What is missing beneficiary indemnity insurance and when should an Ontario estate trustee buy it?

Missing beneficiary indemnity insurance is a policy that protects an estate trustee, and effectively the other beneficiaries, if a person who could not be found after a genuine search later turns up and claims a share that has already been distributed. Instead of holding funds back indefinitely or leaving the estate open forever, the trustee distributes the estate now and the insurer covers the missing person's claim if one is ever made.

It's typically considered once a proper search has been done and has failed to locate the person, but before final distribution - insurers generally want evidence that real efforts were made, not just an assumption that someone is unreachable. Premiums are usually a one-time cost weighed against the size of the missing share and how long the estate might otherwise have to wait or hold funds back.

This tool tends to work best for smaller or moderate missing shares, where a holdback or court application would be disproportionately expensive or slow. For a large share, or where there is real doubt about whether the person is alive, an estate trustee should discuss the options - including insurance, a holdback, or a court order - with the estate's lawyer before deciding which route best protects everyone involved.