In general terms, an asset with a named beneficiary will not form part of the asset holder’s estate. As a result, registered accounts or life insurance policies are useful tools in the estate planning process because assets that pass directly to a beneficiary are not subject to probate fees or will variation claims on the asset holder’s death.

However, complexities can arise in cases where a beneficiary is named (such as in a RRSP or RRIF) who is also the executor of the asset holder’s estate.

In this case, it could be possible that the asset holder named this person as beneficiary merely to avoid probate fees and that he or she did not intend to gift this person with the funds outright. So, where it is unclear what the asset holder’s intention was, the law presumes that the asset holder intended for this beneficiary to hold the funds in trust for the benefit of the asset holder’s estate (in other words, a ‘resulting trust’ scenario).

The presumption of a resulting trust has applied to jointly owned assets for many years, but its application to beneficial designations is considered differently across the country. In BC, the court confirmed in Neufeld v. Neufeld, 2004 BCSC 25 that in this province at least, yes the presumption applies to RRSPs, RRIFs, TFSAs and the like.

Accordingly, naming someone as your beneficiary may not be enough to cement your intention, and additional documentation in support of same is recommended, especially for those with sizeable funds and investments housed in registered accounts. Want to know more? Call or email us today!

This article is intended for information purposes only and should not be taken as the provision of legal advice. Grace C. Cleveland is a lawyer with the law firm of Cleveland Doan LLP and can be reached at (604)536-5002 or grace@clevelanddoan.com.