Today's article is a guest submission from Janine Guenther CFA, CMT, a Portfolio Manager and Senior Wealth Family Advisor with over 30 years of industry experience. The views presented here do not necessarily represent those of Bellwether Investment Management.
Last edition, I promised to discuss the “taboo” topic of talking about money in this blog. I'm deviating from the plan to provide an update on a piece I wrote last year, detailing my experience opening an estate account following my mother's passing.
A full year has passed. The tax returns are complete, and I'm currently awaiting the clearance certificate from the CRA to finalize her estate distributions.
From the mundane to the frustrating, here is what I've learned!
My mom’s estate was simple. My parents, who immigrated to Canada in the 1950s, raised four daughters by owning a series of businesses, culminating in their retirement approximately 30 years ago. Our mom lived with my family, so there were only financial assets to collapse—things that someone in my profession should easily be able to handle.
The first step was to open an estate account. If you need context, you can read my article on The Financial Times.
I didn't apply for probate—the estate was very small, and my sisters and I get along swimmingly, so there was virtually no chance of a dispute. Most estates need an application for probate, so it's important that you thoroughly review this important step.
Filing the date of death tax return was surprisingly straightforward. I called the CRA and had a productive discussion with their agents, during which they provided me with an upload link where I could upload my mom's will, her proof of death, and my identification as the executor. I used a popular tax preparation software and printed the return to mail into the CRA. Last year, there was no option to electronically submit the return for a deceased person. All correspondence from the CRA has been by mail, which, I suspect, is becoming less secure since at least one letter from them was delivered to a neighbour. The choice of electronically transmitting documents from the CRA to executors could improve turnaround times, save paper, and, most importantly, mitigate neighbourly confusion.
Mid-year, an edict was delivered from the Bare Trust declarations. I quickly collected the information and my obligations, as we had one for the bank account that I shared with my mom. Although it didn't meet the threshold, it would have resulted in another CRA filing, piling on another layer of nuance to an already small estate.
Two tax returns were required for year-end 2023: one for my mom's income from 2023 and a T3 return for the death benefits. Sometimes, executors forget this last return because it's not exactly intuitive. I did seek some help to complete it to make sure I didn’t make an error. The ability to file the T3 return electronically was a wonderful feature. The estate did owe some money to the CRA, and I found it complicated to pay in a timely manner.
The CRA's website clearly states that you can pay the amount owed on a T3 return online. But here's the kicker—only a few financial institutions allow the payments! My bank, which is a member of the Big 5, has yet to establish the CRA as a bill payment option for T3 returns. Okay, I thought, I'll phone them. It turns out that my bank doesn't accept the trust account number for in-person payments without a notice of assessment from the CRA. Another complication, as I had prepared the return just before the deadline under the impression that I could easily settle any outstanding balance. They suggested I make the payment using my mom's SIN, then call the CRA to ask for forgiveness and transfer it to the estate. I considered adding a layer of complexity (ironically to find a solution to an already convoluted set of circumstances) to the situation. After reading more about the CRA account, I learned that I could use a preloaded Visa Debit Card to settle the outstanding balance. My bank doesn't allow you to buy one of those in an estate account. I could have written a cheque and mailed it, but I don’t have any personally and didn’t think of getting any for the estate account. My final solution? A friend with a bank account already set up with the CRA made the payment for me, and I e-transferred them the money from the estate account.
A little communication between the CRA and the banks to properly set up the T3 numbers on their bill pay system would alleviate a problem for taxpayers.
Why do I care about this so much? In my day job, I work with families, helping to make sense of and smooth out the complexities of wealth. We know that in many cases, the burden of estate management falls to women because they live longer and are caregivers sandwiched between generations. We also know that, too often, women haven't been well equipped with the tools or resources needed to be fully financially literate.
In the case of estates, there is enough to deal with: grief, asset disposition, and family relationships. Why not make administration, the least personal and emotional aspect, a bit easier?
