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Named beneficaries on RRSP and TFSA accounts
March 3, 2021
8:23 am
Ninkin
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Hello
My thought is about not creating doubts between the beneficiaries (my siblings) in my will. Therefore my silly question is:
Say if I put designated name(s) on the RRIF and TFSA registered accounts. My siblings know about the existing of the accounts but would not know about the designated name(s) until the time comes.
Is it by law the executor will required to produce evidence / document to the beneficiaries in my will, the designated name(s) on the accounts? The document would also shows the proceeds have distributed directly to the named immediately after my death?

March 3, 2021
10:41 am
AltaRed
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If you have named beneficiaries on your registered (RRIF and TFSA) accounts, the holding financial institution will disburse the proceeds of the accounts to the beneficiaries upon receipt of a valid statement of death. They will most likely want a notarized copy of the Will as well to ascertain the legitimacy of the Executor who would have provided that Statement of Death.

This disbursement will occur whenever the financial institution receives the proper paperwork and can implement disbursement. It will be anywhere from perhaps 4 weeks to perhaps months if there is tardiness in processing paperwork.

There is no need for either the Executor or the financial institution to say anything to the beneficiaries other than to tell each beneficiary what their share of the registered account is. In other words, there is no need for a beneficiary to know they are named as a beneficiary until such time they receive proceeds, but I would suggest it is 'customary' for each beneficiary to know they are a beneficiary and further that they are not necessarily a sole beneficiary.

There could be one outstanding issue with respect to RRIFs. If the residual of the Estate does not have sufficient funds to pay income taxes due on the collapse of the RRIF, CRA (and/or the Executor) will come after the beneficiaries to recover income taxes due on the collapse of the RRIF.

March 3, 2021
11:34 am
Ninkin
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Thanks AltaRed for your information.
In order to plan it well. I would like to know if the executor will supply evidence / document to the beneficiaries in my will, the designated name(s) on the accounts? The document would also shows the proceeds have distributed directly to the named after my death?
If it is not required by law for the executor to supply the document. Would he or she produce it upon request by any of the beneficiaries in the will?
I am sorry that my quest may be somewhat unusal.

March 3, 2021
12:17 pm
Bill
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Ninkin, I think AltaRed has answered your questions. If you're wondering if the executor is required by law to notify the beneficiaries of the Will who the named beneficiaries of the registered accounts are, or how much each received, the answer is "no". If you're wondering what information re your affairs an executor might voluntarily divulge to various people, well that's where you need to choose the executor carefully and make your wishes clear to her/him.

The distribution of the TFSA and RRIF accounts to the named beneficiaries has nothing to do with the Will and the bequests in it, is my understanding. The Will has its own provisions, not related to these payouts. It's just that the executor is normally the person that provides proof of death to the institutions that then make these payouts to the named people.

March 3, 2021
12:33 pm
Norman1
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Registered account beneficiary designations are not final. A case I mentioned earlier shows that.

Executor may have to file the beneficiary designations on the registered accounts in court if there is a question of whether or not something in the will revokes the beneficiary designations.

If the will has one of those "revokes all wills and testamentary dispositions of every nature or kind whatsoever made" clauses, was signed after the beneficiary designation, and is the last will, then the designation is revoked. The registered account then belongs to the estate and not to any beneficiaries in the revoked designation.

March 3, 2021
2:31 pm
Ninkin
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Bill said
"If you're wondering if the executor is required by law to notify the beneficiaries of the Will who the named beneficiaries of the registered accounts are, or how much each received, the answer is "no". "
I understand that it is the institute that distribute the proceed to the designated beneficary(ies) directly, upon receipt news of the deceased account holder from the executor.
Under this circumstance, the institute should also in return dispatch such document to the executor, informing the circumstance of the accounts in order that the executor could show it to the beneficiaries of the will for the sake of transparency. Why is it not?

