Deemed Disposition ACB Calculator: New Brunswick Estate With $950,000 in Stocks, Bonds, and a Fundy Shore Cottage — Step-by-Step Final Return and Probate Math in 2026

The Estate: A 74-Year-Old Widower in Rothesay, New Brunswick

A 74-year-old retired engineer dies in August 2026 at his home in Rothesay, NB. Widowed three years earlier — no surviving spouse, so no spousal rollover under section 70(6). Two adult children in Ontario are co-executors. The estate holds three distinct asset classes, all non-registered:

His principal residence was the Rothesay home, which is sheltered by the principal residence exemption and is not part of this calculation. The cottage on the Bay of Fundy is a recreational property — it does not qualify for the PRE because the Rothesay home was designated as his principal residence for every year of ownership.

Asset 1: Reconstructing the ACB on Stocks With Missing T5008s

The stock portfolio was originally opened in 2003 with a regional broker that was acquired by a Big Six bank in 2012. The original broker did not issue T5008 slips with ACB (reporting of ACB on T5008s only became standard for most brokers after the CRA expanded reporting requirements around 2017). The deceased kept no personal records of purchase prices.

The executors face the most common ACB problem in Canadian estates: they know the FMV at death ($420,000) but have no documented cost base.

The CRA-Prescribed Reconstruction Method

The CRA does not prescribe a single method, but accepts ACB reconstruction through a clear hierarchy of evidence:

In this case, the executors contacted the successor bank and obtained archived transaction records from 2003–2012, plus the bank's own records from 2012 onward. The reconstructed ACB: $245,000, including $12,400 of reinvested dividends through the DRIP and $3,200 in original purchase commissions.

Asset 2: The Bond Ladder — Small Gain, Misunderstood Mechanics

The $180,000 bond ladder holds Government of Canada and provincial bonds maturing over 2027–2031. Bonds are often assumed to have zero capital gain at death — this is wrong. A bond purchased at a discount to par (below $100 per $100 face value) accrues a capital gain as it approaches maturity. A bond purchased at a premium (above par) accrues a capital loss.

In this portfolio, most bonds were purchased near par. The net capital gain across the ladder is modest: $8,000. The real tax event on bonds at death is the accrued interest — interest earned but not yet paid as of the date of death. This accrued interest is reported as income (not a capital gain) on the terminal return under section 70(1)(a). For this ladder, accrued interest totals approximately $3,200, taxed as ordinary income at the full marginal rate.

Asset 3: The Bay of Fundy Cottage — Capital Improvements Without Receipts

The cottage near Alma, NB was purchased in 2001 for $125,000. Over 25 years, the deceased made two significant capital improvements:

Only the roof replacement has a contractor invoice. The septic replacement was paid in cash to a local contractor who has since retired. Without documentation, the executors cannot add the $22,000 to the ACB with confidence.

The ACB With and Without the Undocumented Improvement

The $22,000 septic improvement, if documented, would reduce the cottage gain by $22,000. At the 66.67% inclusion rate (this portion of the gain falls above the $250K threshold), that is $14,667 less taxable income, saving approximately $7,300 in combined federal and provincial tax. The executors should attempt to obtain a duplicate invoice from the contractor, a permit record from the local municipality, or a bank statement showing the payment before filing the terminal return.

The Capital Gains Calculation: 2026 Tiered Inclusion

With all three assets deemed disposed, the total capital gain is $380,000. Under the 2026 tiered inclusion rules introduced by the 2024 federal budget (effective June 25, 2024):

If capital gains were still taxed at a flat 50% inclusion, the taxable amount would be $190,000 — $21,671 less. The tiered inclusion adds roughly $8,000–$10,000 of additional tax on this estate compared to the pre-2024 rules.

Terminal Return Income Summary

The terminal return includes all income from January 1 to the date of death in August 2026:

At New Brunswick's combined federal and provincial marginal rates, the estimated income tax on the terminal return is approximately $72,000–$76,000. The capital gains portion accounts for roughly $66,000–$70,000 of that. New Brunswick's top combined marginal rate (approximately 52.5% on income above $185,000) applies to a significant portion of the deemed disposition income on this return.

New Brunswick Probate: $5 Per $1,000, No Threshold

New Brunswick's probate fee is $5 per $1,000 on the full value of the estate passing through the will. Unlike Ontario, which exempts the first $50,000, NB charges from the first dollar.

New Brunswick sits in the middle of the Atlantic provinces on probate — cheaper than Nova Scotia ($15,600 on this estate), more expensive than PEI ($4,000) and roughly comparable to Newfoundland (~$5,700). The $4,750 NB probate fee is $8,750 less than Ontario would charge on the same estate. Province of residence at death is one of the largest single levers in estate cost, and most people never think about it.

The Total Bill: Tax + Probate on a $950,000 NB Estate

The beneficiaries receive approximately $871,000 after tax and probate, before any executor fees or legal costs. The effective estate rate of 8.3% is well below the 20–53% range that applies to RRSP/RRIF-heavy or cottage-dominated estates because this estate has no registered accounts and the gains, while substantial, are spread across three assets with moderate appreciation.

