Prior to distributing the estate to the heirs, the Executor has the responsiblity to pay for the funeral, all debts, probate, legal and accounting fees, outstanding income taxes etc. from the estate. Once everything has been paid the estate is distributed as per the instructions in the will. If the remaining funds are sufficient, you will receive your $10,000. Canada does not have an estate tax so you won't owe on the principal amount. However, if you invest it, you will be required to pay income tax on any income the investment generates.
The only taxes on estates is called 'probate'. It is levied by the provinces and is usually calculated at different incremental rates on the value of the estate. But there is no tax specifically on a particular bequest. Nor do you pay tax on its receipt.
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