Insurance, Pensions and Joint Assets When There Is No Will in Ontario

When someone dies without a will, many families assume that everything the person owned will be pooled and divided by the intestacy rules. Some assets may be handled differently from the rest of the estate, and which is which can change who ends up with what.

This article explains the general idea, the few rules that apply to RRSPs, and the questions to ask about insurance, pensions and joint accounts. The answer for each asset depends on its documents, so a lawyer or accountant can confirm the details for your situation.

Why the type of asset matters

When a person dies without a valid will, it is called an intestacy, and Ontario's Succession Law Reform Act sets out how the estate is distributed. The people who can inherit are the deceased's spouse and closest next-of-kin.

Those rules divide the estate. The estate trustee is the only person with legal authority to manage or distribute it. The court's certificate gives the estate trustee authority to manage estate assets and pay estate debts. Whether an asset is in the estate or outside it is something to confirm from the document that governs it.

What the rules say about RRSPs

RRSPs show how the two paths work. If no beneficiary is named on an RRSP, the plan is paid to the estate and divided under the intestacy rules. How a plan with a named beneficiary is treated depends on the plan paperwork, which is why it is worth finding the paperwork early and confirming the position with a lawyer or accountant.

Either way, tax is a separate question from who receives the money. For an unmatured RRSP, the Canada Revenue Agency treats the deceased as having received the plan's fair market value immediately before death, and that amount is included in the deceased's income on the final return.

• If the RRSP is paid to the estate and a spouse, common-law partner, or financially dependent child or grandchild inherits it, the legal representative and that survivor can elect to treat some or all of it as paid to the survivor as a refund of premiums, which reduces the amount taxed on the final return.
• If the plan's value falls after death, the legal representative can ask to deduct the difference between the value at death and the total distributions, but only if the final distribution is made by the end of the year after the year of death.
• RRIFs and matured plans follow different rules, so they need separate advice.

Insurance, pensions and joint accounts: questions to ask

The fact that a person had no will says little about who is named on their other documents. Each of these assets has its own paperwork, and that paperwork usually decides where the money goes. The table sets out what to look for.

Joint accounts in particular can raise disputes, because a joint name does not always show who was meant to benefit. If family members disagree about this, get legal advice before anything is moved.

Why this matters to couples who are not married

A spouse here means a person married to the deceased. A common-law spouse does not inherit under the Succession Law Reform Act when there is no will. That makes named-beneficiary designations, pension survivor terms and joint ownership especially important for unmarried partners, because the intestacy rules will not give them a share.

A common-law partner may still be able to apply to court for support from the estate as a dependant if the deceased did not make adequate provision for them. For that purpose, unmarried partners count as spouses if they cohabited continuously for at least three years, or were in a relationship of some permanence and are the parents of a child. A separate article on dependant support claims covers that route.

What to do next

Before anyone divides anything, sort the assets into those that are in the estate and those that are not. Funeral and burial expenses and debts are paid before the estate is distributed, and the estate trustee is responsible for taxes, bills and other debts. Estate Administration Tax is nothing on estates of $50,000 or less, and above that it is $15 per $1,000 (or part) of the value over $50,000, for certificates requested on or after January 1, 2020. Which assets count toward the value depends on your situation, so confirm that with a lawyer before filing.

• Gather recent statements for every bank, investment and registered account.
• Request copies of every insurance policy and pension plan document.
• Note who is named as beneficiary on each, or whether no one is.
• Find out how each joint account and property was held.
• Keep the final tax return in mind, since RRSP amounts are included in income.
• Hold off on paying out or moving money until a lawyer or accountant has reviewed the list.

Frequently asked questions