This document discusses how assets can pass outside of an estate upon death. It provides examples such as life insurance policies, where a beneficiary is designated to receive the proceeds directly rather than the estate. Jointly held assets also pass directly to the surviving joint owner. Inter vivos gifts made during one's lifetime also remove assets from the estate. However, certain assets like those in a trust can still be accessed to fund claims of dependents or creditors against the estate. The document explains different mechanisms by which assets bypass probate but may still be subject to certain claims against the deceased's estate.

1. Assets Passing
Outside of an
Estate
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2. 2
Assets Passing Outside of an Estate
• Typically, the claim that an individual brings against an estate is
limited to the recovery of assets held by the estate at time of
death.
• Other assets that are transferred outside of an estate may pass
“outside of” the deceased’s estate, rather than in accordance with
the terms of his or her Last Will and Testament.
• As a result, just because one is named as a beneficiary under a
Will does not mean that there will not be other beneficiaries who
benefit from assets that are not administered in accordance with its
terms.

3. 3
Life Insurance Policies
• The owner of a life insurance policy has the opportunity to name a
specific beneficiary to the proceeds paid out by the policy after
death. Beneficiary designations are usually revocable, meaning
that the owner of the policy may change the beneficiary if he or she
chooses to do so.
• If no beneficiary is designated for a life insurance policy, the
proceeds will instead fall into the estate and be distributed in
accordance with the terms of the Will.
• If a Will is subsequently executed and specifically refers to and
revokes a beneficiary designation, the policy proceeds may be paid
out to the estate.
• Beneficiary designations may determine the beneficiary to whom
other types of assets will also be transferred, such as funds held in
Tax-Free Savings Accounts and Registered Retirement Income
Funds.

4. 4
Jointly-Held Assets
• Individuals who are joint owners of an asset have a right of
survivorship and will receive joint property directly as the last
surviving joint owner.
• Note that joint ownership differs from tenancy in common in that a
tenant in common does not have a right of survivorship.
• In the case of assets jointly held with an adult child, however, a
presumption of resulting trust typically applies. Absent evidence
that the jointly-held property was intended to pass to the survivor,
the assets may be considered to be held by a surviving adult child
in trust for his or her parent’s estate.
• It is also possible to sever a joint tenancy while joint owners are
still living. The result will be that the ownership is divided and held
as tenants in common, with no right of survivorship.

5. 5
Inter Vivos Gifts
• Sometimes a person will choose to dispose of assets during his or
her lifetime.
• Gifting provides the donor of the gift with the opportunity to see the
recipient of the gift enjoying its benefit.
• Disposing of certain assets prior to death may prevent disputes
over items as assets of an estate.
• It is more difficult for a donor to seek to undo a gift if his or her
mind is later changed with respect to the desired beneficiary.

6. 6
Property Subject To Trust
• The beneficial interest in an asset can also be transferred to the
next generation using a trust.
• The creator of the trust (settlor) can retain some control over the
trust property before he or she dies as trustee or through the terms
of the trust.

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Exceptions
• Notwithstanding that certain assets may pass outside of an estate,
they may be clawed back into the estate for the purposes of
funding a claim for dependants’ support.
• Section 72 of the Succession Law Reform Act provides that any of
the classes of assets referred to in the previous slides shall be
deemed to be part of an estate for the purposes of calculating and
funding the provision of support to a dependant.
• Creditors of an estate may also have a claim against these types
of assets if it can be shown that they were transferred in a
deliberate attempt to conceal assets that would otherwise fall into
the estate and be subject to the claims of creditors.

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