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Can an Executor distribute the estate without a Clearance Certificate from the CRA?

estates executors Mar 07, 2018

A Clearance Certificate is a document that you receive from the Canada Revenue Agency that states that all the taxes owing on the estate have been paid.

The Executor should request this certificate to ensure that the estates taxes have been paid. The concern is that the Executor may distribute the estates property to the beneficiaries and then later discover that there are taxes owing. If taxes are found to be owing after the distribution, the Executor could be held personally liable for these outstanding taxes.

Typically, in most estates where the Executor wants to distribute property before receiving a clearance certificate, the Executor will consider doing an interim distribution of funds.  When doing an interim distribution of funds they will hold back enough money to cover the outstanding taxes, prior to receiving the Clearance Certificate.

An Accountant should be consulted prior to an Executor considering an interim distribution.  In Alberta, as a general rule, most Executors hold back 20-30% of the gross value of the estate as a cushion to cover taxes prior to obtaining a clearance certificate.

If you are an Executor here in Alberta and have questions about doing an interim distribution, contact our office.  Our team of experienced Estate Lawyers can walk you through the process, answer your questions and ensure there are no problems.  We are here to help!


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