RRSP designations
A May 10, 2021 CBC article demonstrated the importance of
reviewing RRSP beneficiary designations. The article
discussed the unfortunate cascade of events where, in 2018, a
50-year-old individual went to the hospital for stomach pain
and was diagnosed with cancer. He passed away three
weeks later, leaving a spouse and a child. It appeared as if
the deceased had not reviewed the designated beneficiary
on his $685,000 RRSP, which remained his mother from the
time when he had originally set it up while single. Not only did
this mean that the surviving spouse and child would not
receive these savings, but also that they were effectively
liable for the tax on the RRSP funds. Although the will
included a clause making the spouse the 100% beneficiary of
the estate, this did not override the RRSP beneficiary
While the spouse and mother were able to settle and cover the
tax bill with the proceeds of a life insurance policy, the case
serves as a good reminder to review whether insurance and
registered account beneficiary designations match the
current intent of the parties.

In a March 16, 2021 Ontario Court
of Appeal case, a dispute arose
over the interpretation of a will
regarding how proceeds from the
sale of a cottage were to be
distributed. As the deceased’s
daughters held a life interest in the cottage, the cottage was
not sold until more than 40 years after the original owner’s
death. The proceeds from the sale of the cottage were to go to
the grandchildren. However, within the 40-year period, one of
the grandchildren passed away. At issue was whether the
proceeds should be split among the four surviving
grandchildren, or in five parts, with the deceased
grandchild’s estate and beneficiaries receiving a fifth.

The court used the “armchair rule,” which seeks to interpret
the will using the same knowledge that the testator had when
making the will, and determined that it should be divided
into four.

Ensure to review wills and beneficiary
designations when major life events or changes in the
family occur. Death or critical illness/injury can arrive unexpectedly, limiting the possibility of estate planning updates that can compound the emotional strife of loved
ones after an individual’s passing.

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