Curious if anyone has run into this situation: annuitant passed in November 2025…RRIF has perhaps $100K in it or so and there is a named beneficiary. The residual estate, however, likely will not have sufficient funds to pay any tax on the amount paid out, which will go to a “child” (albeit non-lineal and non-adopted) of the deceased.
Generally, the estate simply pays the tax and the beneficiary gets full value. I’ve read that CRA can require the recipient to pay any tax not covered in the final return.
I’m guessing that’s done under Sec 160? Have never run across this situation, but would like to be prepped if indeed it occurs, which, given what I know of the deceased, seems likely.
The situation I had was RRIF had spouse named as ben; but deceased also had debt with CRA from charity scheme; so the RRIF needed to be paid to CRA; still not paid by surviving spouse, but CRA has been asking for it.
The executor is responsible for paying debts of the estate. Failing that, the beneficiaries are ultimately responsible since they received the balance of the estate. I’m not sure if responsibility is joint and several or proportionate to each beneficiary’s share. The beneficiaries should have guessed that the deceased might owe tax, so it should be no surprise that their inheritance comes with a price.
ohh an interesting one…not dealt with directly, but I believe a partner at my firm had a similar issue, but ultimately the requirement to pay any tax owing by the estate with no funds left over did not require the beneficiary to pay the amount owing…not sure what section this was under though
Subsection 160.2(2) seems to limit the RRIF beneficiary’s potential claim for the deceased’s tax to the proportion of the increased tax on the deceased’s tax return caused by the RRIF income inclusion to the total tax on the final return.
The Executor can & will be held responsible for the deceased’s tax where the Executor has prematurely distributed assets to beneficiaries. The Executor must also be aware that they cannot pick and choose which creditors they pay. Where the estate is insolvent, the Executor must identify secured and unsecured creditors and then distribute the net assets of the estate in proportionate amounts. I wouldn’t do this without the aid of a lawyer.
I’ve seen a similar situation. Annuitant passed with prior CRA & other debts, my client was named executor & beneficiary of the RIF but the widow (a much younger foreign national, ahem) promptly liquidated the house/contents/assets and left the country. I advised my client to not act as executor, and not to spend the RIF. That was several years ago (2021?) and so far nothing from CRA…
It’s unlikely the widow was a foreign national if they were married, since permanent residency can be obtained within a few months of being married, assuming they weren’t already a permanent resident. By definition, a permanent resident is not a foreign national. And it’s odd that you would even include that detail, to be honest, since it affects nothing about the situation.