Tag: RRSPs/Insurance Policies

13 Aug

Til Death Do Us Part – Spouses, RRSPs and Taxation

Hull & Hull LLP Litigation, RRSPs/Insurance Policies Tags: , , , , , , , , 0 Comments

In Kiperchuk v. The Queen, 2013 TCC 60 (CanLII), the Tax Court of Canada held that a spouse who received RRSP benefits upon her spouse’s death was not liable to pay the deceased’s unpaid tax debt arising prior to his death.

There, deceased designated his wife as the beneficiary of his RRSP. The couple subsequently separated, and divorce proceedings were commenced. However, the designation remained in place. Prior to his death, the deceased incurred significant tax debts, which were unpaid as at the time of his death. His estate was insufficient to pay the tax debts. CRA sought to find the wife liable for the unpaid taxes. It relied on s. 160 of the Income Tax Act which, in effect, imposes joint liability for unpaid taxes (to a certain extent) where a tax payer transfers property to a spouse, child or “person with whom the person was not dealing at arm’s length” for less than fair market value. 

The Court refused to find the wife liable. Although it had no difficulty in finding that there was, in fact, a transfer, the transfer took place at the time of death. As of that date, the status of marriage ended due to death, and the wife was, therefore, no longer a spouse, and further, “nor was she a person with whom the transferor was not dealing at arm’s length at the time of the transfer”.

The Court may have been splitting hairs here. The transfer took effect on the moment of death, and as of that moment, according to the reasoning, the parties were no longer spouses: the husband “was not related to the appellant by marriage at the time she became entitled to the RRSP”. “The status of marriage is ended by death… .”

Further, the Court does not give much explanation as to why it considered the transfer to be at arm’s length. 

Finally, the limited application of the case should be noted. The case dealt only with tax liability arising before death: a beneficiary of an RRSP is liable for unpaid income tax on the RRSP proceeds where the estate is unable to pay: s. 160.2(1) of the Income Tax Act.

Thank you for reading.

Paul Trudelle

10 May

Novel Issue before the Court of Appeal

Hull & Hull LLP RRSPs/Insurance Policies Tags: 0 Comments

One cannot benefit from one’s crime. Even in this most basic form, this statement is unlikely to cause shock to many. Generally, in the Estate world this means that where a person is the beneficiary of an Estate, but is the cause of the death of the Deceased, they are not permitted to inherit from the Estate. The very commonplace nature of my above ramblings is the reason you should read this article.

The Ontario Court of Appeal was recently asked to consider a nuance of this particular issue, and rendered its decision in the Dinghra v. Dinghra Estate 2012 ONCA 261 on April 24, 2012. The decision notes that Mr. Dinghra took out a group life insurance policy in 1998. He was the beneficiary of the policy on his wife’s life. He later killed his wife in 2006, but, in 2008, was found not criminally responsible for her death (Criminal Code, R.S.C., 1985, c. C-46, s. 16).  In 2007, a claim was made by the Respondent, the Estate Trustee of the wife’s Estate, who submitted to the insurer an Accidental Death Claim, claiming the proceeds of the insurance policy on behalf of the Applicant/Appellant, Mr. Dinghra. Payment was not immediately made, and after the criminal trial, the Respondent requested that the proceeds of the insurance policy be paid to the Estate. In response, the insurer brought an application to have the funds paid into Court, which relief was granted in 2009.  Thereafter, the Applicant made an Application to the Superior Court of Justice to have the proceeds paid to him.  

The lower court found that the public policy rule that ‘one cannot benefit from one’s crime’ was not limited to intentional killing, on the basis of the trial judge’s interpretation of the decision in Ontario Municipal Employees Retirement Board v. Young (1985), 49 O.R. (2d) 78.   The lower court judge found that the Applicant committed ‘second-degree murder’ as he physically committed the crime, even though he was found not criminally responsible.  This rationale lead to a finding that the Applicant was not entitled to the proceeds of the life insurance policy. 

On appeal, the Appellant submitted that he was entitled to the funds, and that even if he wasn’t, the Estate had no claim as the Estate was not a named beneficiary of the policy.   The Respondent agreed that the Estate was not entitled to the proceeds.   Upon consideration, the Court of Appeal found that pursuant to the rule of public policy, a party found not criminally responsible, is not prevented from taking under an insurance policy. The Court then considered whether the rule had been varied because of the Civil Remedies Act, an issue which the Court of Appeal referred to as ‘novel’[1].   The Court of Appeal disposed of the matter by setting aside the order of the lower court and granted that the insurance proceeds held by the Accountant of the Superior Court of Justice (along with interest) were rightfully payable to the Appellant. Interestingly, the Order was stayed for 30 days, allowing the Attorney General time to consider whether he wishes to apply for an interlocutory order under s. 4 of the Civil Remedies Act.

Professor Erik Knutsen of Queen’s University, an insurance law specialist, was quoted in the above noted article, saying “the court has stated that you need criminal intent before you can deny someone an insurance benefit on public policy grounds”. Although it may be that this issue isn’t seen often in the Estate context, and even here it was generally accepted that the Estate did not have an interest, it is not without possibility that we may see more claims given the new clarity in the law. 

