An Ontario will beneficiary has an interest in the estate but does not necessarily administer the will, and estate distributions are not guaranteed within one year.
This guide draws on Ontario’s small-estate probate guide, Ontario’s estate-administration guide and Ontario’s Succession Law Reform Act.
What Does Being A Beneficiary Of A Will Mean In Ontario?
Being named as a beneficiary means a person may receive money, property or another gift from the estate.
A beneficiary has no duty to administer a deceased’s estate unless appointed as the estate trustee (executor). It is the executor’s role to collect the estate’s assets, pay all debts and taxes owing by the estate and distribute the remaining assets.
| Role | What the role usually controls | What it does not automatically control |
|---|---|---|
| Estate trustee | Areas of control include estate records, debts, probate application, distribution, and tax filings. | Property that validly passes outside the estate. |
| Specific beneficiary | The particular cash amount, item or property described in the will. | It would not automatically control every estate transaction or the entire residue. |
| Residuary beneficiary | A stated share of what remains, less estate expenses and specific gifts. | A fixed amount before liabilities and expenses are known. |
Types Of Beneficiaries And Their Rights
Find out from the estate trustee how the asset was owned by the deceased, and whether there is a beneficiary designation in respect of the asset.
A will can distribute the deceased’s money, investments, real estate, personal effects and any other interests owned by the deceased. However, not every asset connected to the deceased is controlled by a will.
| Asset or gift | Question that decides the route |
|---|---|
| Home or other real estate | Was it owned alone, as a joint tenant or as a tenant in common? |
| Bank or investment account | Is the account an estate asset, a joint account, or does it have a permitted designation? This will determine what route to take. |
| Life insurance | Is a beneficiary named in the insurance contract, and is the designation valid? |
| Personal property | Is this item a specific gift, or does it fall into the residue? |
| Debt owed to the deceased | Is the asset collectible? Could the estate trustee collect it? |
Who Can Be Named As A Beneficiary?
Beneficiaries can be individuals, properly described charities and other legal recipients. Minor children can be beneficiaries but their parents or guardians may not automatically receive and use a minor’s inheritance. The will may create a trust to hold property for the child. Absent some workable provision for assets to be held for a minor, court or public-office involvement may be required.
Gifts under a will can be made subject to terms or conditions. Vague, impossible or legally invalid conditions can lead to disputes. Professional legal advice should be obtained by an estate trustee before making a determination that a beneficiary is not entitled to a gift because a condition has not been met.
Do Beneficiaries Have Legal Rights?
A beneficiary of an estate has a legal interest in its proper administration which can be enforced. Exactly what rights a beneficiary has depends on the stage of administration and the nature of the gift. There is no blanket right to all of the estate’s papers. A residuary beneficiary may need enough estate accounting to understand how the residue was calculated, but someone who receives a specific item may not be entitled to every record in every case. A probate applicant must give the required notice to estate beneficiaries.
| If this happens | Useful next step |
|---|---|
| You have not seen the relevant will wording | If conditions apply to the gift, ask the estate trustee for the portion of the will describing your gift and its conditions. |
| There has been a long period with no update | Ask for a written status of all pending items, such as probate, tax, asset-sale, or any disputes. |
| You are asked to sign a release | If in doubt as to the figures, or as to the terms of the release, get legal advice. Ask for the proposed distribution and the supporting accounting before signing anything. |
| You suspect delay, self-dealing or missing property | Keep all relevant records and speak with an Ontario estates lawyer about an accounting, court direction or another remedy. |
There is also no magic rule that beneficiaries are entitled to receive their money on the first anniversary of the deceased’s death. One year is a rule of thumb. Probate, a property sale, tax clearance, litigation, an illiquid asset or a missing beneficiary can reasonably prolong the administration of an estate.
What Responsibilities Does A Beneficiary Have?
All duties relating to the administration of the estate, such as paying debts, tax filings, obtaining a grant of probate, and keeping accounts, are the responsibility of the estate trustee and not a beneficiary unless the beneficiary is also the estate trustee.
However, beneficiaries should provide identification and payment instructions, respond to reasonable requests for information, and report address changes to help with settling the estate.
Does Life Insurance Pass Through a Will?
Not always. Generally, insurance proceeds are paid directly to the beneficiary named in the insurance policy outside of an insured’s estate. Insurance proceeds pass to the beneficiary as a result of an insurance contract and not as a testamentary gift from an estate.
However, in some cases, insurance proceeds are paid to the insured’s estate. For example, this might happen where the estate is the beneficiary, where no valid beneficiary is named, where a dispute or legal rule affects the designation, or where all beneficiaries predeceased the insured and there is not a contingent beneficiary that applies. Conflicting documents should be reviewed by an Ontario estates lawyer.
Where the proceeds of insurance are paid to an insured’s estate, those proceeds could be used to pay estate debts, taxes and administration expenses before any of the balance is distributed. A will can create or change some insurance designations, but only when the legal requirements are met.