Canada: Keeping Your Beneficiaries Current

Last Updated: April 29 2016
Article by Kate M. Faught

Every spring day brings us closer to warm summer afternoons, perfect for lounging on the deck or at the lake with a cold beverage and our favorite reading material. Instead of that hot new best-seller, why not dust off your insurance policies and investments for your reading pleasure? They may not be on your book club's reading list, but it is critically important to ensure that you are aware of who you have, and who you should have, listed as your beneficiaries on these instruments, so that tax savings can be achieved and costly litigation can be avoided.

When you buy life insurance or set up your RRSPs, pensions and Tax-Free Savings Accounts (TFSAs), you are asked to name a beneficiary or, in the case of a TFSA, a successor-owner.
When the time comes for these assets to be paid out, the company or financial institution holding the assets will look at the most recent beneficiary designation, and pay out the benefits to those people who were named last. This means that you can change your beneficiaries as you need to, either on the investment or life insurance policy itself, or in your will. If you need to change the beneficiary designation on any of these items, the best practice is to do so on the instrument itself so that there is no discrepancy between the instrument and your will, and no question over which designation should apply.

If there is a beneficiary other than your estate named on the instrument, those benefits can usually be paid out directly to the beneficiary without getting tied up in the process that is required to administer the other assets in the estate. If you have named your estate as your beneficiary on your life insurance policy, then it will be paid to the executor in trust for the estate, and will be available to the estate's creditors before being paid out to the estate's beneficiaries. While there are circumstances when this is appropriate, it is usually recommended that these benefits be kept outside of the estate and be paid directly to other named beneficiaries.

Unfortunately it is not uncommon to learn that a deceased person forgot or failed to change their beneficiary designations before their death. Our Estates, Trusts and Taxation practice group has handled numerous matters where a life insurance policy had to be paid to a former spouse because the deceased did not change the beneficiary on his life insurance policy after he re-married. There are times where benefits are paid to the parents of a deceased because she signed up for those benefits at work before she got married, and neglected to revisit the designation after the wedding.

Sometimes this failure to ensure beneficiary designations are current will result in a loss of tax savings. For example, when one names their spouse as the beneficiary of their RRSPs, those investments can be rolled over to the surviving spouse's RRSPs on a tax-deferred basis and the deceased's estate will not have to pay the tax on those assets. If, however, a parent or sibling inadvertently remains noted as the beneficiary, that potential tax saving can be lost. If the deceased had wished to still benefit their parent or sibling, it would have been more advantageous to provide a gift for them in the will, rather than through an RRSP if there is a spouse that could have taken advantage of the rollover.

To complicate matters further, the laws governing how to change your beneficiaries are different depending on the type of asset that is involved. Certain pension plans will have a deemed beneficiary or "pension partner", usually a spouse or common-law spouse, which will automatically apply regardless of who is named as the beneficiary of that pension, either on the pension or in the will. Our clients must ensure that they are aware of those deemed beneficiaries so that they can provide other gifts, for example through their will, to other people that they wish to benefit rather than trying to do so through a pension that has these types of restrictions. 

If changes are necessary to the beneficiaries named on a life insurance policy, care must be taken to ensure that this is done in a manner that meets the formal requirements laid out in Alberta's Insurance Act in order to be effective. We have seen many instances where parties assume that a waiver of life insurance in a divorce settlement will mean that their ex-spouse will not receive life insurance benefits. They would likely be surprised to find out that, unless they have actively changed the beneficiary in a way that complies with formalities set out in the Insurance Act, their ex-spouse will be the lucky recipient of those funds.

In addition to checking your insurance policies and investment vehicles, it is also important to understand your obligations and to ensure that you have named any parties that you are required to name as beneficiaries. This issue also arises commonly in a divorce, where it is often a term of the divorce settlement that one party will be required to name either their former spouse or the children of the relationship as a beneficiary on their life insurance or RRSPs, for at least a certain amount of time. If that party fails to ensure that he or she has properly named those beneficiaries, then their estate is open to what could be costly and uncertain litigation as to who are the rightful owners of those benefits. The situation may also arise in a corporation, where under shareholder's agreement, business partners may have an obligation to carry life insurance to benefit the company in the event of their death. Care must be taken to ensure that the beneficiaries of those policies are not changed inadvertently or there may be a liability to the company or business partner. Before changing your beneficiaries on any instruments, you must carefully consider whether you are subject to any restrictions on who may be named to receive those benefits.

If changes need to be made, they can usually be dealt with easily enough before the owner of the policy or investment passes away. Usually it is just a matter of completing a simple form and sending it back to the financial institution or insurance company. As noted above, changes can also be made through one's will.

Anyone who owns these types of assets would be well served by taking a few minutes to review their named beneficiaries. If changes need to be made, then a call to your bank, financial planner or lawyer will be required. If you have named the people you intend to benefit from your life insurance or retirement savings, then you can rest easy and start reading your book club's summer pick.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Kate M. Faught
Events from this Firm
27 Oct 2016, Seminar, Edmonton, Canada

Alberta is going through a difficult economic period. These times can be challenging and while owners struggle to get their business through the rough patch, they want to preserve the assets and capital they have built up.

2 Nov 2016, Webinar, Calgary, Canada

“Problem Employees” come in a variety of forms but seem to take up the majority of an employer’s time. Each form brings its own challenges and each must be addressed in a different way.

30 Nov 2016, Webinar, Calgary, Canada

Legal issues surrounding contaminated sites affects landowners, developers, realtors, as well as consultants and contractors working on the front lines. This webinar will provide a practical review of how the legislation is actually being used, recent court decisions, challenges with brownfield developments, and future changes.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.