RRSPs, TFSAs and insurance: the beneficiaries your will can't touch

The most consequential estate-planning documents most people ever sign are not wills. They are the beneficiary boxes ticked on account-opening forms, years ago, and forgotten.

The rule

A valid beneficiary designation on an RRSP, RRIF, TFSA, pension or life insurance policy sends that asset directly to the named person on death. It never enters your estate. Your will does not control it, probate does not touch it, and — the part that surprises people — a newer will generally does not override an older designation. The designation stands until you change it with the institution (or expressly revoke it in a will that identifies the plan, which is messy and litigated — change it at the source instead).

The classic disaster is exactly what you think: the RRSP still naming an ex-spouse from 2011, overriding the 2024 will that says everything goes to the new family.

Used deliberately, this is a planning tool

Assets that bypass the estate also bypass probate tax. In Ontario, at 1.5% above $50,000, routing a $400,000 RRIF directly to your spouse rather than through the estate saves real money and months of waiting. Direct designations are the main honest answer to “how do I reduce probate fees”.

The tax trap hiding inside it

Bypassing probate does not bypass income tax. An RRSP or RRIF is fully taxable as income on the deceased’s final return unless it rolls to a spouse (or qualifying dependant). Here is the trap:

The beneficiary gets the gross; the estate pays the tax. Name your daughter beneficiary of a $300,000 RRSP and your son residual beneficiary of the estate, and your daughter receives $300,000 intact while the roughly $130,000 tax bill lands on the estate — that is, on your son’s share. Perfectly legal, wildly unequal, and almost never what the parent intended.

Quick reference

Asset	Passes by	Taxable at death?
RRSP / RRIF	Designation	Yes, unless spousal rollover
TFSA	Designation	No (growth after death can be)
Life insurance	Designation	No
Pension survivor benefit	Plan rules / designation	Depends on form
Joint property w/ survivorship	Survivorship	Deemed disposition may apply
Everything else	Your will	Deemed disposition applies

Our questionnaire asks which registered accounts you hold precisely so the will and your designations can be read as one plan — and your estate record is where you keep the list current.