No one intends for estate property or money to languish instead of going to its rightful owner. Unfortunately, unclaimed inheritances are quite common. What happens to a beneficiary’s assets if they do not claim their inheritance depends on multiple factors, such as whether or not they can be located, if they predeceased the will-maker, or if they refuse or neglect to collect the property. It is recommended to seek legal advice if you are unsure about an inheritance.
Our expert estate law lawyers and inheritance lawyers with over 20 years of experience have the knowledge necessary to assist you, whether you need help claiming your inheritance, or you want guidance preparing a will that decreases the likelihood of unclaimed accounts by your beneficiaries after your passing. We welcome you to reach out to Onyx Law Group today to find out more.
This blog will provide insight into unclaimed inheritances and what happens when an inheritance goes unclaimed.
What Happens If a Beneficiary Does Not Claim Their Inheritance?
As mentioned previously, what happens if a beneficiary doesn’t claim inheritance depends on several factors. First off, an executor has a duty to notify beneficiaries of their entitlement under an estate. BC law requires the executor to make reasonable efforts to locate each named beneficiary. A proper search takes time and there will be costs associated with it (for instance, it may be necessary for the executor to take steps such as arranging a trace to locate the beneficiary or posting ads in the newspaper and online).
If the executor is unable to locate a beneficiary, BC law allows the executor to discharge their duties by obtaining a court order permitting the missing beneficiary’s share to be paid into court. If the funds remain in court after five years, the funds are considered “unclaimed property.” When funds become unclaimed property, the court transfers the money to BC Unclaimed, which is our province’s unclaimed property administrator.
If the inheritance in question is a specific gift of property and the executor can’t locate the beneficiary within 12 months of the grant of probate from the BC probate court, the executor can sell the property, deduct costs related to storage, transportation, and sale of the property, and hold the net proceeds in trust (see s. 147 of the Wills, Estates and Succession Law Act).
If, on the other hand, the beneficiary has been located but refuses or neglects to collect the property within 180 days of receiving notice, the executor can sell the property, deduct costs related to storage, transportation, and sale of the property, and send the net proceeds to the beneficiary (or hold the net proceeds in trust if the beneficiary refuses to accept the funds).
The executor also has the option of transferring net proceeds to the Public Guardian and Trustee of British Columbia to hold in trust for the beneficiary. Alternatively, the executor may make an application to pay the net proceeds into court after deducting the costs of doing so.
Other Potential Outcomes of a Beneficiary Not Claiming Inheritance
There are other possible outcomes, depending on the circumstances. For example, if it turns out that a primary beneficiary predeceased the will-maker, the unclaimed inheritance may go to an alternate beneficiary if one was named in the will. If the will doesn’t name alternate beneficiaries, what the deceased beneficiary was meant to inherit must be distributed to heirs in accordance with BC inheritance laws. The same process applies if a beneficiary is located but refuses to accept the inheritance.
It may also be necessary for the executor to apply for a court order seeking directions on how to handle an unclaimed inheritance or missing beneficiary.
What Does It Mean to Not Claim an Inheritance?
When a person passes away, everything they owned is referred to as their estate. Ideally, that person will have prepared a valid will during their lifetime that provides instructions for what they want to happen to their estate. After the will-maker’s death, the estate assets are transferred to the named beneficiary or beneficiaries in accordance with the terms of their will.
An unclaimed inheritance refers to unclaimed assets or unclaimed property left behind by a deceased individual that is not transferred to the named beneficiaries. It may include specific assets such as a bank account, stocks, investments, or real estate, for example, or it may be the “residue” of the estate that goes unclaimed (what is left after the outstanding debts of the estate have been paid out).
Uncollected Inheritance vs. Unclaimed Inheritance
There is a difference between an inheritance that is uncollected because the beneficiary is unaware, and an inheritance that a beneficiary is refusing. In the case of uncollected inheritance, the beneficiary fails to claim the inheritance or because they aren’t aware or can’t be found.
For unclaimed inheritance, the beneficiary is notified but disclaims the inheritance (i.e. formally refuses to accept it). To disclaim an inheritance, the beneficiary should submit a written legal document to the estate executor in a timely fashion and the beneficiary must not have received part of the inheritance or some benefit from it—disclaiming is all or nothing.
A beneficiary who refuses the gift, money, or property does not get to decide who receives it. The inheritance instead will pass to the next beneficiary named in the will. If there is no secondary beneficiary or residuary beneficiary, the disclaimed inheritance must be distributed to certain family members in accordance with the rules of intestacy (the surviving spouse has special inheritance rights, the children of the deceased person are the next priority, followed by other heirs).
Different Types of Beneficiaries that Can Receive Inheritance
A primary beneficiary is the will-maker’s first choice and has the first claim to the property or assets in question. A contingent beneficiary is the next in line; also known as a secondary beneficiary, they only receive an inheritance if the primary beneficiary dies before inheriting, disclaims the inheritance, or can’t be found.
Another type of beneficiary is a residuary beneficiary. This is a person who receives what is not specifically left to a primary or secondary beneficiary of a will or trust. For example, the will may provide for a charitable donation of $10,000, with the “residue” of the estate going to the residuary beneficiary.
