Do Half-Siblings Inherit Equally in Ontario Estates?

When someone dies with no spouse or children, brothers and sisters often turn out to be the closest family. If some are half-siblings, people naturally ask whether everyone gets the same share.

This article does not try to give a single answer, because the answer depends on whether there is a will and on the family facts. It explains how to work out what is actually in the estate, who is in charge, and the practical steps that apply to everyone.

Is there a will, and what does it say?

If there is a will, its wording usually controls who gets what, and the label "half-sibling" may not matter at all. If there is no will, the rules for dying without one set out the order of relatives. How those rules treat half-siblings compared with full siblings in a particular family is worth confirming with a lawyer before anyone agrees to a split.

One rule that does matter early is about spouses. The intestacy rules giving a spouse a share do not apply if the spouses were separated at the time of death, but only where the separation event occurred on or after January 1, 2022. Whether the person was separated from a spouse is therefore one of the first facts to pin down, and how it affects the rest of the family is worth confirming with a lawyer.

Assets that may never reach the sibling split

Many people assume everything is divided among relatives. In practice, some assets are outside the estate. Estate value for Estate Administration Tax excludes assets with a beneficiary designation, jointly owned assets that pass automatically to the other owner, real estate outside Ontario, and registered plans with a beneficiary designation. A designated life insurance payout does not form part of the estate.

There are exceptions. A designation to the insured's "heirs, next of kin or estate" is treated as a designation of the personal representative, so the money goes through the estate.

Pensions have their own rules. For Ontario-registered pension plans, when a member dies before the pension starts, the spouse is entitled to the pre-retirement death benefit ahead of any designated beneficiary, and a designated beneficiary and then the estate take the commuted value only if no spouse is entitled. A spouse who was living separate and apart from the member on the date of death has no entitlement to that benefit. A spouse may also waive it by delivering a written waiver to the plan administrator in the approved form. Federally regulated plans and plans in other provinces follow different rules, so ask the plan administrator or a lawyer which rules apply.

• Look for named beneficiaries on insurance and registered plans.
• Check how bank accounts and property were held.
• Check for a pension and whether a spouse might be entitled.

The estate trustee and the process

An estate trustee collects the estate assets, pays taxes and debts, and distributes the residue to those entitled. If the deceased owned real property or assets held by a financial institution, the estate normally has to be probated through a Certificate of Appointment of Estate Trustee.

Estate Administration Tax is $0 on estates of $50,000 or less, and above that it is $15 for every $1,000 (or part thereof) of the estate's value over $50,000, for applications on or after January 1, 2020. The Estate Information Return must be filed within 180 calendar days after the estate certificate is issued, even if the tax is nil.

Before distributing, a legal representative should get a CRA clearance certificate (Form TX19). Anyone who distributes without one is personally liable for unpaid amounts, up to the value of the assets distributed. Trustees who acted honestly and reasonably may sometimes be excused by a court from liability for a breach of trust, but that is not something to rely on.

Missing siblings, tax and scams

Estranged half-siblings can be hard to find. Where trust money is held by trustees, the court may order it paid into court, which is one route for holding a share for someone who cannot be found. Certain bank products that go unused for 10 years are treated as unclaimed, after written notices at 2, 5 and 9 years, and the balance is transferred to the Bank of Canada, where it can be searched on the Unclaimed Properties Office website. That scheme is federal and covers bank accounts only, so it will not help with other kinds of property.

Most inheritances are not reported or taxed for the person who receives them. If a beneficiary lives outside Canada, income paid or credited by an estate to a non-resident beneficiary is subject to Part XIII withholding tax and is reported on an NR4 slip. Be wary of any stranger asking for a fee to release an inheritance, which is a warning sign of fraud.

What to do next

• Find out whether there is a will and who the estate trustee is.
• List every asset and note which ones have a named beneficiary or joint owner.
• Do not agree to a split or sign a release until you understand the rules that apply.
• Keep records of any contact with other siblings and relatives.
• Ask a lawyer to confirm how shares are divided in your family before any money is distributed.

Frequently asked questions