for dependant relief claims see Figure 6.4 Common Law Jurisdiction
Deadlines for Making a Dependant Relief Claim.
NOTE: While most jurisdictions permit the executor to distribute after six months, some
only require four months. Others are expressed in terms of a number of days.

Figure 6.3: Common Law Jurisdiction: Deadlines for Spousal Division of Family
Property Claims
Jurisdictions* Deadline
Saskatchewan, Manitoba, Nova Scotia, 6 months from grant
Nunavut
Ontario 6 months from date of death
New Brunswick 4 months from date of death
Newfoundland and Labrador 1 year from date of death
Northwest Territories 2 years from date of death
* Note: British Columbia and Alberta do not have division of family
property rules on death

Where there are potential spousal claims claimants but there are strong reasons to believe
that no claims will be made, the executor may entertain an earlier distribution on the
strength of a release from the spouse. However, each case must be decided on its facts
and the potential risks to the executor.
Spousal rights are reviewed in more detail in CETA 2.

6.4.2 Dependant Claims

6.4.2.1 Quebec Only: Dependants as Creditors of Support

For Quebec, see 6.1.1.2 Quebec Only: Liquidator’s Obligation to Pay Debts regarding the
survival of the obligation to provide support.
NOTE: Claim must be brought within six months of the date of death.

6.4.2.2 Common Law Only: Dependant Rights

All provinces also have legislation that provide for dependants, in addition to a spouse, to
make a claim to vary the terms of the will to obtain a greater share. Some also permit
variation of entitlement under an intestacy.
Dependants are defined in each jurisdiction. Generally dependants will include minor
children and disabled adult children who cannot earn their own livelihood. However, the
definitions vary between provinces. The following examples are offered to illustrate the
range of criteria:

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 Estate Liabilities and Claims Against the Estate

• In British Columbia, the class is limited to children, but includes all children and
there is no test for financial dependency.
• All other jurisdictions require some degree of dependency but different classes of
family members may be included. For example:
o in Ontario, the definition of dependant includes parents, children, or
siblings of the deceased,
o in Alberta the class includes children, grandchildren, and great
grandchildren, and
o in Manitoba it includes grandparent, parent, and grandchild.19
For estate administration purposes, it is necessary to:
• identify those in the deceased’s family who may qualify as a dependant,
• ensure the appropriate notice is sent to start the clock running, and
• diarize the expiration period.
See Figure 6.4 Common Law Jurisdiction: Deadlines for Making a Dependant Relief
Claim for the deadline for making a dependant relief claim, where applicable.

Figure 6.4: Common Law Jurisdiction: Deadlines for Making a Dependant Relief
Claim
Jurisdictions Deadline
British Columbia 180 days from grant of probate
New Brunswick 4 months from date of death
All other jurisdictions 6 months from date of grant of probate
(or grant of administration if
applicable)

6.5 OTHER ISSUES

6.5.1 Insolvency
Where an estate does not have sufficient assets to pay all liabilities and legacies, a number of
laws must be considered and are beyond the scope of this course. Generally, the order of priority
is:
• funeral expenses are a first charge,

19
Students are not responsible for the jurisdictional rules for purposes of this course. The examples are only offered
to illustrate the range of rules. Details, by jurisdiction, will be covered in CETA 2. Students are referred to their
legislation (see Table of Legislation at the end of the text) or for a province-by-province review, see Christine Van
Cauwenberghe’s Wealth Planning Strategies for Canadians 2015 (Toronto: Carswell, 2014) at chapter 19.