A residuary beneficiary may also receive assets after they’ve already been given to the primary beneficiary. For instance, property can be held in a trust or a life estate in favour of a primary beneficiary; once the trust is fulfilled, or the primary beneficiary dies, what is “left over” goes to the residuary beneficiary.
Common Reasons Beneficiaries Don’t Claim Their Inheritance
There are many reasons as to why a beneficiary might not have claimed their inheritance. Some of the most common are:
- Lack of Awareness: Beneficiaries may not know they are entitled to an inheritance. This may be because the estate executor has failed to take steps to locate them, because the executor is not communicating with beneficiaries, or because a bank account was overlooked when the estate was settled, for example.
- Inaccessibility: The executor may not be able to locate a beneficiary because the beneficiary has moved away, died, or not provided current contact information.
- Disinterest or Refusal: A person may refuse to inherit property or money despite receiving notice due to personal reasons (e.g., because of estrangement or family conflict).
- Financial Concerns: While there is no inheritance tax in Canada, certain types of inherited property might come with unwanted financial responsibilities, such as mortgages, other tax consequences or debts.
- Complicated Estate: Some assets are more complicated, such as real estate or estate assets that are bogged down in a legal dispute. The beneficiary may simply not want any part of it.
Is There a Time Limit on Claiming an Inheritance?
The time limit will depend on several factors, including the type of property, where the property is located, whether the beneficiary is unaware or refusing, and whether the deceased person died without a valid will.
If left for too long, an unclaimed inheritance may be turned over to the government or unclaimed property administrators. For example, federally regulated banks in Canada will consider the balance of a dormant bank account to be unclaimed funds after 10 years. They will transfer the unclaimed funds to the Bank of Canada. Unclaimed balances are held by the Bank of Canada for 30 years if the amount is less than $1,000 and for 100 years if the amount is $1,000 or over. At the end of the prescribed period, the balance is transferred to the Receiver General of Canada.
Can a Designated Beneficiary Claim Their Inheritance After It’s Unclaimed?
Unless a beneficiary formally disclaims the inheritance, that beneficiary’s entitlement to receive an unclaimed inheritance continues to exist even if the funds are put in trust, paid into court, or transferred to the Public Guardian and Trustee.
Once the unclaimed funds are paid into court or held in trust by the Public Guardian and Trustee of British Columbia, the beneficiary cannot receive the funds unless they apply to the court, allowing the funds to be released to them. This can be a lengthy and complicated process, and we strongly suggest retaining an estate lawyer when applying to obtain such funds.
If the unclaimed inheritance is being held by the Bank of Canada and is under $5,000, the beneficiary can submit claim documentation on their website.
A beneficiary trying to locate unclaimed property in British Columbia specifically can use the British Columbia Unclaimed Property Society search engine. Once the claim is submitted, BC Unclaimed will reach out by email requesting further information, should the claim be valid.
The longer a beneficiary waits, the more difficult it can be to prove they are the rightful owner. There may also be limitation periods that apply to certain types of unclaimed property; if the limitation period is missed, the claim is lost. Time limits vary depending on factors such as where the unclaimed property is located.
The process and documentation required to retrieve unclaimed property are extensive and sometimes complicated. It’s highly recommended that you consult with an inheritance lawyer so you don’t miss any applicable time limit and to get help preparing your claim to retrieve your unclaimed inheritance.
How to Avoid Missing Out on Inheritance?
There are various ways to avoid missing out on an inheritance. If you are a beneficiary who wants to avoid missing out on an inheritance, you should keep your contact information updated (e.g., notify your financial institution, family members or friends when you move or change your contact info). If a will-maker has told you about a potential inheritance, you should stay in communication with the executor and respond to all legal notifications. You may also want to search through BC Unclaimed or other sources (e.g. a U.S. state government site or national association if property is in another jurisdiction).
If you are a will-maker, you can avoid unclaimed inheritances by working with an estate planning lawyer to ensure you have a valid will. It’s also important to maintain updated estate documents and beneficiary contact information. You can also communicate with your beneficiaries regarding their potential inheritance so they are aware and can reach out to the executor after your death.
Need an Inheritance Lawyer?
You should not hesitate to seek professional advice if you have concerns about an inheritance going unclaimed. For those who suspect they may have unclaimed money or inheritance, taking action with an inheritance lawyer is essential in protecting your rights and interests. A skilled lawyer can provide invaluable guidance and expertise in navigating the complexities of inheritance law and estate administration.
For those who want to get an estate plan in place to prevent the possibility of an unclaimed inheritance, reach out to estate and trust lawyers. A well-written will is the first step in making sure your assets are distributed according to your wishes. By clearly outlining your beneficiaries and specifying how assets should be divided, a will can provide legal clarity and minimize the risk of disputes and unclaimed assets.
Reach out for a consultation with the inheritance lawyers at Onyx Law Group today. We are proud to offer our legal services to the people of Vancouver, Burnaby, New Westminster, Surrey, Coquitlam, Kelowna, and all other surrounding areas.