3. Learn about designated beneficiaries
Question and answer
What are probate fees and can I reduce them?A is the person you want to give a certain asset to after you die, without writing it in your will.
Examples of property that can have designated are:
- life insurance policies
- pensions
- registered investments, such as a tax-free savings account (TSFA), registered retirement savings plan (RRSP), or registered retirement income fund (RRIF)
When you die, that have designated beneficiaries usually go directly to those persons. It generally does not become part of your , and it is not included when calculating fees.
Things to keep in mind
If you do not clearly name who should receive your RRSPs, RRIFs, TFSAs, or pension benefits, it can lead to family fights.
Ontario law also says that you must financially support your dependants if you can. This means a can go to court and make a dependant's support claim.
The court may decide that the dependant's claim is valid and they need to be supported by assets in your estate. Sometimes the only way for them to get the support they need is from an asset that had a designated beneficiary.
The court can decide that:
- the designated beneficiary will not get the asset,
- the asset will be part of your estate,
- the asset must be used to support the dependant instead.
Choosing a designated beneficiary
In most cases, you can name anyone to be a designated beneficiary. It does not have to be a partner or child. For example, you can name a partner, grandchild, niece, or friend, or even a charity as your designated beneficiary.
You may be able to name 2 or more people as designated beneficiaries to share the same asset. You can say what share of the asset each person gets. For example, you might want your 2 children to each get half. Or you might want your partner to get 75% and your child to get 25%.
You may be able to name an alternate beneficiary who gets the property if the first person you named dies before you do.
If your married or common-law partner is your designated beneficiary and you later separate from or them, they still get that asset after you die. If you do not want them to get that asset, you must remove them as your designated beneficiary if you can.