Will vs Beneficiary Designation: Which Wins in Ontario?

You may be holding a will that leaves everything to one person and an insurance policy or RRSP form that names someone else. It is natural to ask which document the insurer or plan administrator will follow, and the answer is not always the will.

In Ontario, life insurance is governed by the Insurance Act, and many registered plans are governed by the Succession Law Reform Act. The rules are similar but not identical, so this article walks through each, the exceptions, and how a beneficiary or estate trustee can work out which document controls.

Life insurance: the latest valid designation wins

A person insured under a life insurance contract may name a beneficiary in the contract itself or by a declaration. Unless the designation is irrevocable, the insured may change or revoke it at any time by a declaration. A declaration is an instrument signed by the insured that must be endorsed on the policy and identify the contract or describe the insurance, and that designates or changes a beneficiary.

A beneficiary can also be named in a will, but a designation in a will has no effect against a designation made later than the will. So a will does not automatically override a policy designation made after the will. How an earlier policy form and a later will interact depends on the exact documents, so it is worth confirming with a lawyer.

If a will that contains an insurance designation is revoked, by operation of law or otherwise, the designation in it is revoked too.

Exceptions that change the result

• Irrevocable designations: if the beneficiary is named irrevocably in the contract, or in a declaration filed with the insurer during the insured's lifetime, the insured cannot change it without that beneficiary's consent while the beneficiary is living.
• An "irrevocable" label in a will, or in a declaration that was never filed with the insurer, has the same effect as an ordinary revocable designation.
• Insurer restrictions: an insurer may, subject to the Authority's rules, restrict or exclude the insured's right to designate beneficiaries in the contract.
• Heirs or estate: naming the insured's "heirs, next of kin or estate" is treated as naming the personal representative, so the money goes through the estate.
• Common disaster: unless the contract or declaration says otherwise, if the insured and beneficiary die at the same time, or it is uncertain who survived, the money is paid as if the beneficiary died first.

RRSPs, RRIFs and other registered plans

For plans other than insurance, a participant may designate a person to receive the benefit payable on death. A designation in a will is effective only if it relates expressly to a plan, either generally or specifically. A later designation revokes an earlier one to the extent they are inconsistent, so whichever valid designation is made last, in a will or on the plan form, controls.

The plan administrator is discharged on paying the person designated, and that person may enforce payment. These plan rules do not apply to a designation to which the Insurance Act applies, such as an insurance-company RRSP or annuity. For those, the Insurance Act rules above are the starting point.

Ontario-registered pension plans work differently. When a member dies before the pension starts, the spouse is entitled to the pre-retirement death benefit ahead of any designated beneficiary. A designated beneficiary, and then the estate, takes only if no spouse is entitled. A spouse living separate and apart from the member on the date of death has no entitlement, and a spouse may waive the benefit in writing in the approved form. These pension rules cover Ontario-registered plans only, so federally regulated plans and plans from other provinces may differ.

Why designated money matters for the estate

In short, designated money generally bypasses probate, but not every claim. A dependant's support application can still reach it. Such an application generally cannot be made more than six months after the grant of letters probate or administration, although the court may allow a later one against any undistributed part of the estate.

Separation and divorce are a trap. Divorce revokes gifts to a former spouse in a will. The same revocation applies if the spouses were separated at death, but only where the separation event happened on or after January 1, 2022, and only if they had lived apart because of marriage breakdown for three years before death, or had a separation agreement, court order or family arbitration award and were still apart at death. Those rules concern the will. Whether a policy or plan designation changes automatically is a point to confirm with a lawyer, and the safe course is to file a new designation.

How to work out which document controls

• Get the policy or plan itself and ask the insurer or administrator for the current beneficiary designation on file.
• Check whether it is an insurance contract or a non-insurance plan, since different statutes apply.
• List every designation by date, including any in a will, because the latest valid one controls.
• Check whether a will designation refers expressly to the plan.
• Look for an irrevocable designation filed with the insurer.
• Confirm whether the will was later revoked.
• If the plan is an Ontario pension, check for a spouse first.

Once the insurer has sufficient evidence of the claim, it must pay the person entitled within thirty days.

What to do next

If two people claim the same money, the insurer may apply to court after thirty days to pay it into court, and payment under a court order discharges the insurer to the extent of the amount paid. Estate trustees should not distribute until they know which assets are designated and which are in the estate. Gather the will, every designation form and the insurer's confirmation, then speak with a lawyer if the documents conflict.

Frequently asked questions