All About Estates

Tax liability of the deceased

Other bloggers have written in this forum on matters related to the tax liability of the deceased – how its determined, when the payment is due, how to minimize the liability and on. Another decision to be made by the trustee is to determine how to fund the payment once the amount has been crystallized.

Generally speaking, for death’s before November 1 the deceased’s tax liability is due on April 30 of the year following the year of death. When the death occurs after October 31 the deceased’s estate gets six months from the date of death to file the terminal tax return(s) and pay the related tax liability.

On occasion, the deceased’s estate may not have the cash to cover the tax liability because the assets of the estate are not “liquid” – perhaps valuable real estate. In that instance, the executor may chose to elect to pay the tax liability of the deceased that arose as a result of deemed dispostions (ie capital gains and recapture) plus interest at prescribed rates over a 10 year period. The election is made by filing a prescribing form on or before the date on the tax was otherwise payable. By making the election the trustee(s) are given the time to make an orderly disposition of the estate’s assets rather than a rushed disposition which may not return as high a sale value.

Consult a pro when making the election to defer a tax payment if your particular circumstances fit within the rules.

About Derek de Gannes
Derek A. de Gannes: Senior Director, Private Client Services of RSM Canada. RSM Canada is committed to the highest level of integrity, quality and professionalism and provides clients with solutions in the area of Audit, Tax and Transaction Services. Email: