July 5, 2021

Just because you are a beneficiary of someone’s estate does not mean you automatically receive your entitlement. Instead, you will have to wait until it is transferred to you. However, in certain circumstances you may receive real property (e.g., a home) directly three years after the deceased’s passing.

When someone dies, their property vests in their estate trustee. In other words, the estate trustee steps into the deceased’s proverbial shoes and takes control of their assets. The estate trustee must then pay the deceased’s debts before transferring what is left in the estate out to the beneficiaries. If the estate trustee delays in winding up the estate and transferring assets to the beneficiaries, then the beneficiaries do not automatically receive the assets – they may need to go to court to replace the estate trustee or obtain an order for payment.

However, this general principle is modified by section 9 of the Estates Administration Act (the “EAA”). This provision states that real property which is not distributed or conveyed to the beneficiaries within three years of the deceased’s passing will automatically vest in those beneficiaries on that grim third anniversary (unless a caution has been registered).

There are two very important caveats. The first is that this provision will not apply where the estate trustee has the power to sell the real property – including a general power of sale. As many wills contain this ‘boilerplate’ language, section 9 of the EAA would not be applicable. The second caveat is that the beneficiary must specifically be the beneficiary of the real property at issue. Just because someone has an interest in the residue of the estate generally does not mean that they have a specific interest in any given piece of property in the estate until it is distributed.

The bottom line is that if three years have passed since a deceased passed away and there is real property in the estate, serious consideration should be given to whether section 9 of the EAA applies. However, as shown above, it will not necessarily be applicable and the specific language of the will and the nature of the estate will need to be examined.