Update Your Beneficiaries
When was the last time you updated your beneficiaries?
In 1987, a man – let’s call him Chris - bought a life insurance policy, naming his wife, Andrea as the beneficiary. They divorced in 1991, and in 1993, he entered a common-law relationship with Tess. They shared their lives for 26 years, until Chris passed away in 2019.
And in 2019 – twenty eight years after their divorce – the insurance payout went to Andrea, his ex wife.
Who knows why he never updated his beneficiary. Maybe he thought his WILL dictated where his life insurance goes. That’s only the case if your estate is named beneficiary. Maybe he procrastinated – I’ll get to it. Maybe he just forgot.
Tess challenged it. Ultimately, the Supreme Court found that allowing Andrea to keep the money would be unjust enrichment, and forced a legal correction. Who won? It went to the Supreme Court. The lawyers won.
My take
I made up those names, but that’s a real case. I started my first RRSP when I was 22. Who did I name as my beneficiary? The same person everybody names as their beneficiary at 22. My dad. Now I’m a financial professional. So I’ve since moved my money to my own management, and updated my beneficiaries. But if I didn’t? I have a wife, I have a kid, and my dad is fairly deep into a cognitive decline.
If you’re a member of a GROUP RRSP (looking at you, ACTRA/CAEA members!) – when was the last time you updated your beneficiary?
There are generally three places money goes when you die (OK there’s probably way more than three, but for the purposes of this article, the BULK usually goes to three entities).
1) Taxes
2) Accountants, lawyers, etc.
3) Your beneficiary(s)
There aren’t many entities whose interest lies in ensuring that as much money as possible goes to column three. I’m one of em.
Update your beneficiaries, folks. It takes minutes, and it’s worth an awful lot of money.
NB: A financial advisor can help with retirement planning, managing irregular income, or saving for major life events.
See also: 50 things I do as a financial advisor
The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This post was written by Tim Ziegler, Financial Advisor with Tim Ziegler Wealth Management, a registered trade name with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this post comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities.