Taking into account the rules set forth by the Civil Code, the interpretation of a will must reflect the last wishes of the testator and not those of their heirs.
While considering the rules established by the Civil Code, the interpretation of a will must reflect the last wishes of the testator and not those of their heirs.
Therefore, Mr. leaves to his common-law spouse his residence, an amount of approximately $378,500 from his RRSPs, and a sum of $92,000 from the sale of his clientele. As for his daughter from a previous marriage, she also receives as a designated beneficiary of various RRSPs, an amount of approximately $227,000.
Due to a lack of liquidity on the part of the spouse, the deceased's daughter pays her father's taxes, believing that she will be reimbursed later. In the absence of reimbursement, she turns to the Court*. Although acknowledging that she owes a portion of the advances, the spouse argues that the taxes payable on the RRSPs for which the daughter is the designated beneficiary should be paid by the daughter herself. They amount to $107,000.
The court considers that i) the RRSPs bequeathed to the daughter are, according to the Civil Code, insurance products and do not entail any liability regarding the debts of the estate for the designated beneficiary; ii) the tax debts clearly belong to the deceased and are not the responsibility of a designated beneficiary of an RRSP; and condemns the spouse to reimburse all the advances made by the daughter, including the taxes resulting from the RRSPs.
A testator must be cautious when making bequests in their will. It is important to confirm, depending on the person who is receiving the bequest, which assets are taxable or not, such as the RRSP. In this case, the bequest of the RRSP to the spouse is not taxable, while it is for the daughter and therefore becomes a debt payable by the estate. In the absence of the testator specifying in their will who will pay the tax, it is their universal legatee (the spouse) who must do so under the Civil Code.
For some, taxes are a sickness. If they have to pay them in case of inheritance, please inform them that consulting their doctor will not alleviate their pain.
*C.A. 500-09-023963-135
