How to manage a parent’s debt before they pass

If there is a profit or capital gain, it is deemed taxable.

In the family cottage example, if it has gone up in value, this could force the children to sell it to pay the tax bill.

To avoid this, Bury said to consider ways to minimize those tax debts at death, such as donating to charity in your will or using trusts to bypass the estate.

“The key is that you have to plan for them now,” she said. “If you die without putting those plans in place, it’s too late.”

If your loved ones’ debts exceed their assets, their estate can be insolvent, which means that the legacy they worked so hard to build won’t materialize for their heirs.

William Chan, a certified financial planner with Modern Vision Planning, notes the exception is “horizontal relationships,” such as between spouses who hold joint debt. In these cases, the surviving partner is typically responsible for the entire amount. However, for children, the differentiation is clear.

“Collection agencies can come after you for the personal debt — myth!” Chan said. “Either the estate addresses the loan or it’s written off.”

Another common pitfall is underestimating the time it takes to settle an estate. “A common misconception is the speed which all of this can be handled,” Chan said. “Debt can still accrue during the administration process, so remember to pay the bills.”

Discussions around death and money can be uncomfortable, preventing families from planning effectively. However, these discussions are essential to avoid future conflicts and financial messes.

“My advice is to be as transparent as possible with your children,” said Kaplan. “No parent wants to leave a mess for their kids, and there is financial and tax planning that can be done to mitigate these types of issues before a loved one passes away.”

Starting these conversations can be challenging so Chan suggested leading by example.

“Simply mention you’ve been speaking with a certified financial planner or estate planner regarding how to best structure one’s finances and building an estate plan,” he said.

This can open the door to a broader family discussion without putting anyone on the spot. He also recommends avoiding high-pressure moments, such as holiday gatherings, and instead using a news story about a celebrity’s estate as a neutral conversation starter.

“If something recently happened in the media with a celebrity, it could bring to light how death and taxes are the two things in life that can’t be avoided forever,” Chan said.

Framing discussions in terms of legacy is also helpful, said Bury.

“Asking a loved one, ‘What do you want your legacy to be, and how can I help honour it?’ opens up a conversation about what’s important to them — how they want to be remembered, and what type of celebration of life they want,” she said.

Remind them that being proactive and putting a solid plan in place is the best strategy for securing their financial legacy.

“As a first step, absolutely everyone should have a will,” Kaplan said. This is a foundational document of any estate plan.

She added that having an accounting or financial adviser review the will to create a road map of what will happen upon your death is key. This can identify potential liquidity issues or tax inefficiencies that can be corrected now.

If you don’t have a will, the courts will appoint someone to manage the estate, which may not align with your wishes.

As life changes, so do your finances. Kaplan said “reviewing and updating your documentation and plans should be no different than going to the doctor for a regular health check.”

Ultimately, the key is to think ahead and overcome uncomfortable conversations to secure your loved ones’ future when your time arrives.

This report by The Canadian Press was first published March 10, 2026.

Kumutha Ramanathan, The Canadian Press