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 Estate Liabilities and Claims Against the Estate

• the necessary testamentary expenses or costs of administration,

• debts,
• legacies, and
• residue.
Quebec Only: If the estate is not manifestly solvent, the liquidator may not pay debts or legacies
until sixty days following publication of closure of inventory (or exemption from making an
inventory) (art. 810 CCQ). If the estate is insolvent, a payment proposal must be homologated by
the court prior to payment of debts or legacies (arts. 811-814 CCQ).
If there are sufficient assets to pay the liabilities, but not all of the legacies, liabilities will be paid
and the applicable rules will be applied to determine which legacies will be paid (see Chapter 7
Estate Beneficiaries).
Where the assets are insufficient to pay all debts and expenses, it will be necessary to examine
the laws that apply to different kinds of debts (e.g. liabilities to the Crown (federal government),
amounts due to employees, secured debt and unsecured debt) and insolvency.
The administration of an insolvent estate is particularly difficult. The executor must exercise care
in all his or her actions as he or she may be called to account to creditors as well as beneficiaries.
“Insolvent” generally means the inability to pay one’s debts as they fall due. An estate will be
insolvent when all the debts, liabilities, and expenses exceed the realizable value of estate assets.
Where an estate is clearly insolvent at the outset, the executor should seek advice immediately
and may want to consider whether or not to renounce the appointment. If no one agrees to act as
executor or comes forward to be appointed by the court, a creditor may do so.
An executor of an insolvent estate should seek legal advice and refrain from paying any debts or
liabilities until advice is obtained. Under provincial law a debtor may not prefer one creditor over
another. In addition, some creditors may have a legal right to payment in priority over others. It
may be possible for the executor to declare bankruptcy on behalf of the estate if an agreement
cannot be reached with creditors.

6.5.1.1 Quebec Only: When the Succession is Insolvent

Where the succession is insolvent, the liquidator may not pay any debts (even regular
utility accounts) or legacies by particular title until he or she has accomplished the
following preliminary steps (arts. 811-814 CCQ).

• The liquidator must draw up a complete list of the debts and legacies by
particular title and a payment proposal, including, if necessary, a reserve for
payment of any potential judgment.
• The liquidator must give notice to interested parties (the creditors, heirs, and
particular legatees).
• The payment proposal must be homologated by the court.

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 Estate Liabilities and Claims Against the Estate

In accordance with the homologated payment proposal, the liquidator then pays the
creditors who have priority over the particular legatees. Prior claims are paid in
preference over other creditors, even hypothecary creditors, in the collocation order set
out at article 2651 CCQ. Other creditors and creditors of support are paid in proportion to
their claim(s) if there are insufficient funds. Articles 813 and 814 CCQ set out the rules
pertaining to alienation of property bequeathed as legacies by particular title and the
reduction of such legacies if the other property of the succession is insufficient to pay the
debts.
In addition to their action in liability against the liquidator, unpaid creditors and particular
legatees can make a claim against heirs who have received advances and other particular
legatees who have been paid to their detriment (art. 815 CCQ). However, creditors and
legatees by particular title who, being unknown, failed to present themselves prior to the
payment being regularly made cannot avail themselves of such an action unless they can
prove that they had a serious reason for not presenting themselves in due time (art. 816
CCQ).

6.5.2 Registered Plans and the Tax Liability

The executor should also be alert to potential liability for the tax that may be payable on the
value of a registered plan that is payable to a named beneficiary. These rules are discussed in
detail in the Estate and Trust Taxation course (CETA 3).20 A brief explanation is included here.
One important difference between life insurance designations and designations in registered
plans is the income tax treatment. Generally life insurance proceeds are received tax free by the
beneficiary as most policies are tax exempt. However, registered plans are fully taxable on death
unless a rollover to a qualified beneficiary is available.
Subject to the rules for tax-free rollovers, the full market value of the plan proceeds must be
reported on the terminal tax return for the deceased. The resulting tax is a legal liability of the
deceased’s estate even where there is a named beneficiary who receives the full value of the
plan. There is no withholding tax. If the estate does not have sufficient funds to pay the tax, the
Canada Revenue Agency (CRA) has the right to collect any unpaid tax from the beneficiary of
the registered plan.
Quebec Only: The estate is not liable for the tax if the proceeds are given as a particular legacy
and the legatee by particular title is expressly charged to assume payment of the tax. Note that
the testator may modify debt liability (art. 778 CCQ).

20
This is the third course in the Certificate to Estate and Trust Administration program. Hereafter referred to as
CETA 3.

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