An up-to-date will is central to an estate plan, but it does not determine the outcome for every asset or claim. Beneficiary designations, joint ownership, contractual obligations, corporate structures, tax rules and family-law rights can all affect what happens at death, and the rules differ across provinces and territories.
Consider a business owner in a second marriage with two adult children. We’ll call her Claire.
Her will divides her estate among her spouse and children in a way she considers fair. She has a sizeable RRSP naming one child as beneficiary, a non-registered investment account held jointly with right of survivorship with the other child, private company shares subject to a shareholders’ agreement and life insurance owned by and payable to the corporation.
None of these arrangements is problematic. But over time, decisions are made on one or more holdings without consideration of the full picture.
Claire needs a comprehensive estate review — one that reviews the will, each significant asset, who is expected to receive it, what tax or liquidity issues may arise and whether the pieces still produce the intended results.
Beneficiary designations
Assume she named one adult child as beneficiary of the RRSP several years ago, before her current will was prepared. The will now reflects a different approach to dividing wealth among her spouse and children. Reviewing it alone would not reveal whether the older designation is still consistent with her intentions.
In Ontario, the Succession Law Reform Act allows beneficiaries of certain plans to be designated by an instrument or by will, and sets rules governing revocation. For example, a revocation in a will is effective against a designation previously made by instrument, only if the will expressly relates to that designation. Life insurance designations are governed separately under Ontario’s Insurance Act.
The advisor’s role is to identify the designations that exist, ask why they were made and confirm whether they still fit the client’s objectives. Provincial differences make this especially important. In Quebec, Canada Revenue Agency guidance states that a beneficiary designation of RRSP proceeds — in the RRSP contract or will — is generally not valid except in limited circumstances. Quebec also does not recognize successor-holder designations for TFSAs, or beneficiary designations for deposit TFSAs and TFSA arrangements in trust.
Joint ownership
Assume Claire added one adult child as a joint account holder of her non-registered investment account with right of survivorship. She may have done this so the child could help with financial matters, or she may have intended that child to inherit the account. Those are very different objectives.
That distinction was central to the Supreme Court of Canada’s 2007 decision in Pecore v. Pecore. The Supreme Court confirmed that the presumption of resulting trust generally applies to gratuitous transfers from a parent to an independent adult child, but the presumption can be rebutted by evidence that the parent intended a gift. In this case, the daughter retained beneficial interest.
For Claire, the planning question is therefore not simply whether the account is labelled joint. The advisor should ask why the child was added, what Claire expects to happen at death and whether that intention has been properly documented with legal advice. Quebec is governed by the Civil Code of Quebec rather than the common-law property rules applied in Pecore, so the same analysis should not be assumed to apply.
Shareholders’ agreement and corporate structure
Claire’s private corporation adds another layer. Assume her will contemplates the shares ultimately passing to the child active in the business, while the shareholders’ agreement contains death-triggered provisions that may require or permit the shares to be purchased by another shareholder or by the corporation.
A will naming an intended recipient does not eliminate the need to review the contractual arrangements affecting the shares. Shareholders’ agreements commonly address transfer restrictions, events triggering a share sale, buy-sell provisions and valuation mechanisms, including provisions that apply at death.
Now consider Claire’s corporate-owned life insurance. Because the corporation owns the policy and is entitled to the proceeds, the death benefit is received by the corporation rather than directly by her family.
For a private corporation, life insurance proceeds received because of a death may generate a credit to its capital dividend account. The amount potentially added is generally determined by reference to the policy proceeds less the adjusted cost basis of the relevant policyholder’s interest immediately before death, subject to other statutory adjustments.
The insurance therefore needs to be reviewed together with the shareholders’ agreement, the share structure, the intended use of the proceeds and the post-mortem tax plan.
Spousal and dependant rights
Consider Claire’s second marriage. Her will may carefully set out what her spouse and children are intended to receive, but those instructions operate within provincial family and succession law.
In Ontario, when a married spouse dies leaving a will, the surviving spouse generally must elect between receiving the inheritance provided to them under the will and claiming the equalization entitlement available under the Family Law Act.
