Hello fabulous community, would love someone to help me out with this one.
Client passed away in April 2022. Had both a RIF and LIF from Sunlife. When preparing the 2022 taxes I noticed that the deceased client received a full year of LIF payment. RIF rolled over to spouse just fine. I let the client know that his wife should not have received a full year payment. Client and daughter said they would get it corrected.
Just received the tax paperwork for 2023 and there is another full year of LIF income to the deceased client. SunLife missed ticking all accounts when notified of death. SunLife is saying the only way to fix this is to have the client pay back (physically pay back) the 2 years of LIF payments, then they will re-issue the slips and funds to the spouse. That is tough for a senior on a fixed income.
I am asking the client to pay back the payments received in 2024 to avoid this for next tax season, but how do I report this LIF income for 2023?
Thanks so much in advance for any help…
I would probably report the 2023 LIF payment on the surviving spouse’s 2023 tax return. If CRA issues a matching letter later, you can explain the situation. It sounds like if Sunlife had correctly updated their records then the 2023 LIF tax slip would have been in the surviving spouse’s name.
Depending on who is really at fault (i.e. if it was Sun Life’s error), I might suggest the client get a lawyer and sue Sun Life for the hardship it is causing. Of course, the client might have to put up a retainer until the case is won, so the financial result may not be much different than paying back the LIF and waiting for Sun Life to re-issue it to the client.
Thank you @vivayala, I think that would be the best solution. I did call CRA to confirm as I am concerned about getting flagged in the matching program. Agent agreed with you to report on husband who did receive, but to have documentation ready to show that SunLife had errored. Luckily we had emails on SunLife saying that they didn’t tick “all accounts” when received the notification. They have agreed to pay for the tax preparation this year as well.
Thank you for your help:)
Hi @Nezzer
Thanks for the suggestion- mentioned that originally to the client as well. Client really isn’t interested and just wants this fixed.