Here is an interesting case I recently came across involving beneficiary designations and the conversion of an RRSP to a RRIF.
The annuitant of the RRSP was mentally incompetent due to a motor vehicle accident. Prior to the accident, he had directly named his wife as the beneficiary of his RRSP and appointed her as his power of attorney for property. If the annuitant had passed away before converting the RRSP to a RRIF, the proceeds of the RRSP would be paid to his spouse’s RRSP and avoided probate.
No Carryover Of RRSP Beneficiary Designation
The annuitant of the RRSP did not pass away and just before turning 71 years old his power of attorney (his spouse) had to act to convert the RRSP to a RRIF before the end of the year. However, the RRIF is considered a different plan from an RRSP and there is no carryover of the beneficiary designation. In addition, the power of attorney cannot make what we call “a testamentary disposition”. This is a fancy way of saying a power of attorney cannot modify a will or make beneficiary designations.
When the annuitant passes away, the RRIF will pay to the estate and be subject to probate.
Although not certain, it may be possible to provide for such a case in your will. For example, you may have wording placed in your will that provides that any RRIFs should be payable directly to your spouse in those cases where no beneficiary designation exists. If you are considering making such a designation, check with an estate lawyer before modifying your will.
Estate planning can be a complex matter and while many people use wills kit’s to prepare their wills, the assistance and advice of a lawyer can save you and your family