If a specific beneficiary is designated with the insurer or in a will, the proceeds of the policy automatically go to that beneficiary.
The designation of a beneficiary of life insurance or an RRSP must be done at the time of the contract subscription, the drafting of the will, or should they simply be named as an heir?
For example, a mother, after specifically designating her two daughters, Sylvie and Andrée, as beneficiaries of her RRSP ($175,000), converts it into a RRIF but does not designate any beneficiaries. Following a dispute with Sylvie, the mother cuts off all contact with her but maintains a good relationship with Sylvie's children. Five years pass, the mother rewrites her will, designating her favorite daughter, Andrée, as the liquidator and bequeathing the entirety of her assets to her grandchildren, including Sylvie's three children and Andrée's child, with the condition that her RRIF be turned over to the grandchildren.
Following the mother's death, a disagreement arises regarding the interpretation of the will, raised by Andrée, who applies to the Court* on the basis that the RRIF should be given to her and her sister Sylvie as designated beneficiaries. Andrée claims that the designation was "automatically renewed" in the absence of a designation on the RRIF enrollment forms and that the designation appearing on the RRSP "continues to have its effects."
The court rejects Andrée's claims, considering that the will "changed the beneficiary" and constituted "a specific bequest" in favor of the grandchildren, and that the mother's intention to bequeath her RRIF to her grandchildren is clear. The court orders that the proceeds of the RRIF be paid to the estate, with the condition that they be given to the grandchildren, subject to all creditors of the estate, whose claims have priority, being paid.
It should be noted that the bequest of the proceeds of life insurance or an RRSP is included in the estate. However, if there is a specific designation of a beneficiary with the insurer or in the will, the proceeds automatically go to that beneficiary.
*CA 500-09-022733-125
