Living in the Family Home as an Executor-Beneficiary in Ontario

Many adult children are still living in, or move back into, the family home after a parent dies, and are also the executor. That is practical, but it puts you in two roles at once: the person managing the estate and a person who benefits from using its biggest asset.

Other heirs may ask whether you should pay rent, who covers the bills, and whether you are being fair. This article explains the general picture.

Your role as estate trustee

A deceased person's property, including the home and its contents, vests in the personal representative, who holds it as trustee. In Ontario, only an estate trustee has legal authority to manage or distribute an estate, which includes selling the home or clearing it out.

Holding property as a trustee means you manage it for everyone entitled to it, not just for yourself. Whether living in the house affects your share depends on the will and the facts of your situation, so it is worth confirming with a lawyer.

Is rent owed to the estate?

There is no simple fixed rule on whether an executor-beneficiary must pay rent to the estate or on how personal effects are divided. These questions turn on the will, general trust-law duties and the facts.

• Check whether the will gives you a right to live in the home, or says anything about occupation.
• Consider whether other heirs agree in writing to a rent-free or reduced arrangement.
• Think about whether your occupation delays a sale that others want.
• Keep a record of who pays utilities, taxes, repairs and insurance.

Being open early with the other heirs usually prevents more disputes than any technical argument later.

Insurance and keeping the home safe

The statutory conditions are deemed to be part of every fire insurance contract in force in Ontario, including home policies covering fire, and no variation of them binds the insured.

Under Statutory Condition 4, a change material to the risk that is within the insured's control and knowledge voids the contract as to the part affected unless promptly notified in writing to the insurer or its agent. A house left vacant after a death can be such a change. Once notified, the insurer may cancel, or may require an additional premium to be paid within fifteen days.

The insurer may end the contract on 15 days' notice by registered mail, or on five days' written notice delivered personally or by other permitted means. Vacancy clauses vary by policy, so read your own wording and tell the insurer in writing about the death and who is living there.

Fairness, payment and personal risk

An estate trustee is entitled to a fair and reasonable allowance for their care, pains and trouble, as allowed by a judge of the Superior Court of Justice. That is compensation for the work of administering, and it is separate from whatever arrangement exists for living in the house.

If something goes wrong, a court may relieve a trustee from personal liability for a breach of trust if the trustee acted honestly and reasonably and ought fairly to be excused. That is not automatic, so careful records matter.

Other protections for you as trustee: a personal representative who advertises for creditors' claims and then distributes is not liable to a creditor whose claim they had no notice of at the time of distribution. A representative who distributes assets such as house sale proceeds without first getting a CRA clearance certificate can be personally liable for unpaid tax, up to the value of the assets distributed.

Time also matters. Real property not disposed of within three years after death vests in the beneficiaries, unless a caution was registered, which holds off vesting for another three years.

What to do next

• Read the will for any direction about the house or who may live in it.
• Tell the insurer in writing about the death and your occupation, and keep a copy.
• Open a separate estate account and keep receipts for every house expense.
• Share an update with all beneficiaries regularly, even if they do not ask.
• Try to get any rent or occupation arrangement agreed in writing by every beneficiary.
• Get legal advice before selling, distributing or making major decisions about the home.

Frequently asked questions