Tom is 41, divorced and remarried, and feels reasonably on top of his money. He has a will. He has a new life, a new partner, a sense that the loose ends are tied. Then on a slow Saturday he logs into an old RRSP he hasn’t opened in years — and there, in the beneficiary field, is his ex-wife’s name. Same on the life insurance policy through his old job. Forms he filled out a decade ago, still quietly on autopilot.
His stomach drops, because he assumed the will handled all of this. It doesn’t. And that single misunderstanding is one of the most expensive blind spots in personal finance.
Here’s the rule almost nobody is told plainly: beneficiary designations override your will. The will governs your estate — the assets that flow through it. But registered accounts and insurance policies pass directly to whoever is named on them, before the will ever comes into play. You can write the most carefully lawyered will in the country leaving everything to your current spouse, and if your RRSP still names your ex, your ex gets the RRSP. The form wins. Every time.
So the planning move is an audit, and it’s faster than people fear. Make a list of every account that has a beneficiary field: RRSPs and RRIFs, TFSAs, workplace and personal pensions, and any life insurance. On each one, name a primary beneficiary and a contingent — the backup who inherits if the primary can’t. Naming a contingent matters more than it sounds: without one, the asset can fall back into your estate, get tangled in probate, and lose the direct, private, often probate-free path that designations are supposed to give you. Then the part everyone skips: update them after every life event. Marriage, divorce, a birth, a death — each one is a trigger to re-check the forms. And make sure they don’t contradict your will, so the two documents tell the same story instead of fighting each other.
For Tom, fixing it took about fifteen minutes per account — a login, a name change, a contingent added, a confirmation email. The hard part wasn’t the work; it was discovering the gap existed at all. He’d done the “responsible” thing by making a will and assumed it reached everywhere. It didn’t reach the two biggest accounts he owned. One quiet Saturday review meant the right people — not a name frozen in time from a marriage that ended — would actually receive what he intended.
Your beneficiary forms beat your will — whoever’s named on the RRSP, TFSA, pension, and life insurance receives it directly, full stop. Name a primary and a contingent on each, keep them consistent with your will, and re-check after every marriage, divorce, or birth. This weekend: log into one account and confirm exactly who’s listed.
FAQ
Do beneficiary designations override a will?
Yes. Named beneficiaries on registered accounts and insurance receive those assets directly, regardless of what the will says. That’s why a stale form can send money to the wrong person even when your will is up to date.
What is a contingent beneficiary?
The backup who inherits if the primary can’t — for example, if the primary has died. Naming one keeps the asset from falling into your estate, where it may face probate and the delays that come with it.
Does naming a beneficiary avoid probate?
Often, yes, for registered accounts and life insurance, which can pass outside the estate directly to the named person. Rules vary by province and account type, so it’s worth confirming for your specific situation.
When should I update my beneficiaries?
After any marriage, divorce, birth, or death — and a quick review every couple of years regardless. Life events are the moments stale forms do the most damage, so treat each one as a prompt to check.
Next weekend — the document the designations should line up with: Do You Need a Will Yet? A Life-Stage Checklist (link goes live Aug 15).