New Brunswick Executor Settling a $550,000 Estate in 2026: Probate Fees Under the Probate Court Act, Deemed Disposition on a Moncton Rental Property, and What Two Adult Heirs Net After CRA

The Estate: A Moncton Retiree with Three Asset Types

Raymond's estate looks straightforward — three assets, two heirs, a clear will. But the tax complexity is hiding in the rental property. A duplex that generated modest rental income for 15 years now triggers three separate tax events at death: a capital gain, CCA recapture, and the loss of future depreciation deductions. The RRSP adds a fourth hit. Marc, as executor, needs to understand all four before he distributes a dollar.

Cost 1: New Brunswick Probate Fees — $2,750

New Brunswick's probate fees are calculated under the Probate Court Act at a flat rate of $5 per $1,000 on the full gross estate value. There is no exemption on the first $25,000 or $50,000 (unlike Ontario or BC). The fee starts from dollar one.

Probate fee: $480,000 ÷ $1,000 × $5 = $2,400.

How NB compares to other provinces on $550K

New Brunswick's probate fee is manageable. The real cost of this estate is not probate — it is the income tax on the rental property and the RRSP.

Cost 2: Deemed Disposition on the Moncton Rental — Capital Gain + CCA Recapture

Under section 70(5) of the Income Tax Act, Raymond is deemed to have sold the Moncton duplex at fair market value immediately before death. This triggers two separate income inclusions on his terminal T1 return.

Part A: The capital gain

The capital gains inclusion rate is 50% on the first $250,000 of annual gains for individuals and 66.67% above $250,000, per the 2024 federal budget effective June 25, 2024. Raymond's $120,000 gain falls entirely within the 50% tier, producing $60,000 of taxable income from the capital gain.

Part B: CCA recapture

This is the part most executors miss entirely. During 15 years of owning the duplex, Raymond claimed Capital Cost Allowance (CCA) — the tax term for depreciation — on the building component. CCA reduces the undepreciated capital cost (UCC) of the building each year, lowering taxable rental income. At death, the deemed disposition triggers recapture: the CCA that was previously deducted gets added back as ordinary income.

The $25,000 CCA recapture is taxed as ordinary income — not as a capital gain. It does not get the 50% inclusion rate. It lands on Raymond's terminal return at his full marginal rate, stacking on top of the capital gain and the RRSP income.

Cost 3: RRSP Collapse — $180,000 of Ordinary Income

Raymond's $180,000 RRSP has no surviving spouse, no common-law partner, and no financially dependent minor child. Under section 146(8.8) of the Income Tax Act, the full $180,000 is included as income on his terminal T1 return.

This is the single largest tax hit on the estate — larger than the capital gain and the CCA recapture combined. The RRSP was a tax-deferral vehicle during Raymond's working years. At death with no rollover available, the entire deferred tax bill comes due at once.

The Terminal T1: Everything Stacks

Here is what Raymond's terminal T1 return looks like for the period January 1 to March 2026:

At $274,000 of taxable income, Raymond's terminal return pushes well into the top federal bracket (33% on income above ~$253,414 in 2026). New Brunswick's top provincial rate adds another layer. The combined federal + NB top marginal rate is approximately 53%.

Estimated income tax on the terminal return

A precise calculation requires running the full graduated-rate computation across all federal and NB brackets. A reasonable estimate for $274,000 of terminal-year income (with personal credits applied):

That is an effective rate of roughly 30% on the $274,000 — reflecting the graduated brackets (lower rates on the first $50K, higher rates stacking as the RRSP and capital gain pile on).

Cost 4: Executor Liability and the Clearance Certificate

Marc, as executor, has personal exposure under section 159 of the Income Tax Act. If he distributes estate assets to himself and Claire before CRA confirms all taxes are paid, he is personally liable for any shortfall — up to the value of the assets distributed.

The clearance certificate process:

Net Inheritance: What Marc and Claire Actually Receive

Now the full picture — every dollar accounted for:

What each heir receives

From a $550,000 gross estate, each child receives approximately $227,550 — an effective cost of about 17% of the gross estate to CRA, the province, and professional fees combined. The inheritance tax that Canada technically does not have still consumed roughly $95,000 of Raymond's $550,000.

Where the Tax Bill Was Hiding: A Breakdown

The probate fee — the number most people focus on — is less than 3% of the total estate costs. The income tax on the RRSP collapse alone ($180,000 at marginal rates) accounts for more than half the total bill. If Raymond had gradually drawn down his RRSP during retirement and shifted funds into his TFSA, the terminal-year income spike would have been smaller, the marginal rate lower, and the heirs richer.

Three Moves That Would Have Changed the Outcome

1. Update the RRSP beneficiary designation after his wife died

When Raymond's wife died in 2022, the RRSP beneficiary designation became void. Naming Marc and Claire as beneficiaries would not have changed the income tax (the $180,000 still hits the terminal return), but it would have removed the RRSP from probate — saving $900 in NB probate fees and giving the children faster access to the funds without waiting for the grant.

2. Gradual RRSP meltdown during retirement

Raymond retired at 65 and had nine years of retirement before death. If he had withdrawn $20,000 per year from the RRSP above the minimum, he could have drawn it down by $180,000 over those years — converting RRSP to TFSA (he had unused room) and paying tax at his lower retirement marginal rate (~25–30%) instead of the 53% terminal-year rate on the final lump. The tax saving over nine years: roughly $25,000 to $35,000.

3. Consider whether CCA was worth claiming

The $25,000 of CCA Raymond claimed over 15 years saved him approximately $7,500 to $8,750 in annual rental income tax (at his working-year marginal rate of 30–35%). At death, the recapture adds $25,000 to his terminal return at a 53% marginal rate — costing the estate approximately $13,250. The net: CCA cost the estate roughly $4,500 to $5,750 more than it saved. CCA on rental property is a deferral that only wins if the recapture happens at a lower rate — and death with a stacked terminal return is the worst possible recapture scenario.

The Decision Lever That Mattered

On Raymond's $550,000 estate, the RRSP meltdown strategy was the single highest-dollar planning opportunity — $25,000 to $35,000 of avoidable tax over a decade of retirement withdrawals. Raymond had the time, the TFSA room, and the low marginal rate during retirement to execute it. He did not, because — like most retirees — he treated the RRSP as money to preserve, not money to strategically redeploy.

The executor's job now is damage control: file the terminal return accurately, pay the $82,000 tax bill, wait for the clearance certificate, and distribute what remains. Marc cannot retroactively fix Raymond's planning — but he can avoid the executor's own trap by not distributing before the clearance certificate arrives.