Aug 25, 2021
What happens when an executor is also a beneficiary?
An executor simultaneously being a beneficiary of that same estate is more common than you may think.
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Thinking about the passing of a loved one is never a pleasant thing, but being informed about what lies ahead will make navigating the difficult process much easier once the time comes. Being informed includes knowing what Ontario’s inheritance laws are so that you’re equipped with the knowledge you need to make the right decisions for you and your family.
Inheritance laws are laws that kick into action once someone dies and hasn’t left a clear will outlining how the estate will be divided among their beneficiaries. If clear directions from a legally valid will are lacking, then Ontario falls back to its inheritance laws in order to divide the deceased’s estate amongst legally designated heirs.
When a person dies without a will, they’re said to have died “intestate.” In that case, Ontario falls back on the Succession Law Reform Act to determine how the estate is distributed.
If someone close to you died without leaving a will, you’re only entitled to their estate if you’re an immediate relative. It doesn’t matter how close you were with the deceased and what kind of promises were made to you, either verbally or written. As long as there’s no legally binding will stating that assets will be inherited to you, you have no right to any part of the estate under Ontario’s intestacy laws. If you’re an immediate family member, such as a spouse or a child, then the situation looks a little different.
If you’re a spouse of the deceased and there were no children, either between you and deceased or from the deceased’s previous relationships, then the scenario is pretty simple: The surviving spouse inherits the entire estate. It’s also important to note that a common-law spouse is not entitled to an inheritance under Ontario’s Succession Law Reform Act.
If the deceased also had children, then the spouse is entitled to a so-called preferential share of the estate, which amounts to $350,000. The rest is then split up between the spouse and the children. So if someone passed away and left behind a spouse and one child, then the spouse would inherit the first $350,000 and then the spouse and child would each inherit the remaining 50% of the estate. If there is more than one child, then the spouse inherits the preferential share as well as ⅓ of the remaining estate, while the children inherit equal shares of the remaining 2/3rds of the estate.
However, if the total value of the estate is less than the preferential share, then the spouse inherits the entire estate, regardless of whether children are involved.
If spouses were divorced or legally separated by the time of the estate holder’s death, then the spouse has no claim on the estate under the Succession Law Reform Act. However, the divorced or separated spouse can still be considered a creditor to the estate if they were receiving support payments, or could file a dependent support claim.
Ontario defines legal separation as having lived apart and separated because of a “dissolution of marriage” for at least three years before the death of the estate holder, or has a court-supervised separation process.
As mentioned above, children inherit part of the estate after the spouse inherits the preferential share. However, if the estate holder was not legally married by the time of their death (meaning they either had no spouse to begin with or were separated/divorced) but left behind children, then the entire estate is inherited by the children equally.
If a spouse-less estate holder had children but those children were already deceased by the time the estate holder dies, then the estate goes to the deceased’s child’s children—ie. the estate holder’s grandchildren—if there were any.
If someone dies intestate and was not married or had any children at the time of their death, then the succession laws dictate that the estate goes to the next of kin. First in line for the inheritance are the deceased’s parents. If the deceased’s parents are no longer alive, then the estate goes to the deceased’s siblings. If there are no siblings, then nephews and nieces are eligible. If there are no nephews and nieces, then the court continues going down the succession line to find the next living kin.
In the unlikely event that the deceased really has no next of kin, the estate would go to the province of Ontario.
It’s always a better idea to have a legally binding will than to leave the inheritance of the estate up to the court. If you have questions on how to draft a legally binding will and ensure that your beneficiaries will be taken care of, get in touch with us for a free consultation and see how we can help.