Who Gets an RRSP or RRIF When Someone Dies Without a Will in Ontario?

When a relative dies with an RRSP or RRIF and no will, families often assume the intestacy rules decide everything. For these plans, the first question is usually different: did the person name a beneficiary on the plan itself?

This article explains how the two situations differ, who is likely to receive the money, and how tax fits in. Details vary by plan, by who the survivor is and by their age, so treat this as a general guide and confirm specifics with a lawyer or accountant.

Start with the beneficiary designation

Under Part III of the Succession Law Reform Act, a "plan" includes pension, retirement and profit-sharing arrangements as well as RRSPs and RRIFs. The person who owns the plan may name a beneficiary in a signed instrument or in a will. A designation in a will is effective only if the will expressly relates to a plan, generally or specifically.

That is why a missing will does not always mean a missing beneficiary. A designation made on the plan's own paperwork can stand on its own. Later designations also override earlier ones to the extent of any inconsistency, and revoking a designation does not bring back an earlier one.

Named beneficiary versus none

Where there is no designation and no will, the money ends up with the estate trustee, who must first be appointed, and is then distributed to the people entitled on an intestacy. For a spouse, children and other family, the order is set by Part II, including the preferential share of $350,000 for deaths on or after March 1, 2021. A common-law partner is not a spouse for those inheritance rules.

How the tax works

On an annuitant's death before maturity, the annuitant is deemed to have received, immediately before death, an amount equal to the value of the RRSP's property at death. CRA says this is the fair market value of all property in the RRSP and it is reported on the final return for the year of death. For a RRIF, the amount included is the fair market value of the RRIF at death.

Some survivors can soften this. A "qualifying survivor" is the deceased's spouse or common-law partner or a financially dependent child or grandchild. A refund of premiums paid to a qualifying survivor can be deducted from the deceased's deemed income and taxed in the survivor's hands, and may be transferred tax-deferred to the survivor's RRSP, RRIF, PRPP, SPP or an eligible annuity.

• A spouse who is sole beneficiary must move all RRSP property to a qualifying plan or annuity by December 31 of the year following the year of death.
• For a refund of premiums, the transfer must be made in the year received or within 60 days after the end of that year.
• The survivor must be 71 or younger at the end of the year of transfer to transfer to an RRSP.
• If the refund is paid to the estate rather than directly to the survivor, it counts as a refund of premiums only if a qualifying survivor is an estate beneficiary and the legal representative and survivor jointly file Form T2019.
• Income earned in the plan after death is included in the income of the designated beneficiaries or, if there are none, of the estate.

Who steps forward when there is no will

If someone must administer the estate, Ontario.ca says that with no will the deceased's spouse or common-law partner usually has the first right to apply, and if that person does not, a close adult relative such as a child, parent, grandchild, sibling, nephew or niece can apply, with the court choosing whichever it considers most suitable. The certificate of appointment is the document that gives authority to manage estate assets and pay debts.

Without a will, the application generally needs renunciations from others of equal or higher priority who have not joined in, and a consent from persons entitled to share who together hold a majority interest in the estate's assets. The applicant must also serve everyone entitled to share, and a child beneficiary brings in the Children's Lawyer. A bond to the court is generally required of an administrator, though the judge may reduce or dispense with it. Any of this can affect how quickly an RRSP or RRIF with no designation can be collected.

What to do next

• Ask the financial institution whether a beneficiary was named, and request a copy of the designation.
• Look for older plan paperwork, since a later designation overrides an earlier one.
• Find out whether the plan is an RRSP or a RRIF, and whether the survivor is a spouse, common-law partner or dependent child.
• Note the rollover deadlines, which depend on the type of plan and who the survivor is, and confirm them with an accountant.
• Talk to an accountant about the final return before you decide how to distribute the money.
• Get advice on who should apply to administer the estate if no designation exists.

Frequently asked questions