Trusts & Estates

A Testamentary Trust is a Trust or Estate that is created as a result of the death of a person. The CRA deems the deceased to have disposed of all their assets at the date of death. The deemed disposal of assets may result in income taxes on any accrued gains or disposal of registered funds. Assets that may attract income taxes when a deemed disposition occurs would include RRSP’s, RRIF’s, real estate, securities and registered pension funds. There may be an opportunity to defer the income tax if assets are left to a spouse. No income taxes would be payable until the assets would be disposed of by the surviving spouse.

Filing of Tax Returns

A Testamentary Trust is required to file a tax return within 90 days after the anniversary of the date of death. The return would report any income earned during the period. There may be an opportunity to allocate out any income earned to the beneficiaries depending on the terms of the Will.

Clearance Certificate

Should you be acting as Executor or Administrator of an Estate you may wish to apply for a Clearance Certificate. A Clearance Certificate confirms that an Estate has paid all amounts of tax and lets the Executor/Administrator distribute assets without the risk of being personally responsible for amounts the deceased may owe.