March 3, 2021
4:07 pm
Bill
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Assuming we're not dealing with the revocation situation that Norman1 describes the named beneficiaries of the TFSA and RRIF accounts get their money once death is established, it has nothing to do with the separate estate settlement process via the Will. That's usually the point of naming beneficiaries for these registered accounts, to bypass the Will process by not being part of the deceased's estate, so the executor really has no role in this process except to notify the institution of the death so that the payouts can occur. The beneficiaries of the Will have no right to info regarding this separate payout, though often they are told as they're the same people, including the executor, involved in the whole thingy anyway. Is my understanding, I'm sure others will have more experience than me in this stuff.

March 3, 2021
4:19 pm
AltaRed
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Norman1 said
Registered account beneficiary designations are not final. A case I mentioned earlier shows that.

Executor may have to file the beneficiary designations on the registered accounts in court if there is a question of whether or not something in the will revokes the beneficiary designations.

If the will has one of those "revokes all wills and testamentary dispositions of every nature or kind whatsoever made" clauses, was signed after the beneficiary designation, and is the last will, then the designation is revoked. The registered account then belongs to the estate and not to any beneficiaries in the revoked designation.  

I agree though that would be, I think, a rare instance of a poorly worded Will. The general presumption by lawyers preparing Wills is that registered accounts have designated beneficiaries.

In any event, an Executor will (or should) have already read the Will and understood its terms (by talking to the lawyer having prepared the Will) before informing any interested parties of the death and before submitting Statements of Death to any interested party. Time is of the essence but to use a saying.. 'don't overdrive your headlights'.

March 3, 2021
5:07 pm
Loonie
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Talking to a lawyer before telling "interested parties" of a death is unrealistic. Most interested parties are family members who should be informed straight away of a death of a loved one. Lawyers are not always available at the drop of a hat. And some religions require burial asap, so the death can't be kept secret.
Where death can be anticipated, it may be possible to speak to a lawyer beforehand.

March 3, 2021
5:34 pm
AltaRed
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Loonie said
Talking to a lawyer before telling "interested parties" of a death is unrealistic. Most interested parties are family members who should be informed straight away of a death of a loved one. Lawyers are not always available at the drop of a hat. And some religions require burial asap, so the death can't be kept secret.
Where death can be anticipated, it may be possible to speak to a lawyer beforehand.  

I meant financial institutions, government agencies and the like. None of the legal matters who are interested parties (and there are several) need to be dealt with immediately.

March 3, 2021
5:35 pm
Norman1
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AltaRed said

I agree though that would be, I think, a rare instance of a poorly worded Will. The general presumption by lawyers preparing Wills is that registered accounts have designated beneficiaries.

It is not rare. The first paragraph of my lawyer prepared will says exactly that. It revokes all previous will, codicils, and testamentary dispositions. I'm sure all those do-it-yourself will kits have the same thing.

Don't take it for granted that the RRIF or RRSP issuer is going to disburse the funds in the account based on the beneficiary designations after being provided proof of death. The will and the beneficiary designations, on insurance policies and registered accounts, interact. Their lawyers know this and are checking for more than the executor's authority when they request a copy of the will.

March 3, 2021
5:41 pm
Norman1
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Loonie said
Talking to a lawyer before telling "interested parties" of a death is unrealistic. Most interested parties are family members who should be informed straight away of a death of a loved one. …

I agree. Why would someone need to talk to a lawyer before informing loved ones of a person's death?!?

March 3, 2021
6:19 pm
Loonie
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Even worse, not informing people immediately may make them suspicious of the motives of the executor.

March 3, 2021
7:24 pm
Bill
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I might be wrong but my impression is the OP's question is whether the named beneficiaries of the registered plans, due to the normal legal documentation involved in the executor's responsibilities, will end up knowing who each other are and what each other received, or is this something that can be kept confidential from each other?