There are qualifications, including if a will expressly provides that a gift is to be received in addition to equalization. Ontario’s Succession Law Reform Act also allows a court to order support where adequate provision has not been made for a dependant as defined by the legislation.
For dependant-support claims, section 72 of the Succession Law Reform Act can also deem the value of certain transactions or arrangements to form part of the deceased’s net estate for those specific provisions.
Depending on the circumstances, these can include certain jointly-held property, specified life insurance proceeds and amounts payable under beneficiary designations governed by Part III of the act. An asset described as “outside the estate” is therefore not necessarily beyond the reach of an Ontario dependant-support claim.
Quebec follows a different framework. Where the deceased was married or in a civil union, the family patrimony must be addressed and the matrimonial or civil-union regime liquidated before the remainder of the succession is settled.
Quebec’s parental-union regime can also be relevant. Subject to the applicable conditions, a parental union is automatically formed when de facto spouses become parents of the same child following a birth or adoption on or after June 30, 2025.
Eligible de facto spouses who were already parents of a common child before that date may also choose to form a parental union by agreement. Where a parental-union patrimony applies and the union ends because of death, the liquidator must deal with that patrimony before distributing property under the will.
The intended inheritance
Now, assume Claire passes. Her RRSP has not matured, it’s worth $1 million and still names one adult child as beneficiary.
Under the Income Tax Act, the fair market value of an unmatured RRSP is generally included in the deceased annuitant’s income immediately before death, subject to available deductions and rollover opportunities. That can include circumstances involving a spouse, common-law partner or financially dependent child or grandchild.
This illustrates why an estate plan should not be assessed only on gross asset values. The person receiving an asset, the taxpayer on whose return the related income is reported and the person who may ultimately be responsible for the tax are not necessarily the same.
The Income Tax Act also contains a joint-and-several-liability rule for certain amounts received from an RRSP after the annuitant’s death.
It is not that Claire’s estate will always pay the tax while the child receives the RRSP free of responsibility. The planning point is to model the estate on an after-tax basis: where each major asset is expected to go, what tax may arise and where the liquidity to meet those liabilities will come from. A distribution that looks fair before tax may look different afterward.
An estate coordination map
Advisors should not interpret wills, determine beneficial ownership, resolve contractual disputes or give opinions on family-law rights. Those are legal questions. Identifying whether the pieces of a client’s financial plan appear to work together, however, is part of comprehensive financial planning.
A practical approach is to build an estate coordination map. Begin with the client’s objectives: Who should benefit? In what proportions? Which assets are intended for particular beneficiaries? Is preserving a business important? Is equal treatment among children the goal, or is equitable treatment more appropriate?
For each significant asset, the advisor can document:
- how the asset is currently registered or titled, and its approximate value;
- the will, designation, agreement or ownership arrangement expected to affect the asset at death;
- the expected recipient and relevant tax consequences, including liquidity needs;
- any issue requiring legal, tax or insurance confirmation; and
- any outstanding action, the person responsible and the follow-up date.
For Claire, this puts the will, RRSP designation, joint account, shareholders’ agreement, corporate insurance and potential spousal rights into the same analysis. The advisor can model the expected after-tax value reaching each beneficiary and compare the expected outcome with Claire’s stated intentions.
Any discrepancy becomes a planning item to address with the appropriate professional. Implementation should be tracked in the financial plan, with responsibility and follow-up dates assigned. The exercise should also be revisited when circumstances change, including marriage, separation, births and deaths, business transactions, material changes in wealth, new insurance coverage or changes to beneficiary designations.
A current will matters. But the real test of an estate plan is not whether each document makes sense on its own. It is whether the will, beneficiary designations, ownership arrangements, corporate agreements, tax plan and family circumstances are all working toward the outcome the client intends.
Salomon Elbaz, F. Pl., CFP, CIM, TEP, MFA-P, is head of legacy planning at HeritageMD, where he leads the firm’s financial planning practice. He works with incorporated professionals, business owners and high-net-worth families on integrated tax, estate, retirement, insurance, philanthropic and intergenerational planning.