Jun 10, 2022
How long does an executor have to settle an estate in Ontario?
Settling an estate is a challenging responsibility that can often take between six months to a year in Ontario. Here’s what you need to know.
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When someone has passed away, their belongings don’t magically disappear. Usually, a person leaves behind a vast catalogue of personal items, real estate, bank and investment accounts, and much more. In order to ensure that these assets are properly taken care of, responsible estate holders will designate beneficiaries for their assets in their will.
That way, they’ll ensure that everyone they care about will be financially set up after the estate holder’s passing, and that important items like family heirlooms or real estate stay within a trusted circle. However, sometimes not every single asset is addressed or covered in the will.
Anything that’s left over after all taxes and debts of the estate have been paid is what is known as a residuary estate.
A residuary estate can be more common than you think. If, for example, an estate holder’s list of beneficiaries is quite small—as in, they only have a spouse and one child, or only a few select family members—then they may want to designate some assets as gifts to specific beneficiaries and then leave the bulk of their estate to their spouse or children.
The spouse or children would receive the residuary estate.A residuary estate is not always intentionally created. Sometimes, a will isn’t updated by the time of the estate holder’s death and fails to include recent developments, such as real estate purchases or other new assets.
Sometimes, a residuary estate can simply occur from plain forgetfulness or inattentiveness: An estate holder simply didn’t consider all of their assets while drafting their will, or failed to make it clear in their will who was the designated beneficiary for a specific asset. In other cases, the beneficiary passed away before receiving their inheritance, turning their share of the assets into a residual estate.
Clever will planning foresees a clause for any residuary estates, indicating in the will itself that any assets left over after all other designated beneficiaries, fees, taxes, and debt have been taken care of be transferred to a named beneficiary or charity. That way, even if something does happen to be left over, there’s no confusion as to where the assets are supposed to go.
If you’re an estate executor who happens to be executing a will that doesn’t cover all of the estate’s assets and doesn’t include a clause on how to deal with the residuary estate, then the remaining assets are distributed according to specific succession laws that are determined by the jurisdiction where the estate is being settled. This means that the probate court will determine who receives the residuary assets according to specific guidelines: Usually, the surviving spouse is prioritized, and if there’s no spouse then it’s the surviving children, and so forth.
As you can probably tell, it’s always better to cover all of your bases and have a clause addressing residuary estates in a will. If you’re feeling overwhelmed about all the details that go into drafting and executing a will, we’re here to help. Get in touch with ClearEstate for a free consultation today.