March 3, 2021
7:51 pm
AltaRed
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Bill said
I might be wrong but my impression is the OP's question is whether the named beneficiaries of the registered plans, due to the normal legal documentation involved in the executor's responsibilities, will end up knowing who each other are and what each other received, or is this something that can be kept confidential from each other?  

Well, they might get to know who other beneficiaries are in a variety of ways but there is no reason for that to be disclosed by the Executor or the financial institution holding the registered account. As a practical matter though, it would be unusual for multiple beneficiaries to not know of each other.

@Norman1: I can assure you I have never heard of a Will that revokes previously assigned beneficiaries of registered accounts, but I defer to the lawyers that should know. I know my own Will does not revoke previously assigned beneficiaries of registered accounts, and it specifically directs the Executor to facilitate those payments.

@Loonie et al: I will repeat I never said that family members should not be made aware of a testator's death immediately. Of course that is the case. But it is not necessary for the various legal matters pertaining to the Estate to be undertaken immediately. The Executor has a fair bit of work to do before any Letters of Direction or Notice of Death be given. Some of the first ones would be to expeditiously advise any pension plan, annuity provider, Services Canada et al to cease payments so as not to have to return payments erroneously made to the deceased. But that is getting off topic to the OP's question anyway.

March 3, 2021
8:55 pm
AltaRed
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In the specific case of a Will, all beneficiaries are entitled to a copy of the Will so they will of course know of each other.

March 3, 2021
11:43 pm
Loonie
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but they would not necessarily know of registered plans or their recipients if these were not mentioned in the will and had designated beneficiaries named for them.
It could be quite difficult for inquiring minds to find out without a court order, especially if the registered plans are held in FIs that the deceased did not use for any other purpose.

March 4, 2021
6:37 am
Norman1
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I don't think the registered plans could be kept secret.

If there was a $200,000 RRIF that was collapsed on death, there would be a $50,000 to $100,000 income tax bill for the estate. Those will beneficiaries who are entitled to the estate's residue would have a right to some accounting for receiving $50,000 to $100,000 less.

I don't know how vague the executor could be in that accounting. Could he or she just reply "because of miscellaneous income taxes"?

March 4, 2021
7:34 am
AltaRed
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I wouldn't suggest the registered accounts themselves can be kept secret, nor should they be, if for no other reason than income taxes to be paid from the estate. I don't recall that being a suggestion either. It is strictly about who are the specific beneficiaries of the registered accounts.

Look at it this way. If the registered accounts have beneficiaries named and they are not superceded by Will provisions and thus truly are external to the Estate, the beneficiaries of the Will have no need to know who the beneficiaries of the registered accounts are. Only that the registered accounts were worth X, the proceeds were distributed to the beneficiaries and the tax bill to the Estate is Y.

Additionally, the Executor does not have any hand in the distribution of the proceeds of the registered plans to beneficiaries. The obligation stops at providing the documentation including the notarized copy of the Will and Statement of Death to the financial institution to commence distribution.

I have not been an Executor to an Estate in which the beneficiaries of registered accounts are different from beneficiaries of the Estate so cannot comment on how I would handle that situation especially if Estate beneficiaries demanded to know who the beneficiaries of the registered accounts were. I would prefer to tell them to keep things transparent but I would also need to be careful to meet Executor obligations. I suppose I would have to read up on Executor obligations and/or ask the lawyer of the Will or the one hired to probate the Estate. I don't think any of us that are not family lawyers know that answer, and maybe the answer varies by provincial jurisdiction. There are considerable variances by jurisdiction.

March 4, 2021
11:49 am
Bill
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The Notice of Assessment for the final and/or estate return will show the taxes payable so can be used to show the beneficiaries named in the Will what their inheritance amounts are reduced by. And there are of course other expenses such as probate fees, legal fees, funeral expenses, etc that also need to be paid prior to distribution to beneficiaries, income taxes are just one of those, and presumably the executor can make a full, documented accounting to beneficiaries of the estate.

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