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Estate, t1 and t3 question

In response to the answers to my questions. First of all, thank for your response. You were correct I was not clear enough in my questions. The husband was the only beneficiary of the will. Unfortunately, he was not very helpful as he was very much grieving his loss. It appeared that all the assets were held in two join accounts one with the wife as the main holder and the other with the husband as the main holder. However, I was not sure that these were the only assets and the will was misleading as it definitely mention leaving all her assets to the husband. Anyway, I took my best guess and filed her return with no deemed disposals. Much later, I talked with the TD Waterhouse estate department as was told that the will was on no use as the wife had transferred over all the assets to the two joint accounts, which meant the assets were transferred out of the wife’s account at ACB. This happened sometime early in 2019, might have been February, but was certainly not later than March. I was there in early April and the assets had been transferred.

Because of this, I assumed that there would not be a need for a T3 return. However, I was wrong somehow two T5008 slips were issued. I will not know until tomorrow for sure, but I am assuming that these bonds matured before the transfer and therefore the asset sales happened in her name with the husband as joint holder. These are not an issue as there was a small capital loss on both trades.

However, there must have been interest due as there was also a T5 issued for interest.

The T3 return is due March 30th and I have not applied for a Trust number. The interest will be transferred to the husband, so the trust does not owe any taxes. Since this is the first T3 I have had to complete, What is the best way I should proceed?

Please respond quickly as I only have tomorrow to decide. This virus is a real problem.

Thank you in advance,

John

Joe

I can hardly wait.

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As alluded to in your OTHER post, (T 3 Questions) It does not matter what TD Waterhouse did do or will do, or when.
Do NOT take direction from them at all.

Also, your wording indicates some confusion as to the various dispositions, distributions, or even as to who owns which assets, since you do not appear to have copies of the Estate Accounts, listing what is and is not held in the Estate, and when, and are using such terms as “main holder” when referring to accounts which may or may not be established as 50/50 JTWROS accounts…
The wife did have dispositions on DOD, so the T1 final would need to show that…

The Beneficiary is not the one who calls the shots.

Regarding the wife, you need a clear engagement from the EXECUTOR. Regarding the wife, it will be the EXECUTOR who is your client, and you need to ensure a proper Engagement letter from the EXECUTOR for that purpose.
If the Executor is the husband, and he is not of sufficient sound mind to produce instructions, if it were me I would reach out to the Estate’s lawyer.

You said that the wife died in late 2018, which means that at least one T3 deadline has ALREADY PASSED. Unless she died on exactly 31 December 2018, the first T3 deadline is not 30 March 2020.

I could make some guesses as to what likely has been happening, but since that would not be based on the actual documentation, I hesitate to speculate.
.
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“Since this is the first T3 I have had to complete, What is the best way I should proceed?”
… You sure you want to do this at this time?

T0000000 …I do it often to claim the CPP Death Benefit and always use 0s for the number. After it is assessed it will come back with a CRA generated Trust Acct #.

“T0000000 …I do it often to claim the CPP Death Benefit and always use 0s for the number. After it is assessed it will come back with a CRA generated Trust Acct #.”

IMHO the issue of a number is not the real problem, but rather the main issue is what should or should not be reported on the T1-2018 final and any following potential T3s…

The EXECUTOR is the one who has to certify that the information on those returns is correct and proper…

https://www.canada.ca/en/revenue-agency/services/tax/trust-administrators/t3-return/application-trust-account-number-overview.html
" Date modified: 2019-12-31: "" You don’t need to apply for a trust account number before filing a T3 return on paper . However, you do need to apply for a trust account number before filing electronically ."

https://www.canada.ca/en/revenue-agency/services/tax/trust-administrators/t3-return/application-trust-account-number-know-before-apply.html

https://www.canada.ca/en/revenue-agency/services/tax/trust-administrators/t3-return/who-should-file-a-t3-return.html

Hey Paul, thank you very much!!! I thought I had read that you could do that and I had entered all 0’s, but the RET list said I had to paer file because I did not have a trust number! However, I open the file now and it said I could file it! Thank you very much.

John

Hey Joe, the wife did die on December 31st, 2018! So that solves that problem. She had claimed a large capital gains exemption back in 1992, so she can not claim a capital loss on her final tax return. I do have FMV reports for both joint accounts and they both showed a capital loss. So I am not worried about 2018.

Legally, joint ownership, with survivorship rights, of property does not become part of the deceased’s estate. It is transferred to the remaining joint owners. In this case the husband.

The TD Waterhouse estate department said that no estate was established, so at this point I am going to file this T3.

John

You stated that you filed the wife T1 2018 with ZERO disposition…
That is not true, though, as apparently she held a portfolio with TD Waterhouse on the date of her death.

So when exactly did this TRUST ACQUIRE these assets which you now propose to have the Trust report has HAVING EARNED INCOME FROM in 2019?
And if it did acquire assets, when did it dispose of them?
IF it did NOT acquire assets, then it CANNOT be earning income from nothing
Sounds like a tax reporting disaster to be proceeding in that manner.

Seems to me that there may be more than a little confusion between ESTATE reporting and TAX reporting…

You are now taking expert legal advice from a clerk at TD Waterhouse? - That is not something that I would personally do…

Indications based on the above suggest that surviving husband appears likely to be reassessed later for unreported 2019 income.

Sorry I cannot help, apparently…

I think Joe might be alluding to the deeming provision of subsection 70(6) with regard to assets passing between spouses on death.

Subsection 70(5) deems a person to dispose of all of their capital property for for proceeds equal to Fair Market Value on death. However, if the taxpayer has a spouse or common law partner, subsection 70(6) provides for a tax deferred Spousal Rollover at the deceased’s adjusted cost base provided the property is transferred to the spouse within 36 months of death.

This 70(6) spousal rollover provision is “automatic”, meaning it is not an election…the deceased’s capital property automatically transfers to the surviving spouse at his cost base… period. If the Executor does not want to have this spousal rollover provision apply then an election must be filed under subsection 70(6.2) to have the assets transferred at their fair market value.

This particular provision works opposite to what you would think should happen, in that you need to “elect” not to have the tax deferred rollover apply.

Essentially… if all of her capital assets passed to her spouse at death (Dec 31, 2018) by virtue of subsection 70(6) can an estate even report income from those investments? The slips from TD Waterhouse don’t really change the way things are to be reported.

Would it be possible to report these slips on the husband’s 2019 tax return? All slips show recipient type as joint account.

John

If all facts are as stated then I expect these slips must be reported on the husband’s 2019 T1. I think that is what Joe had indicated at the end of his last reply.

Hey Wayne and Joe, I am sorry! I misread your message! I thought it said to claim on the 2018 tax return. I agree that I can and will claim it on his 2019. I had asked that question in my very first message, before the one that Joe replied, but did not receive a reply.

I just realized that Joe will not receive my apology. I have a meeting at the bank to try and straighten things up and likely will not have internet access until late tonight when I return to Barrie. Wayne, I know that you are busy, but if you have a chance, please forward this to Joe.

John

Hey Joe, I just wanted to apologize to you! I think when this problem came up I sort of panicked and lost focus. Anyway, I have reread the thread messages and realized that you were actually saying what I was hoping someone would say. Anyway, no T3 except for the $2,500 death benefit.

Thank you for your comments. I am sorry that I caused so much frustration.

John

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