Executor Duties for Life Insurance and Death Benefits in Ontario

After a death, an executor often finds a mix of insurance policies, registered plans and government benefits. A common question is whether the money belongs to the estate or goes straight to someone else.

The answer turns on how each item is set up. This article explains the points that matter in Ontario and the benefits an executor may need to claim or cancel.

Does life insurance go to the estate or a named person?

It depends on the policy. In general terms, an insurance policy may name a person to receive the money, or it may name no one, in which case the money may be payable differently. The only way to know is to read the policy and ask the insurer how the claim will be paid. A lawyer can confirm what that means for your estate, especially if the wording is unclear or the named person has died.

Whether the money is paid to a named person or to the estate can change who receives it and how it is handled, and how this applies depends on your situation, so it is worth confirming with a lawyer. Ask the insurer which applies before you assume either way.

Registered plans and beneficiary designations

For Estate Administration Tax, RPPs, RRSPs, RRIFs and TFSAs with a beneficiary designation are excluded from the estate's value, as are jointly owned assets that automatically become assets of the surviving owner or owners.

If a child is the named beneficiary, special rules can apply. A child entitled to $35,000 or more must generally have the money paid into court, unless a will or beneficiary designation names a trustee of the child's money, or a judge has appointed a guardian of property. If the child will receive less than $35,000, it can be paid to the parent the child lives with or to the person with lawful custody, who holds it until the child turns 18 or reaches the age stated in the will.

Government death benefits

The CPP death benefit is a basic amount of $2,500 plus a possible top-up of $2,500, for a maximum of $5,000. The executor named in the will, or the administrator appointed by the court, applies, and should do so within 60 days of the date of death.

To be eligible, the deceased must have contributed to the CPP for at least one-third of the calendar years in their base CPP contributory period (but no less than three calendar years), or for at least 10 calendar years.

If there is no estate, or the executor has not applied, the benefit can be claimed, in order of priority, by the person or institution that paid or is responsible for paying the funeral expenses, then the surviving spouse or common-law partner, then the next of kin.

Benefits to cancel or return

• The estate keeps the deceased's OAS and CPP payments for the month of death, and all payments issued after that month must be returned.
• To cancel benefits, call Service Canada at 1-800-277-9914 with the deceased's Social Insurance Number, or write to a Service Canada office.
• When a single ODSP recipient dies, ODSP pays the final month for full shelter and basic needs, less any overpayment recovery.
• A deceased spouse's 50% share of a split ODSP overpayment may be recovered from the estate's assets.
• Contact the CRA as soon as possible to avoid repayment of benefits.

What to do next

• Find every insurance policy and registered plan, and note who is named on each.
• Contact each insurer or plan holder to ask how payment will be made.
• Apply for the CPP death benefit if the deceased was eligible.
• Call Service Canada to cancel CPP and OAS payments.
• Notify ServiceOntario and other programs the deceased used.
• Keep records of every claim and payment.
• Ask a lawyer if the policy wording or a beneficiary is unclear.

Frequently asked questions