Can only have either a Successor Holder or Beneficiary | Page 2 | Tax Free Savings Accounts | Discussion forum

kanaka said

I think most of us would assume that we would not have our will over ride any successor or beneficiary assignments. While a will could be a one only document to take care of your estate, the use of sucessor and beneficiary is more efficient tax wise for registered funds and also reduces probate taxes.

No doubt you are correct......but on the other hand it is very important to coordinate and update/change wills, beneficiary, and successor information as needed. Conflicting documents could lead to contesting the will and other assignments.

I agree. It is a good idea to coordinate what is in one's will with the beneficiary/successor designations on the RRSP, TFSA, RRIF, and pension accounts. That seems to also apply to life insurance policies too!

Could save a lot legal wrangling after one's gone. Perhaps, that's why Quebec only allows designations in a will.

Loonie said

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What is not ultimately clear, however, is whether the deceased understood that this would mean that the designation he'd made in his RRIF would be invalidated, whether the lawyer drew it to his attention, whether he'd asked the lawyer to make this provision, whether the lawyer was using a boiler-plate, or whether the deceased had even thought about this implication.

It seems to me that if the will was meant to apply to the RRIF, and both the testator and the lawyer knew this, then it would only have made sense and have been very prudent for the lawyer to have made specific "express" reference to it. I think it's fairly obvious that there would be a likelihood of confusion otherwise. They need only have added one simple clause.

I think he didn't have a very good lawyer! However, the lawyer served his profession well by creating more legal work that had to be paid for by people who did not create the problem.

It is difficult to tell what happened in 2001 when the will was executed. I'm not sure his lawyer can say much; the deceased is no longer around to waive client-solicitor privilege.

As well, the judge almost ruled the beneficiary designation on his RRIF with TD Evergreen Investment Services as invalid. Apparently, that designation turned out to be an RRSP beneficiary designation!

1998	the testator executed a beneficiary designation for his “Mutual Fund RSP – Account Number ░░░-░░░░-░” in favour of his eight children;

Loonie said

Norman1 said

As well, the judge almost ruled the beneficiary designation on his RRIF with TD Evergreen Investment Services as invalid. Apparently, that designation turned out to be an RRSP beneficiary designation!

1998	the testator executed a beneficiary designation for his “Mutual Fund RSP – Account Number ░░░-░░░░-░” in favour of his eight children;

I don't understand the above comment. What does 'almost' mean?

The beneficiary designation on the RRIF account itself expressly referred to a "Mutual Fund RSP" instead of an RRIF! The judge would have thrown it out as not for the RRIF. However, the designation contained an account number. Judge allowed that the deceased actually meant his RRIF, instead of some RRSP account, because the account number matched that of the RRIF account in question.

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I can only say that the language could not have been felt to be very clear or else it wouldn't likely ave ended up in court. It must have involved a lot of money!

The RRIF was worth around $370,000 at time of death.

It didn't seem like there was a fight. Neither the charity nor any of the eight children sent a representative to appear at the hearing. Only a representative of the executor was there.

I suspect everyone with an interest was probably perplexed with what their rights were with the irregularity in the RRIF beneficiary designation document the father had signed. They probably wanted a judge to have a look and rule on it.

For sure, tax of the full RRIF value on death would have been owing. The share of the estate's residue given to the charity, including part of the RRIF, might be considered a donation. So, there might have been an offsetting tax credit.

Loonie said
So, can an executor appeal to the court for a ruling just because they don't know what to do? I never heard of that either, but I have experience. Surely there must be some cost to do this, and presumably the estate would have to be billed for it.

Don't know but an executor can be held liable if proceeds of an estate are disbursed wrongly. IF I was an executor, I would sure want evidence that I did all possible to make sure the right thing was done, including going to court if necessary for that 'evidence'.

Loonie said

I assumed that since the case was Ashton Estate v South Muskoka Memorial Hospital Foundation, that it must have been an adversarial situation, "v" standing for "versus" as far as I know. But, then, I'm not a lawyer.
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That's just how court cases are cited. That's not necessarily an indication of the relationship between the applicant and the respondents in the case of a court application or between the plaintiff and defendant in the case of a court action.

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So, can an executor appeal to the court for a ruling just because they don't know what to do? I never heard of that either, but I have experience. Surely there must be some cost to do this, and presumably the estate would have to be billed for it.

Yes, I think one can apply to a court for a ruling. In the Ashton Estate case, it was "an application for the determination of rights under a will brought under R.14.05(3)(d) by one of two estate trustees."

That's correct. Such an application is not free. There's court costs. There's the cost of the lawyer. There's also the cost of serving notice of the application to the respondents.

The executor has to pay the court costs directly. I think it is the judge's discretion as to any reimbursement by the estate. In the Ashton Estate case, the judge did allow the executor to eventually recover from the estate:

[8] The estate trustee will have his costs for this application out of the estate on a full indemnity scale to be assessed upon the passing of accounts.

A sharper lawyer helps. But, I think it is a joint responsibility between the lawyer and the client the will is for.

In another case, the lawyer seemed sharper and the will contained this statement deferring to the beneficiary declaration on the life insurance policy: "I hereby confirm that my daughter shall remain as my beneficiary."

It seemed all good until probate. Then, it was found that the beneficiary declaration on the life insurance policy application was "not the daughter, but his common-law wife." The result was the British Columbia Supreme Court case Reimer (Dierk Estate) v. Smithgall & Kent (2005 BCSC 1357) mentioned earlier.

Smithgall, the daughter, was awarded the group life insurance policy money.

In hindsight, the deceased was mistaken about who he had designated as the beneficiary on the policy itself. But, the judge felt it was clear who the deceased wanted the beneficiary to be in August 2003, when he executed his will with a statement "confirming" that his daughter should remain the beneficiary.

So, the judge allowed that confirmation to be a revocation of the original designation and a designation of his daughter as the beneficiary.