Transfer delays lead to additional costs when settling father’s estate
Ms. W was the executor of her father’s estate and was required to file his final tax return. After filing the return in late May, Ms. W received the Notice of Assessment which indicated that her father’s estate owed taxes to the Canadian Revenue Agency (CRA). The estate included several investment accounts at Firm A and Firm B, both of which held securities and cash. After withdrawing the full amount of cash available in the accounts, Ms. W needed to sell more securities to cover the remaining balance owed to the CRA.
Both Ms. W and her father had worked with an advisor at Firm A, but there had been some challenges in the relationship. Firm B had offered Ms. W some lower cost options when selling securities. As a result, in mid-June Ms. W identified assets at Firm A to be transferred in kind to Firm B. Once transferred, Firm B was to sell some of the assets they received in order for the estate to pay the CRA.
By late July, only some of the assets Ms. W had asked Firm A to transfer had been transferred to Firm B and subsequently sold. Funds from the sale of those securities were used to pay approximately half the outstanding amount owed to the CRA, but her father’s estate kept incurring interest charges on the balance.
Throughout August and September, Firm A reached out to Ms. W and Firm B requesting documents to be resent and experienced numerous internal delays and challenges in processing the transfer. The outstanding transfers were not completed until late October.
Ms. W expressed concerns about the transfer delays to Firm A and asked to be compensated for the CRA interest charges she had incurred. Firm A acknowledged it had experienced internal delays, and the transfers should have been completed by mid-September. However, Firm A questioned whether Firm B had promptly sold the transferred assets as soon as it had received them and asked for proof of this. Ms. W did not believe this information was relevant and thought the firm was further delaying the payment of compensation.
Unsatisfied with Firm A’s response, Ms. W came to OBSI for help.
Complaint partially upheld
After interviewing Ms. W and reviewing account statements and CRA correspondence, we found that Firm A did not act on Ms. W’s transfer instructions in a timely manner after receiving them, which prevented her from settling the estate’s CRA tax bill when it was due. We also found that Ms. W did not sell the securities or pay CRA promptly after the transfer to Firm B was completed and that she incurred additional interest charges as a result.
We considered whether Firm A’s delay caused Ms. W to incur financial losses due to change in the value of the securities during the delay. We determined that it had not caused her financial harm because Ms. W chose to continue to hold the securities even after they were transferred.
Based on these findings, we concluded that Firm A was partially responsible for the CRA interest charges incurred by Ms. W. We also concluded that Firm A was not responsible for interest charges she incurred after the transfer had been completed. Firm A agreed to reimburse Ms. W for the amount we recommended.