How to Settle an Estate - 3 Goals


If you want to settle an estate with the least amount of stress and family conflict. There are only 3 goals you want to achieve.

1.  Find the right kind of tax return.

When someone dies, two taxpayers are created.

First, the income they earned from January 1 of the year of death to the date of death is reported on what is known as the terminal return.

Second, the date after death is the first date for the new taxpayer, which is the estate.

As an executor in Canada, you are responsible for filing T1 personal tax returns on behalf of the deceased, including the terminal tax return.

If the deceased had not filed their tax return for the prior year before their death, you may also have to file a T1 return.

If the tax returns are filed incorrectly, costly government fines could be assessed, money wasted, and family discord fueled.

It’s important to remember that taxes might need to be filed for two years, not one.

To settle an estate in the United States: to officially close an estate, you’ll need to work with a probate court to finalize the process.

To settle an estate make sure you cover
all the bases and protect yourself.

2. Distribute to the beneficiaries

As a general rule of thumb, you as the executor to settle an estate you should work toward wrapping up the estate within one year of the testator’s death.

You could be penalized, personally, if you take too long to get everything completed.

As executor, you assume a certain degree of personal liability when taking on the role. This has to be understood by the beneficiaries. This is where open communication is very important.

Be up front with what is happening with the estate and how it is progressing.

Leaving them out of the process can lead to needless tension, conflict, and sometimes legal action.

3. Close the Estate

Before distributing all of the estate, as executor you should obtain a clearance certificate from the Canada Revenue Agency (CRA). Getting a clearance certificate provides protection for the executor—it does not prevent the CRA from going back to the beneficiaries to get any additional tax that may be owed.

However, if you are the executor and the beneficiary, getting a clearance certificate may not be required.

But when there is more than one executor and beneficiary, a clearance certificate should be obtained.

The final responsibility of the executor is the same in the United States—to officially close the estate.

This can only be done once all of the beneficiaries have received their legal property, and once taxes and other debts have been paid.

In order to officially close an estate in the United States, you’ll need to work with a probate court to finalize the process.

If you distribute all of the estate before receiving government clearance, you can be held personally liable for any additional taxes assessed against the estate.


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