Your RRSP looks straightforward on paper. You contribute, it grows, you name a beneficiary. Done. But the way an RRSP is set up can have a surprisingly large impact on your family later, and a small detail on the paperwork can make a big difference in how much of it they actually keep.
Three things that quietly matter
1. Who you've named as beneficiary. Registered accounts like RRSPs and RRIFs pass directly to the named beneficiary, outside your Will. That's efficient, but only if the name is right. The classic problem is a designation that's years out of date: an ex-spouse still listed after a divorce, a beneficiary who has since passed, or no beneficiary at all (which sends the account through your estate and into probate). Taking a few minutes to review the name can save your family unnecessary delays, fees, and tax surprises.
2. The tax treatment at death. This is the part most people miss. With some exceptions, primarily a spouse or common-law partner, or in certain cases a dependent child, the full value of an RRSP is generally treated as income in the year of death and taxed accordingly. That can mean a large tax bill landing on the estate, sometimes catching families completely off guard. Knowing this in advance lets you plan for it, rather than leaving your heirs to absorb it.
3. How it lines up with your Will. Because the RRSP passes outside the Will, a mismatch between the two can quietly undo your plan. Imagine your Will says "split everything equally among my three children," but your RRSP names only one of them as beneficiary. That one child receives the RRSP on top of their equal share, not what you intended, and a recipe for family conflict. Your registered accounts and your Will need to tell the same story.
A simple audit now
None of this requires a major overhaul. It requires a review:
- Check the named beneficiary on every registered account and insurance policy.
- Confirm it still reflects your wishes and your current family situation.
- Make sure it's consistent with what your Will says.
- Understand the tax that may be owed at death, and whether it should be planned or funded for.
When it comes to estate planning, the little things are rarely little. A detail that takes minutes to fix today can save your family money, delay, and stress when it matters most.
If you're not sure your registered accounts and your Will are telling the same story, let's check. Book an introductory conversation and we'll review where things stand.
