Deceased Estate Tax Checklist

1. Gather Essential Documents

• Original death certificate.
• Last will and testament (or letters of administration if there is no will).
• Bank statements, investment statements, and retirement account documents.
• Title deeds for real property, mortgage statements, and property tax bills.
• Vehicle titles and registration documents.
• Business records, partnership agreements, and shareholder information.
• Previous years personal income tax returns.
• Social Security numbers for the deceased and any surviving spouses.

2. Notify the Appropriate Authorities

• File a death registration with the local registrar.
• Notify the Social Security Administration to stop benefits and apply for survivor benefits.
• Inform the Canada Revenue Agency (CRA) or Internal Revenue Service (IRS) depending on jurisdiction.
• Notify employers, pension plans, and insurance companies.
• Contact the probate court to open the estate file.

3. Obtain a Tax Identification Number for the Estate

Most jurisdictions require a separate Tax Identification Number (TIN) or Estate Tax ID to file the final tax returns. In the U.S., apply for an Employer Identification Number (EIN) using Form SS4. In Canada, a Business Number (BN) can be requested from the CRA.

4. Determine Filing Requirements

Final Personal Income Tax Return (Deceased)

• Report all income earned up to the date of death.
• Include any taxable benefits received after death (e.g., survivor benefits).
• Claim all allowable deductions and credits that the deceased was entitled to.
• File the return by the regular tax deadline (usually April15 in the U.S. or April30 in Canada) for the year of death.

Estate Income Tax Return

• If the estate generates income (interest, dividends, rent, etc.) after the date of death, an estate income tax return is required.
• U.S.: Form 1041 U.S. Income Tax Return for Estates and Trusts.
• Canada: T3 Trust Income Tax and Information Return.
• File annually for each tax year the estate remains open.

Estate Tax (Inheritance/Death Tax)

• U.S. Federal estate tax applies only if the estate exceeds the exemption amount (e.g., $12.92million in 2024).
• Many states have their own estate or inheritance taxes with lower thresholds.
• Canada does not have a federal estate tax, but deemed disposition rules may create capital gains.

5. Calculate Capital Gains and Deemed Dispositions

Upon death, many assets are deemed to have been disposed of at fair market value, potentially triggering capital gains.

• Real estate, stocks, and securities compute gains based on steppedup basis.
• Collectibles, personal-use property, and certain retirement accounts may have special rules.
• Use Schedule D (U.S.) or Schedule 3 (Canada) to report capital gains.

If the estate is a qualified small business, you may be eligible for the 90% capital gains exemption (U.S.) or the Lifetime Capital Gains Exemption (Canada).

6. Pay Taxes Owed

• Set aside cash to cover any income tax, estate tax, and capital gains tax.
• File and pay any outstanding tax liabilities of the deceased before distribution to beneficiaries.
• Request extensions if necessary Form 4868 (U.S.) or CRAs T2 adjustment request.
• Consider filing an instalment plan if cash flow is a concern.

7. Distribute the Estate

• Obtain a courtissued Letter of Authority or Grant of Probate.
• Prepare a final accounting for the court and beneficiaries.
• Pay debts, liens, and taxes before any distribution.
• Transfer title of real property, vehicles, and financial accounts to beneficiaries.

8. RecordKeeping

• Maintain copies of all tax returns, supporting schedules, and receipts for at least seven years.
• Keep a detailed ledger of estate income and expenses.
• Document communications with the tax authority, courts, and beneficiaries.

9. Seek Professional Assistance

Estate tax matters can be complex. Consider consulting:

• A tax attorney or estate lawyer.
• A certified public accountant (CPA) or chartered professional accountant (CPA) experienced in estate taxation.
• A financial advisor for investment and assetallocation decisions.

Professional guidance helps avoid costly mistakes and ensures compliance with all filing deadlines.

Quick Reference Checklist

1. Obtain death certificate and original will.
2. Notify Social Security/CRA, employers, insurers, and the probate court.
3. Apply for an estate TIN/EIN.
4. Gather all asset and liability statements.
5. Prepare and file the final personal income tax return.
6. File estate income tax returns for each year the estate remains open.
7. Determine if federal or state estate/inheritance tax applies.
8. Calculate any capital gains arising from deemed dispositions.
9. Pay all taxes due before distributing assets.
10. Obtain court authority, prepare final accounting, and distribute to beneficiaries.
11. Retain records for at least seven years.