How do creditors get paid from an estate in Ontario?

In Ontario, an executor is responsible for identifying and paying the deceased's legitimate debts before distributing the estate to beneficiaries. Debts take priority over inheritances — beneficiaries only receive what remains after all valid debts, taxes, and estate expenses are paid.

Creditors who are aware of the death can present their claims to the executor. Executors who want to protect themselves from claims they did not know about can advertise for creditors by publishing a notice in a local newspaper, then waiting a set period before distributing. If a creditor later comes forward after that notice period, the executor who followed the notice procedure is generally protected from personal liability for that missed claim.

If the estate is insolvent — meaning debts exceed assets — the estate is administered under rules that set the order of payment: secured creditors are paid first from their secured assets, then certain preferred claims, then unsecured creditors. Beneficiaries receive nothing in an insolvent estate. The executor must not pay one creditor over another or pay beneficiaries while debts remain, as this can create personal liability.