Be Careful with RRSP Beneficiary Designations

When Margaret and James married in 2005, it was a second marriage for both of them. They had no children, so when they did their financial planning, their wills were clear that 100% of their estates would go to the other. Believing this was sufficient protection, they built a life and continued to grow their wealth.

Sadly, Margaret's sudden passing in 2019 exposed a serious hole in their estate plan. Her registered retirement savings plan (RRSP), worth $450,000 and the bulk of her estate, listed her first husband as beneficiary. To make matters worse, her RRSP would not only go to someone she was no longer married to, but her estate would also be required to pay a substantial tax bill.

Margaret had made this beneficiary designation when she'd opened an individual registered retirement savings plan (RRSP) early on in her first marriage. As it remained hers in the divorce settlement, she continued making regular monthly investments, completely unaware that she hadn't changed the beneficiary. When this designation was revealed after her passing, James wasn't worried. After all, Margaret's will made it clear that her estate would go to him. Despite the work of his legal team, however, the will was overridden by the RRSP beneficiary designation. Fortunately, he was able to leverage Margaret's insurance policy to settle the matter with her ex-husband. Without that layer of protection, James would have lost almost everything his wife had intended for him to have.

During a deeply painful time, James was forced to navigate challenging legal and financial waters to protect the financial future he and Margaret had built together. Sadly, this isn't uncommon. When it comes to conflicts between wills and designations in life insurance and registered plans (RRSPs, RRIFs, TFSAs, etc.), beneficiary designations almost always trump wills. It also depends on where you live in Canada. While there's one set of rules in Nova Scotia, there's another in British Columbia. This can impact your financial planning, so it's vital to know these regulations in your current province of residence.

What can you do to avoid this kind of situation in your future? Talk with a trusted financial advisor who can help you ensure that:

  • you are growing your portfolio wisely and steadily
  • you and your family are protected with the right insurance
  • your estate plan reflects your current situation and intentions
  • your estate plan is designed to mitigate taxes to be paid by your beneficiaries
  • your beneficiary designations on all applicable assets are up to date


A financial advisor can also be your long-term guide. Marriage, children, grandchildren, divorce, remarriage, retirement, disability and death alter the landscape of our lives. Your financial and estate planning should reflect these types of changes. Financial advisors have the skills and tools you need to avoid a situation like James suffered through.

Connect with us today to build or review an estate plan that will protect you when it matters the most.


*Fictional characters for illustrative purposes only.



Copyright © 2021 AdvisorNet Communications Inc. All rights reserved. This article is provided for informational purposes only and is based on the perspectives and opinions of the owners and writers only. The information provided is not intended to provide specific financial advice. It is strongly recommended that the reader seek qualified professional advice before making any financial decisions based on anything discussed in this article. This article is not to be copied or republished in any format for any reason without the written permission of the AdvisorNet Communications. The publisher does not guarantee the accuracy of the information and is not liable in any way for any error or omission.

Tags: 

What our clients are saying...

  • When working with a financial planner, my expectation is to work with someone who is responsive to changes and who can devise a path forward as we age for the benefit of ourselves and our children. I valued the depth of detail and explanation along with the disclosure of all the variables at play. I would certainly recommend Anthony to my family and friends!

  • I was looking for a financial planner who could provide clarity and show me the best possible way to structure and plan for my retirement. Anthony’s expertise was clearly evident. He is professional, punctual, and answered all my questions and concerns. I would definitely recommend Anthony to my family and friends.

  • We expect a Financial planner to be thorough, detailed and have a strong understanding of their clients' needs. It was a pleasure working with Anthony and his team. He delivered a tremendous package and reviewed his findings in great detail. Anthony's attention to detail, solutions, recommendations and in-depth reports provides a great deal of confidence in his recommendations. We would absolutely refer our family, friends and associates to Anthony.

  • I expect my financial planner to review and discuss my financial goals along with how my goals can be achieved. I valued Anthony reviewing my investments and the projections of what they will equate to when I reach my eventual retirement. Anthony has certainly met my expectations and I would be happy to refer my family and friends.

  • My expectation was to be provided with the best possible advice specific to my situation (as it evolves) and to be provided with objective, evidence-based solutions which will provide me with the maximum financial benefit (and peace of mind). I valued the very thorough process of gathering all pertinent information regarding my estate, pension, income and expenses in order to produce a very detailed and fulsome projection of my current and future financial situation. I really appreciate the time Anthony has taken to answer all of my questions and provide sound advice based on my goals and concerns. I am really looking forward to continuing my investment and financial planning journey with Anthony. I would certainly recommend Anthony to my family and friends!

  • We valued receiving a detailed report and explanation of our finances. When working with a financial planner, we expect to have our questions answered with adequate detail and to have a plan developed to help grow our money. Our expectations were clearly met and we would be happy to recommend Anthony to anyone looking for a Financial Plan.