The RRIF Still Named Her First Husband's Son

The situation

Miriam and Rivka had been married for twenty-two years. Miriam had spent her career as an elementary school teacher; Rivka had worked as a registered nurse. Both were retired, and after selling the house they had raised their family in, they had recently moved into a condominium in Richmond Hill. Downsizing had put them in a tidying mood, and updating their wills was next on the list. Their existing wills were old, drafted separately before they married, and neither had been touched since.

They came to Treadstone Law wanting something simple: mirror wills leaving everything to each other, and on the second death, dividing the estate among their children. Between them, their combined estate — the condominium, joint bank accounts, a registered retirement income fund, or RRIF, that Miriam had converted from her RRSP a few years earlier, and a smaller tax-free savings account, or TFSA, in each of their names — was worth somewhere in the range of $800,000 to $900,000. It was a straightforward instruction. The complication was not in the will at all.

What the review found

As part of opening any estate planning file, our practice is to ask clients for the current beneficiary designations on every registered account and insurance policy they hold, not just the terms of the will they want drafted. This is because a will does not control everything a person owns. Registered accounts like RRSPs and RRIFs, and most life insurance policies, are set up under a direct contract between the account holder and the financial institution. The account holder names a beneficiary directly with the institution, and on death, the institution pays that person straight away — outside the estate, outside probate, and outside whatever the will says. A will can say the RRIF goes to a spouse in clear language, and it will not matter if the designation on file with the institution names someone else.

That is exactly what we found. Miriam's RRIF had originally been set up during her first marriage, decades earlier, and the beneficiary designation on file still named her son from that marriage — Manpreet, now in his forties and living independently. Miriam and Rivka had married more than twenty years ago. Miriam had always assumed that marrying Rivka, and later writing Rivka into a will, took care of it. It did not. Nothing had ever been filed with the institution to change the designation, and a designation, once made, stays in place until the account holder actively replaces it. The RRIF was worth roughly $150,000. On paper, if nothing changed, it was due to go to Manpreet, not to Rivka.

We flagged this to Miriam the same week we reviewed her intake documents, in writing, with a clear recommendation: sign an updated designation form with the institution immediately, separately from and in addition to the new will. A will alone would not fix it.

What we did

1. Identified the mismatch before drafting a single clause of the will. Reviewing beneficiary designations is a standard step precisely because clients rarely think to mention an old RRSP or insurance policy when they come in to talk about their will. The designation had been sitting quietly out of step with Miriam's actual wishes for two decades.
2. Prepared the corrected designation form right away. We drew up the paperwork to name Rivka as the RRIF beneficiary and sent it to Miriam within days, along with plain instructions on where it needed to be signed and returned. The form had to go directly to the financial institution holding the RRIF — it is the institution's own form that governs, not anything filed with us.
3. Confirmed the TFSA designations were already correct. Rivka's TFSA named Miriam as successor holder, and Miriam's smaller TFSA had, fortunately, been updated to name Rivka some years earlier when the account was opened. Not every account was a problem — only the RRIF, because it had simply never been touched since the first marriage.
4. Followed up when the signed form did not come back. Miriam had a scheduling conflict with the institution's in-person signing requirement and asked to handle it the following week. We noted the risk plainly and pressed for a firm date, but the form was still unsigned when, ten days later, Miriam suffered a serious stroke. She died shortly after, before ever making it back to the institution's branch.
5. Confirmed exactly what did and did not pass correctly. After Miriam's death, we reviewed every asset with Rivka. The condominium, held jointly with a right of survivorship, passed to Rivka automatically and outside probate, as intended. The TFSA passed to Rivka as successor holder, also outside probate. The RRIF, still carrying the decades-old designation, paid out to Manpreet directly from the institution — a legally valid payment, because the designation on file was the one the institution was obliged to honour, regardless of the new will or Miriam's clearly expressed intention in the weeks before her death.
6. Explained Rivka's realistic options. Because a beneficiary designation is a contractual instruction to the institution, there is no automatic right to have it reversed after the fact, even where the account holder's later intention is well documented. We explained that a surviving spouse who has been left without adequate support can, in some circumstances, bring a claim for dependant's support against the estate under Ontario's succession legislation — but that this is a court process, it takes time, it has real cost, and here it would mean a legal claim against a stepson rather than a straightforward correction. We also confirmed that, once the joint condominium and the TFSA were accounted for, Rivka was not left without means, which weakened the case for that kind of claim even if she had wanted to pursue it.
7. Helped Rivka update her own designations properly this time. Rather than pursuing Manpreet, Rivka chose to preserve the family relationship. We used the experience to make sure her own RRIF and any future accounts were designated correctly, filed directly with each institution, and cross-checked against her will — with a note in her file to revisit both every few years or after any major life event.

The outcome

The loss was real. Roughly $150,000 that Miriam intended for Rivka went to Manpreet instead, because the paperwork to fix a decades-old designation was signed too late by ten days. No amount of correct advice changes what a financial institution is legally required to do once someone dies with a valid, if outdated, designation on file. That is the hard part of this story, and it is not one we can soften: the mismatch was identified in time to fix, and it still was not fixed in time.

What limited the damage was everything that had already been checked and corrected before Miriam's death. The condominium and the TFSA — together worth several hundred thousand dollars — passed to Rivka exactly as intended, because those designations had either always been correct or were confirmed and left untouched rather than assumed. Of the estate's total value, only the RRIF was misdirected; the rest reached Rivka cleanly and without dispute. Rivka was left with an estate reduced by roughly $150,000 from what the couple had planned, but not left in financial difficulty, and not facing a contested, drawn-out claim against a family member she did not want to sue. She also went into her own estate planning afterward with every designation checked, filed, and matched to her actual wishes — which is more than most people ever get around to doing until something forces the question.

What you can learn from this