Many Canadians don't realize that their will doesn't govern all of their assets. Registered accounts — RRSP, RRIF, TFSA, life insurance — pass directly to named beneficiaries, bypassing the estate entirely. This means outdated or incorrect beneficiary designations can override the intentions of your will, cause family conflict, and create significant tax consequences.
What is a beneficiary designation?
A beneficiary designation names the person (or people) who will receive the proceeds of a specific account or insurance policy when you die. Because these designations are contractual — separate from your will — they take precedence over whatever your will says about that asset.
Why it matters more than your will
- Registered accounts (RRSP, RRIF, TFSA) and life insurance pass directly to named beneficiaries — not through your estate
- If you name your estate as beneficiary (or have no beneficiary named), the assets flow through your estate — subject to probate fees and potentially creditors
- A named beneficiary who predeceases you, with no contingent beneficiary named, can create significant estate complications
- A divorce does not automatically revoke a beneficiary designation in all provinces — your ex-spouse may still receive your RRSP
5 common beneficiary mistakes
Naming an ex-spouse
Many Canadians forget to update designations after separation or divorce. In Ontario, a divorce revokes the spousal designation — but common-law separations do not. Check all accounts.
No contingent beneficiary
If your primary beneficiary predeceases you and there's no backup named, the proceeds go to your estate — triggering probate. Always name a contingent beneficiary.
Naming a minor as direct beneficiary
Minor children cannot legally receive large sums directly. The courts will appoint a trustee, which is expensive and slow. Instead, name a trust or trustee.
Naming a disabled person without a trust
A direct inheritance can disqualify a disabled person from receiving government disability benefits. A Henson Trust is the proper vehicle.
Never updating after major life events
Marriage, children, divorce, death of a named beneficiary — any of these should trigger an immediate beneficiary review across all accounts.
Which accounts have beneficiary designations?
| Account type | Has beneficiary designation? | Notes |
|---|---|---|
| RRSP/RRIF | Yes — strongly recommended | Name spouse as 'successor annuitant' for tax-deferred rollover |
| TFSA | Yes — name 'successor holder' | Spouse as successor holder is the most tax-efficient option |
| Life insurance | Yes — critical to name correctly | Can name anyone; check primary and contingent beneficiaries |
| Sun Life GIF | Yes | Functions like insurance — names beneficiary directly |
| Non-registered accounts | No — passes through estate | Covered by your will; may be subject to probate |
| Real estate | No — passes through estate | Joint tenancy with right of survivorship is an option for couples |
How to do a proper beneficiary review
Gather all account statements
List every RRSP, RRIF, TFSA, pension, and life insurance policy you own. Include employer-sponsored plans.
Confirm current designations
Contact each institution or check your online account to see exactly who is named as primary and contingent beneficiary.
Check for outdated designations
Is there an ex-spouse, a deceased person, or 'estate' listed? These need immediate updating.
Confirm your will and designations align
Your overall estate plan should tell a consistent story. Where inconsistencies exist, decide which takes priority and update accordingly.
Review with Carrie
As a CEA, Carrie can review your complete beneficiary picture, identify risks, and help you update designations in the context of your overall estate plan.
Carrie's advice: I encourage every client to do a beneficiary review every 3–5 years, and immediately after any major life event — marriage, divorce, birth of a child, or death of a named beneficiary. It takes less than an hour and can prevent years of legal complications for the people you love.
Carrie Wang
Carrie is the founder of Seven Lakes Financial Services Inc. and a Sun Life advisor serving clients across Ontario and Saskatchewan. She specializes in retirement, estate, and investment planning, with a warm, personalized approach. She is fluent in English, Mandarin, and Taiwanese.