Beneficiary vs Heir: Who Is Who in an Ontario Estate

After a death, people often use beneficiary, heir and next of kin as if they meant the same thing. In everyday talk they overlap, but in an Ontario estate they point to different ideas, and the difference affects who is told what and who can ask questions.

This article explains each term in plain words, shows who has a real say in estate matters, and points out situations where a named beneficiary may not end up receiving a gift.

What each term generally means

• Beneficiary: a person or organization who is to receive something from the estate, usually because the will says so. The key idea is entitlement to a share.
• Heir: an older, informal word for someone who inherits. People often use it for family members who inherit when there is no will, or loosely for anyone who receives an inheritance.
• Next of kin: your closest relatives by blood or marriage. It is a family label, not a promise of any inheritance.
• Estate trustee: the person appointed to manage the estate. Estate trustees carry out the wishes in the will, wind up the deceased's affairs, pay taxes, bills and other debts, and then distribute the estate according to the will.

One person can be several of these at once. A daughter may be next of kin, a beneficiary and the estate trustee. Another relative may be next of kin but receive nothing.

Who has to be told about a probate application

The duty to give notice is tied to being entitled to a share, not to being related. A person applying for probate, which is a certificate of appointment of estate trustee, must send or give a copy of the application form to everyone entitled to a share of the estate, and must do so before filing with the court.

If a beneficiary is a minor or an incapable adult, the application may also need to go to the Office of the Children's Lawyer and the Office of the Public Guardian and Trustee. For a small estate of $150,000 or less, the signed application must reach everyone entitled to a share 30 days before filing, and Form 74.1B confirms that notice was given.

Who can ask for accounts or object

Under rule 74.15 of the Rules of Civil Procedure, any person who appears to have a financial interest in an estate may ask the court for an order requiring the estate trustee to pass accounts. That wording is wider than beneficiary alone, so a person with a financial stake can have standing even if they are not named in the will.

When accounts are passed, the notice of application (Form 74.44) states that objections must be served at least 35 days before the hearing. The court decides only the issues raised in filed notices of objection, and if no objection is filed the estate trustee may obtain judgment without a hearing.

When a named beneficiary may not receive the gift

The wording of the will matters a great deal here, so it is worth having it read closely before assuming a result.

What to do next

Generally, being a beneficiary does not mean you owe tax on what you receive, although how this applies to a particular asset depends on your situation, so it is worth confirming with a lawyer or accountant. The CRA lists most gifts and inheritances among amounts that are not reported or taxed. Some assets, such as jointly owned property that passes to the surviving owner and RRSPs or TFSAs with a named beneficiary, pass outside the estate for Estate Administration Tax purposes.

• Find out which role you actually hold: beneficiary, estate trustee, both, or neither.
• Ask for a copy of the will and the probate application if you are entitled to a share.
• Note any deadlines you are given, especially for objections.
• Keep records of what you are told and when.
• Speak with a lawyer before taking a position if a gift looks void, or if you think you have been left out.

Frequently asked questions