Review beneficiary designations

It is crucial to do things right, if you want your last wishes to be met

Have you checked your beneficiary designations recently? If not, you may find that your designated beneficiary is not who or what you think it should be, especially if you have divorced, remarried or had children since your last review.

While many of us ensure that important documents such as wills are updated on a frequent basis, we tend to neglect our registered accounts and life insurance policies.



Outdated Beneficiary Designations

It seems that every couple of years a court decision is released that serves to remind us of the importance of regularly reviewing beneficiary designations to ensure they properly reflect our wishes. There have been numerous cases of individuals who have divorced and remarried but who have neglected to update their beneficiary designations accordingly. This can be frustrating for their survivors who must battle in court for a legal determination of the true beneficiary. The court’s decision, however, may not necessarily be what the deceased would have wanted, as was the case in the recent Ferguson, Estate Trustee v. Mew decision in the Ontario Supreme Court.



Simultaneous Death

Few people expect to die at the same time as their spouse and they name each other as their designated beneficiaries. In the case of simultaneous death, a determination needs to be made about which spouse died first, even though both deaths occurred at the same time. This determination may be critical, especially if there are children from a previous marriage: will all the children be included? Or will children from a previous marriage be excluded? Proper documentation designating contingent beneficiaries for normal and extenuating circumstances will ensure that registered assets and insurance proceeds are directed towards your intended beneficiaries.

A similar dilemma arises if children are named as beneficiaries but documentation has not been updated to include those who were born after the initial designation.

Another common occurrence is for a parent to make a beneficiary designation for a minor that simply uses the words “In Trust For” on the application. This could mean no formal written trust agreement exists or that an agreement does exist but is not cited in the designation. These types of designations have implications that are often not thought of at the time of making the designation.

One of the disadvantages of an “In Trust For” arrangement is the inability to encroach on capital by the trustee for the benefit of the minor, which could leave the minor at risk.

Conversely, in the case of adult children, parents sometimes wish to predetermine how a benefit is paid — i.e. in the form of monthly income rather than a lump sum.

Irrevocable beneficiary designations provide even more flexibility and assurance that your wishes will be met, as future changes cannot be made without permission from the beneficiary affected.

To ensure that your ultimate wishes will be met, it is crucial that you conduct a regular review of your beneficiary designations with a professional advisor or even immediately after you experience a change in family status to ensure they reflect your intentions.




Jim Grant, CFP (Certified Financial Planner) is a Financial Advisor with Raymond James Ltd (RJL). The views of the author do not necessarily reflect those of RJL. This article is for information only. Raymond James Ltd. is a member of Canadian Investor Protection Fund.  For more information feel free to call Jim at (250) 594-1100, or e-mail at and/or visit



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