Should I name my estate or a person as the beneficiary of my RRSP in Ontario?

Naming a person directly as the beneficiary of your RRSP is almost always preferable to naming your estate, for both tax and practical reasons. When you name an individual, the RRSP funds pass directly to that person outside your estate. They avoid probate, are not subject to estate administration tax, are not available to creditors of the estate, and are transferred quickly without waiting for estate administration to complete.

From a tax standpoint, the RRSP is fully taxable as income in the year of your death unless you name a qualifying beneficiary — a spouse, common-law partner, financially dependent child or grandchild — who can roll the RRSP over on a tax-deferred basis into their own registered account. If you name a non-qualifying individual or your estate, the full value of the RRSP is included in your income in the year of death, which can create a significant tax liability.

If you name your estate, the RRSP funds flow through your will and are subject to all the delays and costs of estate administration. This may make sense in limited circumstances — for example, if you want the RRSP included in a trust for a minor child — but usually a direct beneficiary designation is better.

Review your RRSP and TFSA beneficiary designations regularly, especially after major life events like marriage, divorce, or the birth of a child.