Acting as an estate trustee can be a burdensome task, and it can become particularly difficult in circumstances where beneficiaries cannot be so easily found or located. This can occur where beneficiaries live abroad; are distant family members; or are missing persons, for example. In situations where a beneficiary’s whereabouts are unknown, several options, outlined below, exist to allow an estate trustee to complete the administration of the estate.
Payment of funds into court
This option allows the missing beneficiary’s share to be held by the Court until that person comes forward. An application can be made by a trustee to make a payment into court where a beneficiary cannot be found, pursuant to section 36(4) of the Trustee Act. The Act specifically contemplates the scenario where a person’s address is “unknown”.
When paying funds into court, there is a formal procedure to follow. The trustee will need to file a written request to the Accountant of the Superior Court of Justice or the registrar under Rule 72.02 of the Rules of Civil Procedure.
The request should include a trustee’s sworn statement outlining all relevant information, including the trustee’ efforts to locate the beneficiary. The court must be satisfied that the Estate Trustee acted honestly and in good faith in their efforts. Otherwise, the Court may award costs against the trustee for paying funds into court unnecessarily. For example, an Estate Trustee was held not to be acting in good faith where she tried to pay her estranged brother’s inheritance into court after he informed her that he would be returning to the country to take possession of it (Re Elliot’s Trust).
Obtaining a disclaimer from the beneficiary (or reviewing whether the beneficiary has already disclaimed)
Where a beneficiary has only recently become non-responsive, it may be a valuable exercise to review recent correspondences from them to understand whether a disclaimer has already been made through their conduct or in writing.
A “disclaimer” arises when a beneficiary turns down the rights to the assets they were supposed to inherit. A disclaimer can occur by contract, by deed, by writing or even informally through conduct (Biderman v Canada). It is, however, advisable to obtain some written record of the disclaimer.
The disclaimer must occur before the beneficiary derives any benefit from the assets. When a gift is disclaimed by a beneficiary, section 23(b) of the SLRA stipulates that it returns to form part of the estate and is divided according to the will’s instructions.
Seeking a Benjamin order
Benjamin orders are rare but have been granted by Courts in Ontario. A Benjamin order allows a trustee to distribute the assets of the estate as though the missing beneficiary had died before the deceased testator. A Benjamin order absolves the estate trustee of liability, but still leaves open the possibility of the lost beneficiary coming forward and making a claim against the recipient of the assets in question.
Benjamin orders are most often appropriate where there is an impression that the beneficiary in question is missing or deceased. These orders are typically sought and granted where the Estate Trustee has made extensive inquiries but cannot determine whether a named beneficiary is alive or has died before the deceased.
To grant a Benjamin order, the Court would require the trustee to make a “full enquiry”, which is a fact-driven question, with a relatively high burden. In some cases, a “full enquiry” has meant publishing advertisements in various jurisdictions where the missing beneficiary might be; conducting several searches over a period of 48 years (Re Benjamin); or hiring a tracing company (Steele v Smith).
Seeking an order declaring the beneficiary deceased or an absentee
The definitions under the Declarations of Death Act and the Absentees Act are quite narrow and the burden would fall on the trustee to satisfy specific circumstances of fact, for example, that the beneficiary has disappeared in “circumstances of peril” and that no one has heard of from the beneficiary since their disappearance. This avenue poses a high burden of proof on the Estate Trustee and is therefore not a commonly relied upon option.
Seeking the court’s advice or direction
In situations where the appropriate way forward is particularly complicated or unclear, a trustee can apply to court to get some direction and/or advice. Specifically, under Rule 14.05(3), an estate trustee may make an application to the court for its “opinion, advice or direction…on a question affecting the rights of a person in respect of the administration of the estate of a deceased person or the execution of a trust.” When seeking the advice of the court, the trustee should include an affidavit outlining the reasonable inquires that they have already made.