When a person who passes away leaves a will behind, it’s up to the named executor to distribute the estate according to the will-maker’s instructions. Even with a clear will in place, unexpected challenges can arise. Missing beneficiaries who can’t be found, refuse their inheritance, or who passed before the will-maker create difficulties for the executor. BC estate laws outline specific steps for dealing with missing beneficiaries. Questions like how long to search for a missing beneficiary, what happens if a beneficiary is deceased, and who inherits in their place aren’t always easy to answer. Executors must often make time-sensitive decisions under pressure, while staying compliant with legal duties.
Does an Executor Have a Duty to Find Missing Beneficiaries?
In BC, executors are required by law to make reasonable efforts to locate all individuals named in a will. That obligation includes taking active steps to contact each beneficiary and inform them of their entitled inheritance. Reasonable efforts can include actions like using tracing services, reaching out to known associates of listed beneficiaries, or publishing notices online. These efforts are not optional and are likely to come at a cost. Any investigative or advertising costs associated with beneficiary searches can typically be paid out of the estate.
What Happens If a Beneficiary Can’t Be Found?
If a beneficiary is still missing after failed search efforts, the executor may need to seek court direction to move forward with the rest of the estate administration. First, an executor must apply to the court for permission to deposit the missing beneficiary’s share into the court’s unclaimed inheritance registry. Once deposited, the inheritance remains under court control until it is claimed or becomes classified as unclaimed property. Under the Unclaimed Property Act, if an inheritance remains unclaimed in court for five years, the assets are transferred to BC Unclaimed. BC Unclaimed then becomes responsible for holding the funds until the rightful beneficiary comes forward.
In certain situations, the executor may instead choose to transfer the beneficiary’s inheritance share to the Public Guardian and Trustee (PGT) of BC. The PGT acts as a custodian and fiduciary by handling money or property on behalf of individuals who cannot do so themselves. This is most appropriate when:
- There is uncertainty or dispute concerning the identity of the beneficiary in question.
- The missing beneficiary is a minor or is mentally incapable of accepting the inheritance on their own.
- The estate requires long-term administration, and the court deposit is not suitable.
- The executor is unable or unwilling to continue managing the unclaimed funds in the trust.
What Happens If a Beneficiary Refuses or Ignores Their Inheritance?
In some cases, a beneficiary may be aware of their inheritance and, for one reason or another, choose not to accept it or simply never follow through with the claims process. If a beneficiary fails to collect specific property within 180 days of being notified, the executor is allowed to sell the asset, subtract any storage or handling fees, and either send the net proceeds to the beneficiary or place them in trust. Executors may also ask the court for approval to pay the funds into court or transfer them to the Public Guardian and Trustee.
Ultimately, a beneficiary who refuses their inheritance does not have the right to determine who should receive the gift. Refused inheritances are permitted to pass to the next named beneficiary. In cases where there are no other beneficiaries to distribute the inheritance to, the assets must be transferred according to intestacy rules. This means that particular surviving family members, like a spouse or children of the deceased, have a right to the inheritance.
What Happens If a Beneficiary Is Deceased?
Sometimes, when an inheritance gift isn’t claimed right away, the executor discovers the beneficiary has passed away. What happens with the inheritance depends on the terms included in the will. If the will has a gift-over provision, the deceased beneficiary’s share is distributed to someone else. If no alternate beneficiary is named, the assets are distributed according to intestacy rules. However, if no relevant qualifying relatives exist, the estate would then be transferred to the BC government as if the will-maker had died without a written will in place. Situations with no living relatives are very rare, so it is more likely that the will-maker’s assets would be distributed according to intestacy laws.
When to Contact a Lawyer
Estate litigation can be challenging. Whether you are an executor unsure of how to proceed or are a beneficiary looking for assistance claiming an inheritance after an extended period, Stephens & Holman is here to help. Reach out to our office today to schedule a consultation.