I had the same situation happen to me when my wife died in 2001. What you have to do is treat each income tax return separate. That means transferring each individual from the previous year one by one and not as a joint return. When filling the info on both returns you insert information from one spouse (like net income) on the other return and vise versa. You treat each return as separate but married. You can not transfer the deceased return to CRA (IMPOTNET - CRA won't let you for a deceased person), you have to print the deceased return and mailed it in. If money is owed to the deceased person CRA will issue a cheque and will not do a direct deposit. Hope this helped.
