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Pressure to find missing beneficiaries

Focus on Trusts and Estates Law
|Written By Marg. Bruineman
Pressure to find missing beneficiaries
Suzana Popovic-Montag says the extent of a search for the beneficiary of an estate really needs to be in proportion to the size of the estate and the bequest left to the person who is missing.

When a beneficiary of an estate is missing, it puts pressure on the executor to do what is reasonable to find them before seeking relief through the courts to ensure that the executor or estate trustee is not liable.

The questions for the lawyers then are: What is reasonable and what options do executors have to protect themselves?

The search for a missing beneficiary can begin by talking with others named in the will, family members, friends, neighbours and any clues the testator might have left in their own contact information. Advertisements could be posted in the area where the individual was last seen. Online searches and employment of other online tools might garner information. Other avenues include hiring a researcher, private investigator or genealogist for family members who may be overseas, say lawyers.

“The searches that are going to be done by the executor are really important because, at the end of the day, the goal here is to find these people, and if you can’t find them, to at least convince the court that you’ve done your very best to find them,” says Suzana Popovic-Montag, managing partner of Hull & Hull LLP, where she practises in the areas of estates, trusts, capacity and fiduciary litigation.

But Popovic-Montag says the extent of the search really needs to be in proportion to the size of the estate and the bequest left to the individual that is missing. It’s up to the executor to do a cost-benefit analysis because spending thousands of dollars on a search for a $3,000 bequest, for instance, doesn’t make any sense.

“The problem is a little bit exacerbated, too, for executors because we have an act that says you have to make reasonable enquiries to find beneficiaries through births outside of marriage,” she adds.

A will that directs that the estate — or part of the estate — should be left to the testator’s children could include those conceived out of wedlock, heightening the executor’s search responsibility, she says.

If the beneficiary remains missing following what the executor believes are reasonable searches, they can to turn to the courts for relief. That includes having them declared dead or seeking an absenteeism order to have someone else accept the bequest on behalf of the missing individual, she says. But there are other approaches.

“Where the absentee has an interest in the estate, rather than declaring the absentee dead and, therefore, the absentee loses the interest in the estate, the court can appoint a committee to manage beneficiaries’ interest. It can be an individual or trust corporation. And, basically, that committee would manage that estate,” says Toronto-area estate lawyer Charles Ticker.

That preserves the missing person’s right to the estate, he adds. And if later that person remains missing, an order can be sought to have them declared dead, says Ticker.

One order that can be useful but that Ticker believes isn’t so frequently used despite its introduction more than a century ago is a Benjamin order, which came out of the old British case Neville v. Benjamin, in which one of 13 children named in a will couldn’t be found.

The court declared the beneficiary predeceased the testator, meaning the missing person’s share in the estate could be divided among the rest of the beneficiaries.

“The purpose of the order is it protects the trustee because if the beneficiary does show up down the road and says, ‘Hey, I’m back,’ if the trustee has already distributed the estate and has obtained this Benjamin order, the trustee is protected” from liability for the distributed estate, says Ticker.

“The beneficiary, in some circumstances, can go after the other beneficiaries and try to get it out of them, but that would not be an easy task.”

Although Benjamin orders aren’t frequently used in Ontario, it did come up in Steele v. Smith before the Superior Court of Justice. The case examined what the estate trustee has to go through to find the missing beneficiary and how much time has passed since the testator’s death, concluding that the 18 months between the testator’s January 2017 death and the July 2018 order was enough time.

It’s handy because it directly applies to the problem of a missing beneficiary in an estate matter, says Jacob Kaufman, who practises with de Vries Litigation LLP in Toronto, whereas a declaration of death can have other, sometimes unintentional, consequences. Additionally, Ontario’s Declaration of Death Act considers two options for time of death: a circumstance of peril at which time the death was likely caused or the date the application was made.

“It’s a pragmatic, fair approach where the court can balance everyone’s interest,” Kaufman says, of the Benjamin order.


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