Updating Beneficiaries on Investments
Separation often triggers the need to reassess how you’ve planned for the future. Ensure that your loved ones are protected.
What is a beneficiary?
A beneficiary is the individual or entity designated to receive the proceeds of your insurance policy or investment accounts. When you open an investment account (i.e. TFSA, RRSPs, RRIF) or buy insurance, you name one or more beneficiaries directly with the institution. It’s essential to ensure beneficiary designations are accurate and reflect your current wishes, especially after separation.
What is the point of naming a beneficiary?
- The funds in these investment or insurance payouts will bypass your estate and avoiding probate delays and fees
- The money is paid directly to the beneficiary named
- You can change the beneficiary at any time
How do you change the beneficiary?
The process typically involves:
- Obtaining a beneficiary designation form from the institution.
- Completing the form, clearly identifying your chosen beneficiaries and their percentage share of the proceeds (if applicable).
- Submitting the signed form to the financial institution.
Beneficiary designations override the terms of your Will in Ontario. Therefore, even if your Will leaves certain assets to individuals other than your designated beneficiaries, the insurance or account proceeds will go to the designated beneficiaries.
Following separation, updating your beneficiary designations is critical, particularly if your ex-spouse was previously named.
Which changes can you be made?
It is important to note that:
- You can designate a new beneficiary or beneficiaries.
- You can remove your ex-spouse as a beneficiary.
- You can adjust the percentage share allocated to each beneficiary.
It’s prudent to update your beneficiary designations as soon as possible after separation to avoid any potential legal disputes or unintended outcomes.