Beneficiary Died Before Getting Their Inheritance in Ontario: Who Gets the Share?

A will names someone to receive a gift, and then that person dies. It is a common and stressful situation for an estate trustee, who has to decide who now takes the share, and for family members who wonder whether they are entitled to anything.

The answer turns mainly on timing and on the exact wording of the will. This article walks through the two main cases in Ontario, a related rule for former spouses, and the practical steps for an estate trustee.

Start with the timing

There are two different situations, and the rules are not the same. In the first, the beneficiary died before the person who made the will (the testator). In the second, the beneficiary outlived the testator but died before the estate was paid out. Work out the dates of death first, because everything else follows from them.

Beneficiary died before the testator: the anti-lapse rule

A gift to someone who is already dead when the testator dies may not go through as written, and the wording of the will matters a great deal. Ontario has an important rule in section 31 of the Succession Law Reform Act. If the gift was made to the testator's child, grandchild, brother or sister, and that person dies before the testator and leaves a spouse or issue, the gift does not lapse unless the will shows a contrary intention.

Where the rule applies, the gift passes as though it had been made directly to the people who would share that person's estate. The rule is limited to those listed relatives. A friend, a niece or nephew, or a charity that no longer exists is not covered by it, and what happens to those gifts depends on the will, for example whether it names a backup beneficiary.

Because a contrary intention in the will overrides the rule, wording such as a named substitute beneficiary, or a statement that a gift is only for a person who survives, matters a great deal.

Beneficiary died after the testator but before payout

A different result applies when the beneficiary survived the testator, even by a short time. Under section 2(1) of the Estates Administration Act, property vested in a person with no right of survivorship passes to that person's personal representative. In practice, a beneficiary who survived the testator generally passes their share to their own estate, unless the will imposes a survivorship condition.

That means the share is handled by the beneficiary's personal representative as part of their estate. How the two estates fit together in practice depends on the facts, so it is worth confirming with a lawyer.

Wills often contain a survivorship clause, commonly requiring a beneficiary to outlive the testator by a set period such as 30 days. Some gifts also vest only at a later age. In either case the share may not belong to the deceased beneficiary at all, so the will's exact wording must be read before assuming it goes to their estate.

A related case: a former spouse after divorce

A similar idea applies to a former spouse. Unless the will shows a contrary intention, a gift to a former spouse, and their appointment as executor or trustee, are revoked after divorce or a declaration of nullity. The will is then read as if the former spouse had died before the testator.

After a divorce, what happens to the gift depends on the will's wording, such as whether it names a backup beneficiary, so it is worth confirming with a lawyer. A separation without a divorce is different, and the rule is stated in terms of divorce or a declaration of nullity.

What an estate trustee should do next

• Confirm the dates of death for the testator and the beneficiary, and get certified proof of each.
• Read the gift carefully for survivorship clauses, age conditions, named substitutes and any statement of contrary intention.
• Decide which case applies: died before the testator, or after.
• If the anti-lapse rule may apply, confirm the beneficiary's relationship to the testator and identify whether they left a spouse or issue.
• If the share goes to the beneficiary's estate, find out who their personal representative is.
• Keep the executor's year in mind: estates are still presumed to be wrapped up within one year of death, although a court accepts that this may be unreasonable for complex estates.

Questions about contrary intention, vesting and unclear wording can be difficult to answer from the will alone. A lawyer can read the document and confirm the current wording of the statutes before you distribute anything.

Frequently asked questions