Deadline Sequencing: T1, T3, and NB Surrogate Court

The executors face three overlapping filing deadlines. Getting the sequence wrong can trigger penalties, interest, or personal liability.

The Practical Sequencing

In practice, the executors should proceed in this order:

1. Within 2 weeks of death: Notify CPP and OAS (Service Canada), cancel direct deposits, request date-of-death valuations from the broker and a property appraisal for the cottage.
2. Within 1–3 months: Apply for probate at NB Surrogate Court (file the will, death certificate, inventory of assets). Pay the $4,750 probate fee. This grants legal authority to access and transfer assets.
3. By February 2027: Gather all income slips (T5008 from broker, T4A(OAS), T4A(P) for CPP, T5 for interest). Reconstruct any missing ACB. Obtain the cottage appraisal at date of death.
4. By April 30, 2027: File the T1 terminal return. Pay the estimated tax of ~$74,000 or make an interim payment to avoid interest.
5. After the terminal return is assessed: Request a clearance certificate under section 159(2). Do NOT distribute estate assets to beneficiaries until the certificate is received.
6. After clearance certificate received (3–6 months after request): Distribute remaining assets to beneficiaries. File the T3 estate return if the estate earned income after the date of death.

Which Assets Bypass Probate — and What That Saves

Not every asset in a $950,000 estate needs to pass through the will. Assets with direct beneficiary designations or joint ownership with right of survivorship bypass probate entirely — reducing the probatable estate and the NB fee.

In this estate, all $950,000 passes through the will. The deceased had no registered accounts, no life insurance, and no joint ownership arrangements. The full $4,750 probate fee applies. Had the deceased held even a $100,000 term life insurance policy with the children named as beneficiaries, the probatable estate would have been reduced and the insurance proceeds would have provided immediate liquidity to pay the ~$74,000 tax bill without forcing a sale of the cottage or stocks under time pressure.

Executor Liability: The Clearance Certificate Window

This is the part that keeps executors up at night — and the part most estate guides gloss over.

Under section 159(2) of the Income Tax Act, the executor (called the “legal representative”) is personally liable for any tax owed by the deceased or the estate — up to the value of the assets they control or distribute. This liability does not end when the returns are filed. It ends when the CRA issues a clearance certificate confirming that all tax obligations are satisfied.

The Timing Problem

The clearance certificate cannot be requested until:

1. All income slips have arrived (T5008s from the broker may not be issued until February of the year following death)
2. The T1 terminal return has been filed and assessed
3. Any T3 estate return has been filed and assessed
4. All taxes, interest, and penalties have been paid in full

In practice, this means the clearance certificate typically arrives 9–18 months after death. During that entire window, the executor is personally exposed. If the executor distributes $400,000 to the two children in month 6 and the CRA later reassesses the terminal return with an additional $30,000 of tax (perhaps because the ACB reconstruction was challenged), the executor — not the beneficiaries — owes that $30,000.

The T5008 Delay Problem

Brokerages issue T5008 slips for the year of death by the end of February of the following year. If the deceased died in August 2026, the T5008 for January–August 2026 activity arrives by February 28, 2027. But if the broker was slow to process the estate account freeze or transferred positions to an estate account, the T5008 may not accurately reflect the deemed disposition values. The executor should reconcile the T5008 against the date-of-death valuation statement and file the terminal return using the appraised FMV at death, not the T5008 proceeds amount (which may reflect an actual sale at a different price if the estate sold the securities after death).

The Spousal Rollover: What This Estate Missed

If this 74-year-old had a surviving spouse, section 70(6) of the Income Tax Act would have deferred every dollar of capital gains tax. The stocks, bonds, and cottage would all roll over at the deceased's ACB — $570,000 instead of the $950,000 FMV. The $380,000 of capital gains would be deferred until the surviving spouse sold the assets or died.

The spousal rollover is automatic — the executor does not need to elect it. In fact, the executor must opt out of the rollover (by filing an election on the terminal return) if they want the gain taxed at death instead. There are rare cases where opting out makes sense — typically when the deceased has capital loss carry-forwards or very low other income and the surviving spouse is in a high bracket — but they are exceptions.

In this estate, the spouse predeceased by three years. The rollover is unavailable. The full $380,000 of gains is taxable. This is exactly the scenario where a life insurance policy — taken out at age 65 or 70 when health still permitted standard rates — would have created $200,000–$300,000 of tax-free liquidity to cover the bill without forcing asset sales. At premiums of roughly $5,000–$8,000 per year for a $250,000 T-100 policy, the math almost always works for estates above $500,000 in non-registered assets.

What the Beneficiaries Actually Receive

After tax, probate, and a conservative estimate of $8,000 in executor/legal fees, the two children split approximately $863,000 — or $431,500 each from a $950,000 estate. That is a 9.2% total cost of estate settlement.

The inheritance itself is not taxable in the beneficiaries' hands. All tax was paid on the terminal return. The children receive their share with a stepped-up cost base — the FMV at the date of death becomes their new ACB for any assets they keep rather than sell. If they keep the cottage, their ACB is $350,000 — not the original $125,000 their father paid.