What does beneficiary mean in an Ontario estate?

A beneficiary is a person, or sometimes a charity or other organization, who is named to receive something after a death. How they are paid depends on the type of paperwork that names them.

Under a will, the estate trustee carries out the will, winds up the deceased's affairs, pays taxes, bills and other debts, and then distributes the estate according to the will. For life insurance, an insured may name a beneficiary in the contract or by a declaration. Registered plans such as RRSPs, RRIFs and TFSAs with a beneficiary designation are left out of the estate value for Estate Administration Tax. A TFSA may instead have a successor holder, who becomes the new holder and owner, while a designated beneficiary receives the account's value.

A trust can also have beneficiaries, and income an estate or trust allocates to them is generally reported on a T3 slip and included in their income. Most inheritances are not taxed in a beneficiary's hands. Being a beneficiary also gives some rights, such as notice of a probate application.