Estate & Trust Tax Administration
Most people hire an estate tax accountant for the first time under circumstances they would rather not be in. The work has a shape they don’t expect: the tax consequences of a death arrive on a schedule, whether or not the family is ready, and the most valuable decisions have to be made earliest, often before probate is granted, sometimes before anyone has fully absorbed what happened.
The legal side of an estate is the lawyer’s work. The tax side is a separate file with its own deadlines, its own elections, and its own ways of going wrong quietly. Where the deceased owned a corporation, that file is usually larger than the rest of the estate combined.
What we handle
Terminal returns. The deceased’s final T1, including the deemed disposition of capital property at death, for an incorporated professional, usually the largest number on the return, and a gain on which no cash was received.
T3 trust and estate returns. Annual filings for the estate, including the graduated rate estate designation in the first year and the elections that depend on it.
Post-mortem planning for corporate estates. Where the estate holds private company shares, the same value can be taxed twice, once on the deemed disposition, again when the shares are redeemed. The planning that prevents this has deadlines measured in taxation years, and the clock starts at death.
Estate freezes and pre-death planning. The cheapest estate work happens while everyone is alive. Freezes, trusts, and the corporate restructuring that makes an eventual estate simpler and smaller.
Clearance certificates. The certificate that lets an executor distribute without personal liability for the estate’s unpaid tax. Distributing without one is the single mistake on these files that cannot be fixed afterward.
Executor support. Most executors have never done this before. We work alongside the estate lawyer as the tax side of the file — the deadlines, the elections, the returns, and honest answers about what actually matters.
Why the first year matters most
An estate that qualifies as a graduated rate estate gets access to graduated tax rates, a taxation year of its own choosing, flexible treatment of charitable donations, and the loss carryback under subsection 164(6) — the main tool for undoing double tax on corporate shares.
All of it depends on a designation made in the estate’s first T3 return. Miss the designation, and the status is gone; there is no second chance and no relief application. Choose the first year end carelessly, and the deadline for the loss carryback moves without anyone noticing.
These are decisions that get made, sometimes by default, in the first months after a death, which is exactly when nobody wants to think about them. That is the reason to have someone on the file whose job is to think about them anyway.
What to do if you’ve just become an executor
Don’t distribute anything yet. Not until the tax position is known and a clearance certificate is in hand. Personal liability for the estate’s tax follows the executor, not the beneficiaries.
Find out what the deceased owned as of the date of death, especially any corporation, and especially its approximate value. A valuation as of the date of death anchors everything that follows.
Note the filing deadlines. The terminal return is due April 30 of the year after death, or six months after death if later, and if the deceased or their spouse carried on a business, June 15 applies instead. Balances owing are due earlier than the June date. These do not extend because probate is slow.
Ask whoever prepares the first estate return about the graduated rate estate designation. If they don’t know what you’re asking, that is information too.
Working with us
You work directly with Robert Occhiuto, CPA, CA. Over 20 years in public accounting including three years at BDO Canada, and CPA Canada’s In-Depth Tax certification — the specialist program where post-mortem planning for private corporations is actually taught, rather than picked up on the file.
We work with your estate lawyer, not around them. The legal and tax sides of an estate have to agree on sequencing, and files go wrong when they don’t talk.
The first conversation is free. If the estate is simple enough that you don’t need us, we’ll say so.
Common questions
Do I need an estate tax accountant, or can our lawyer handle it? Estate lawyers handle probate and the legal administration. Most don’t prepare terminal returns or T3 filings, and the elections that matter on a corporate estate sit outside the legal file entirely. On a simple estate the two roles can reasonably collapse into one. Where a corporation is involved, they generally shouldn’t.
When is the deceased’s final tax return due? Generally April 30 of the year following the year of death, or six months after the date of death, whichever is later. If the deceased or their spouse carried on a business, the filing deadline is June 15 (with the same six-month override), though tax owing is still due earlier. The estate’s T3 return runs on its own separate schedule.
What is a graduated rate estate? An estate that designates itself as one in its first T3 return, for up to 36 months after death. The designation gives the estate graduated tax rates instead of the top rate on every dollar, and unlocks the elections that matter most on corporate estates. Only one estate per deceased person can be designated.
The deceased owned a corporation. Does that change things? Substantially. The shares are deemed disposed of at death, which creates a tax bill, and getting the value out of the corporation afterward can create a second one on the same money. There are established ways to prevent that, but they have deadlines, and they need a valuation and a plan rather than a template.
Can you work with our estate lawyer? Yes, that’s the normal arrangement. The lawyer handles probate and the legal administration; we handle the tax file. Where multiple wills were used, we coordinate on the graduated rate estate designation, since only one estate can carry it.
What does it cost? It depends on what the estate holds. A straightforward terminal return is a different engagement from a corporate estate needing post-mortem planning. We’ll give you a range in the first conversation, before you commit to anything.
Administering an estate, or planning your own?
Book a free consultation, or call directly. We’ll tell you what the timeline actually looks like and what needs deciding first.