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Executor of the Will Must Plan the Tax

By Nizam Shajani CPA, CA, MBA 

The executor of an estate has a duty to obtain tax advice that goes beyond the simple preparation of tax returns. The failure to engage this advice will leave the executor open to liabilities claimed by the estate and its beneficiaries.

Tax Planning Opportunities

There are several post-mortem tax planning opportunities and consequences available that should be considered when administering an estate. This can be done more effectively during an estate planning engagement while an individual is still alive, however may also be done post-mortem at the direction of the executor of the estate.

Some opportunities to consider include tax-free rollovers, estate freezes, consideration of the lifetime capital gains exemption, foreign tax planning (for assets or property held outside of Canada or for purposes of international estates) and utilizing Trusts to minimize tax.

Common Errors by Executors

In addition to a lack of planning (inter vivos or post-mortem), some common errors made by executors include the following:

  • Failure to file the appropriate tax returns
  • Failure to pay the appropriate amount of tax
  • Missed planning and filing of the 21 year deemed disposition on Trust returns
  • Misunderstanding the tax implications on beneficiary allocations of RRSP an RRIFs
  • Failure to understand the settlor attribution rules
  • Not identifying US tax issue for income beneficiaries, shareholders and estate and gift tax
  • Not obtaining a clearance certificate to limit liabilities of the executor

Get Professional Advice

At Shajani, we can provide the tax preparation necessary as well as provide tax planning services for an estate. Contact us for a consultation.

This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. © 2020 Shajani LLP

Nizam Shajani, Partner, LLM, CPA, CA, TEP, MBA

I enjoy formulating plans that help my clients meet their objectives. It's this sense of pride in service that facilitates client success which forms the culture of Shajani CPA.

Shajani Professional Accountants has offices in Calgary, Edmonton and Red Deer, Alberta. We’re here to support you in all of your personal and business tax and other accounting needs.