If you are a beneficiary named in a Will entitling you to receive a payment of money, can the Estate Trustee withhold that payment from you?
If at the time of the testator’s death you owed him/her money, which remains unpaid at the time the Estate is distributed, then the Estate Trustee can refuse to pay your inheritance to you up to the amount that you owed the deceased. This is referred to as the “right of retainer”. The Estate Trustee can withhold payment to you even if there is no court judgment or order saying you owe the money.
There is an exception where the Estate Trustee cannot withhold payment of your inheritance based on the right of retainer – if the Will provides that you are to receive a specific fund (for example, the money in a particular bank account, or the amount in a RRSP). However, even when this exception may apply, it may be possible for the Estate Trustee withhold the payment based upon a claim of “equitable set-off.” However, before the Estate Trustee can claim equitable set-off, specific criteria must exist.
If you are a beneficiary under a Will and the Estate Trustee is withholding payment of your inheritance, speak with your legal adviser to ensure that the withholding is proper.