Do RRSPs, RRIFs and Life Insurance Go Through Probate in Ontario?

After a death, many families are surprised by how much of a person's wealth sits in registered plans and insurance. A common worry is whether all of it will be pulled into probate and taxed. The answer depends on who is named to receive each asset.

This page explains how Ontario's probate tax treats RRSPs, RRIFs, TFSAs, pensions and life insurance, and the situations where an asset you expected to pass outside the estate ends up inside it.

What the probate tax actually counts

Ontario's probate tax is formally called the Estate Administration Tax. It is paid as a deposit when the application for an estate certificate is filed, and it becomes the tax once the certificate is issued. There is no tax on the first $50,000 of the estate, and above that the tax is $15 for every $1,000, or part of $1,000, for certificates applied for on or after January 1, 2020.

The tax is based on the value of all assets the person owned at the time of death. That includes:

• Ontario real estate, less mortgages or liens on it
• Bank accounts, including those at foreign banks
• Investments, and vehicles and vessels wherever located
• Property held in another person's name, and business interests
• Insurance paid to the estate

RRSPs, RRIFs, TFSAs and pension plans

Registered Pension Plans, RRSPs, RRIFs and TFSAs that have a beneficiary designation or beneficiary declaration are not included in the estate value for the tax. In plain words, if the plan paperwork names a person to receive the money, the plan is left out of the value used to calculate the probate tax. How the money is paid out in your case is worth confirming with the plan administrator.

The reverse is just as important. If there is no such designation, these plans are included in the estate value. A large RRSP with no named beneficiary can therefore raise the tax noticeably, since each extra $1,000 of estate value above $50,000 adds $15.

Life insurance

The tax rule refers to insurance paid to the estate. That means the question is who the policy says will receive the proceeds. Registered plans such as RRSPs and RRIFs are handled by a separate rule, and they are left out of the estate value only when a beneficiary designation or declaration is in place. How a particular insurance policy is treated depends on who it is actually payable to, so it is worth confirming with your insurer and a lawyer. Your insurer can confirm what is on file.

Income tax is a separate matter from probate tax. A final income tax return is still needed for the person who died, and the rules on when it is due depend on the date of death.

When these assets fall back into the estate

• A registered plan has no beneficiary designation or declaration.
• Insurance is paid to the estate.
• A joint account was set up by a parent with an adult child without payment. The law presumes the child holds the money in trust for the parent's estate, unless evidence shows the parent intended the child to receive it by survivorship.

By contrast, assets held jointly that automatically become the property of the other owner on death are not included in the estate value, so it matters how the asset was actually held. For transfers from a parent to a minor child, the starting point is different: the transfer is presumed to be a gift. Debts generally cannot be deducted from the estate value for this tax. Only mortgages, liens and similar charges on real property can be deducted, and only from that property's value, while credit card debt, lines of credit and funeral costs cannot.

What to do next

• Find the plan statements and policy documents and check who is named on each.
• Ask each plan administrator or insurer to confirm the beneficiary on file.
• List every asset with its value at the date of death, supported by statements or an appraisal.
• Remember that an Estate Information Return listing each asset must be filed within 180 days after the certificate is issued.
• If you later find assets, an amended return is due within 60 days of becoming aware.

If a joint account or an unclear designation is involved, a lawyer can confirm how the rules apply to your facts before you file.

Frequently asked questions