As the legal representative, you may continue looking after the deceased's estate through a trust. If you dispose of capital property, the result may be a net capital loss. If you dispose of depreciable property, the result may be a terminal loss.

Usually, you would claim these losses on the trust's T3 Trust Income Tax and Information Return. However, in the first tax year of a deceased person's graduated rate estate (GRE), you can elect to treat all or part of these losses as losses of the deceased on the deceased's final return.

To make the election, you must file an amended final T1 return of income for the deceased taxpayer. To benefit from the election, the losses to be applied to the final return of the deceased cannot be processed prior to the assessment of the GRE's tax year in which the losses were realized. A net capital loss realized in this first tax year cannot be applied to any tax year before the year of death. For more information, see "164(6) election" in Chapter 3 of the T4013, T3 Trust Guide.

Forms and publications

• Guide T4011, Preparing Returns for Deceased Persons
• Guide T4037, Capital gains
• T3 Trust Income Tax and Information Return