There are still a few weeks before the stay on the order of the Court of Appeal is lifted.   Perhaps this isn’t the last of this case. We’ll just have to wait and see.

Thanks for Reading,

Nadia M. Harasymowycz – Click here for more information on Nadia Harasymowycz

[1] I direct you to the text of the Court of Appeal decision for further exploration of this issue

29 Jul

Life Insurance Locator Service

Hull & Hull LLP Beneficiary Designations, Estate & Trust, General Interest, RRSPs/Insurance Policies Tags: , , , 0 Comments


Ever wonder if (or wish that) you might be the lucky beneficiary of a hefty life insurance policy left to you by some benevolent benefactor? Well now you can find out if your wishes have come true. 

A life insurance policy locator service created and maintained by MIB Solutions Inc. allows you to search 170 million records to see who may have named you (or your client) as a beneficiary. The database includes policies collected from virtually every North American carrier involved in life insurance. The hit rate is 30%. An executor, administrator, a surviving spouse or other relative eligible for appointment may be entitled to order the report.  Policy Locator can make it easy to discover life insurance benefits you may not have realized existed.

How to Submit a Request

  1. Download the search request form and fill in the required information. 
  2. Include an original death certificate, containing an official seal, with the request form.
  3. Include a $75.00 check (payable to MIB Solutions, Inc.) or money order in U.S. currency.
  4. Mail the above items to MIB Solutions at the address listed below or supplied on the form.

Your Policy Locator search report and the "Policy Locator Research Primer" will be mailed to you shortly thereafter.

Mailing Address:
MIB Solutions, Inc.
50 Braintree Hill Park
Suite 400
Braintree, MA 02184-8734

Good Luck!

Sharon Davis 

27 Jul

FAQs on Wills, Death & Taxes

Hull & Hull LLP Estate & Trust, Estate Planning, General Interest, RRSPs/Insurance Policies, Wills Tags: , , , , 0 Comments


The Ontario Ministry of the Attorney General Website posts answers to frequently asked questions about estates matters like how to find a copy of a deceased person’s will and how to calculate the amount of estate administration tax. 

There is a public database on site at the Toronto Estates Office at 330 University Avenue that contains information on wills deposited with the court for safekeeping or provided through an application for a Certificate of Appointment of Estate Trustee with a Will. 

Wills deposited with all Ontario Courts from 1996 forward can be searched through the Toronto office. Wills deposited in Toronto can be searched back 40 years. You must contact the individual court offices in other jurisdictions for wills pre-dating 1996.

You can search the name of the deceased and the date of death in order to obtain the file number and review the original will. Searching is free. If the file is located there is a $10.00 fee to retrieve it, $61 if it is in storage, and $1.00 per page for photocopies of the will.

As for estate administration tax, the formula for calculation is set out in s. 2(6) of the Estate Administration Tax Act, as follows:

·         $5 for each $1,000, or part thereof, of the first $50,000 of the value of the estate, and

·         $15 for each $1,000, or part thereof, of the value of the estate exceeding $50,000.

Or, perhaps you might want to consider a Joint Last to Die Insurance Policy, insurance designed for couples with the specific purpose of providing sufficient funds to pay taxes that will be owed by the estate; the policy pays out the total death benefit upon the death of the surviving spouse. Click here for Sun Life Financial’s version.

Death & taxes: You might not be able to avoid the former but, with a little planning, you can insure against the latter.

Thanks for reading.

Sharon Davis

19 Mar

Death and Taxes and RRSPs (Oh My!)

Hull & Hull LLP Beneficiary Designations, RRSPs/Insurance Policies Tags: , 0 Comments

The tax treatment of RRSPs on an annuitant’s death is something that often confuses (and perplexes) beneficiaries of an estate.  I’ve seen more than one situation where the residual beneficiaries of an estate are distressed to find out that the estate is picking up the tax bill for an RRSP being transferred to a named beneficiary…the argument being that they, as residual beneficiaries, should not have to pay taxes associated with funds be transferred to someone else. 

The general rule is that absent a tax-deferred rollover (more on that in a minute), the fair market value of the RRSP on the annuitant’s death is treated as income and must be included in the annuitant’s terminal return (tax return that is filed for the year of death). 

As noted above, there are a couple of situations where the taxes associated with an RRSP can be avoided by the estate.  The first is where the designated beneficiary is the annuitant’s spouse or common law partner; the other is where the beneficiary is the annuitant’s financially dependent child or grandchild.    

Where the beneficiary is a spouse and a physically/mentally infirm child or grandchild, the RRSP can be rolled-over to the beneficiary.  Where the beneficiary is a minor child or grandchild (who isn’t infirm) the proceeds of the RRSP can be used to purchase an annuity that will make payments annually until the minor has reached 18 (with such payments being taxed).  However, if the children/grandchildren are over 18 and not infirm no tax deferral will be available. 

It is worth noting that the tax liability the estate might incur is related only to the value of the RRSP on the annuitant’s death.  Once the recipient starts withdrawing funds, s/he will be liable for the tax, not the estate.

If you want to know more about the tax treatment of RRSPs on death, check out the Canada Revenue Agency’s memorandum on the issue. 

Have a great day!

Megan F. Connolly 


Enter your email address to subscribe to this blog and receive notifications of new posts by email.