3 common expenses after someone passes away

Mature couple embraces pictured inside their home

When you think about what you want to leave behind in this world, memories and mementos probably make the list.

Financial pressure, less so.

We can probably all agree we don’t want to leave our loved ones with a pile of bills. Yet, many of us are caught unaware by the sheer number of expenses that can add up immediately after someone passes away.

Death benefits through workplace plans and the government, and inheritances might make you feel you’re covered. However, while those can help, the funds are often not immediately available, leaving many families in a sticky financial situation – and at a time when they’re already trying to cope with a big loss.

The final expenses challenge

For the people managing your final expenses after you pass away, the challenge is really all about cash flow.

Even if you have assets like real estate and money in the bank, your loved ones may not have immediate access to your accounts to withdraw the money they need. Or in some cases, your money may be tied up in registered savings accounts like RSPs or TFSAs that take time to access.

“It's often less about the bank not letting you access the money, and it's usually more about the fact that the liquid cash is just not there,” says Ian Kuehl, an estate lawyer who practices in the Ottawa Valley. “You're waiting for the house or the farm to sell, and obviously that can take quite a while.”

Now, if you’re wondering how much these final expenses could possibly be, read on.

Expense #1: Funeral costs

“I think what executors don't realize is that when they step into those shoes, their work starts on day one,” Ian says. “They are, often within the first 48 hours, signing the contract for the funeral for thousands of dollars. They often haven’t even met with the bank; they haven't even met with the lawyer.”

Funeral costs across Canada can vary but in general, experts, including Ian, peg them between $6,000 and $7,000 on average (as of 2022).

Even without an elaborate service, there are costs that add up. Someone will need to pay for transporting the body, plus registering the death to obtain a death certificate. Burial or cremation can also cost a few thousand dollars – and that’s all without considering the costs associated with a funeral service or celebration of life, like catering, décor, and keepsakes.

Expense #2: Estate administration tax or probate fees

While there’s no inheritance tax in Canada, each of the provinces and territories have their own probate taxes, or estate administration taxes.

That tax is typically only payable if the estate needs to go into probate, which is the legal process of appointing someone to administer your estate. If you have a will, the courts may formally accept your will during probate, including whomever you appoint as your executor.

If your will isn’t accepted or you didn’t have one, the courts will appoint someone to act in that role and administer your estate.

Either way, the probate process takes time – months, in some areas – and costs money. “From time of death until granted probate, any expenses that are required on behalf of the estate has to be incurred out of pocket by the executor,” says Davide Pisanu, co-founder of online estate planning company ClearEstate. “It can be quite stressful and quite taxing from a financial standpoint.”

The estate administration tax (or probate fees) varies based on your province and the size of your estate. In Ontario, where probate lawyer Neil Milton practices, it’s 1.5% of the assets that need to be probated. So, on a $500,000 house, that’s $7,500.

“It’s due when you file the probate application,” Neil says. “So, when you file the application, before you have access to the estate, you're supposed to pony up this money.”

There are also the legal fees associated with filing for probate, which can easily add several thousand dollars. At Ian’s firm, for example, a probate application is $2,500, then the firm bills at our hourly rate after that for other estate items. In the case of his firm, he recommends people plan to pay about $5,000 for estate-related legal fees.

Other professional fees, such as for accounting services, might also add to the costs.

Expense #3: Household bills

Think about the bills you pay each month, from credit cards to car payments.

All of that must be taken care of after you pass away. And outstanding bills can mean more financial headaches for the people you care about most, if they are things they haven’t budgeted for.

“Your executor may be just sitting there with creditors and other liabilities knocking at the door in the first few weeks, but they need to wait for the house to sell before there's any liquid cash to pay off anything,” Ian says. “[Creditors] may provide you with some leeway, and they often do, but you as the executor you are sitting there feeling liable for them, and they're adding up.”

Fellow lawyer Neil agrees that while your loved ones may get some breathing room from the companies you owe, they’ll likely want to avoid paying late fees or interest. “It costs money not to pay…so essentially, paying those things off promptly is about saving money,” he says.

Taking care of bills is also about taking care of other loved ones, even those not in charge of your final expenses or estate. “If everything was in Dad's name and Mom is still living in the house, we don't want Mom cut off,” Neil points out.

Remember: Your loved ones are who matter most

Everyone’s final expenses will be different, but so are the circumstances of the people managing them.

The loved ones tasked with planning your funeral, paying your utility bills, or even feeding your cat may not live close by. If they must travel to take care of your arrangements, that could add flights or hotel costs to your final expenses.

And while many workplaces offer bereavement leave, not everyone has enough paid leave to deal with family matters. Having to take time off work can add to the financial burden.

When it comes down to it, your legacy is important – and planning for the end of your life isn’t just about you.

As ClearEstate’s Davide puts it, “estate planning is an act of radical empathy because you need to put yourself in the shoes of the people that are going to survive you. It is really the ultimate act of love.”

Protect your loved ones from unexpected end of life costs

Gain peace of mind and avoid placing the pressure of final expenses on your loved ones. FiftyUp can help, so you can focus on what you do best – living. We’re committed to helping you stay in control of your finances with flexible insurance products and payment options made for people aged 50 and up. Find out more about FiftyUp Final Expenses Insurance.