Can a Surviving Spouse Receive an RRSP or RRIF and Still Claim Equalization in Ontario?

The short answer: Yes, but not necessarily in addition to the full equalization payment.

When a married person dies in Ontario, their surviving spouse may have a choice between taking what they are entitled to under the deceased spouse’s Will or intestacy rules and electing to receive an equalization payment under Ontario’s Family Law Act.

The important point is that receiving assets because of a spouse’s death does not automatically mean the surviving spouse gets those assets plus a full equalization payment. The treatment of the assets depends on the nature of the asset, how it passes to the surviving spouse, the wording of the Will or other written designation, and the circumstances of the estate.

What Is an Equalization Payment?

Under Ontario’s Family Law Act, when a married spouse dies and the deceased spouse’s net family property is greater than the surviving spouse’s net family property, the surviving spouse is generally entitled to one-half of the difference between the two net family properties.

This is commonly referred to as the spouse’s equalization entitlement.

However, the surviving spouse does not simply receive the equalization entitlement automatically while also taking everything left to them under the deceased spouse’s estate plan. If the deceased left a Will, the surviving spouse must generally elect whether to take under the Will or receive the entitlement under section 5 of the Family Law Act. If there is no Will, the spouse generally chooses between the intestacy entitlement and the section 5 entitlement.

So, What Happens to an RRSP or RRIF?

RRSPs and RRIFs can pass to a surviving spouse through a beneficiary designation.

The Canada Revenue Agency confirms that an RRSP beneficiary can be designated in the RRSP contract or in the deceased annuitant's Will. If there is no valid beneficiary designation, the RRIF is generally paid to the estate.

There can also be important tax consequences. For example, where a spouse is the sole qualifying beneficiary of an RRSP and the statutory requirements are met, the RRSP can be transferred on a tax-deferred basis to an RRSP, RRIF or eligible annuity for the surviving spouse. Similar rollover rules can apply to RRIF proceeds.

But tax treatment and equalization are two different issues.

Receiving an RRSP or RRIF as a beneficiary does not, by itself, answer whether the surviving spouse can keep that asset and also receive the full amount of their equalization entitlement.

Can the Surviving Spouse Receive Both?

Potentially, yes. But the surviving spouse should not assume that they will receive both in full.

Ontario’s Family Law Act contains specific rules for certain assets and payments received because of a spouse’s death. 

For example, where a surviving spouse elects to receive their section 5 entitlement and is the beneficiary of life insurance, receives a lump-sum payment under a pension or similar plan, or receives property through survivorship or otherwise because of the deceased spouse’s death, the value of that payment or property is generally credited against the spouse’s equalization entitlement.

There is an important exception.

The crediting rules do not apply where the deceased spouse provided in a written designation, Will or other written instrument that the surviving spouse is to receive the particular payment or property in addition to their section 5 entitlement. This means the wording of the deceased spouse’s estate planning documents can be extremely important.

A Simple Example

Imagine that, after calculating the spouse’s net family properties, the surviving spouse has a $200,000 equalization entitlement.

The surviving spouse is also entitled to receive a $150,000 death-related asset.

The surviving spouse cannot automatically assume that they will receive $350,000.

Depending on the type of asset and the applicable provisions of the Family Law Act, the $150,000 may be credited against the $200,000 equalization entitlement, potentially leaving a $50,000 balance.

However, if the deceased spouse’s written designation or other applicable written instrument properly provides that the surviving spouse is to receive the asset in addition to the section 5 entitlement, the result may be different.

The specific asset and the wording of the relevant documents therefore matter.

What About an RRSP or RRIF Specifically?

This is where legal advice is particularly important.

An RRSP or RRIF may pass directly to a named beneficiary rather than through the estate. That does not mean the asset should automatically be ignored when assessing the surviving spouse’s overall rights.

The Family Law Act contains specific rules concerning property and payments received as a result of death, while the Canada Revenue Agency has separate rules governing RRSP and RRIF beneficiary designations and taxations.

The fact that an RRSP or RRIF passes directly to the surviving spouse therefore does not, on its own, establish that the spouse is entitled to keep the entire asset while also receiving the full equalization payment.

The Will, beneficiary designation, any domestic contract between the spouses, the nature of the asset, and the applicable family-law rules should be reviewed together.

What If the Surviving Spouse Chooses Equalization?

Choosing the section 5 entitlement can have significant consequences. 

When a surviving spouse elects to receive the section 5 entitlement, gifts made to that spouse under the deceased spouse’s Will are generally revoked unless the Will expressly provides that those gifts are in addition to the section 5 entitlement.

The surviving spouse must also make the election within six months of the deceased spouse’s death. If the election is not filed within that period, the spouse is generally deemed to have elected to take under the Will or under the Succession Law Reform Act, as applicable, unless a court orders otherwise.

This deadline makes it important for a surviving spouse to obtain legal advice promptly rather than assuming that accepting a particular asset is automatically the best option.

Why Beneficiary Designations Matter

Beneficiary designations for RRSPs, RRIFs, life insurance and other assets are often treated as a simple administrative detail.

They are not.

A beneficiary designation can determine who receives an asset after death, while Ontario family law determines how a surviving spouse’s equalization rights operate. These rules can intersect in ways that significantly affect the amount a surviving spouse ultimately receives.

For this reason, beneficiary designations should be reviewed together with the Will and any marriage contract or other domestic agreement.

The Bottom Line

Can a surviving spouse receive an RRSP, RRIF or other designated asset and still claim equalization? 

Yes, potentially. But the surviving spouse may not be entitled to keep the full value of the designated asset and receive the full equalization entitlement on top of it.

The answer depends on what the asset is, how the spouse became entitled to it, the wording of the Will or designation, whether the spouse elects for equalization, and the specific provisions of Ontario’s Family Law Act.

For families with significant retirement savings, investments, life insurance or other designated assets, these issues should be addressed as part of a comprehensive estate plan, not left to be resolved after death.

How Yanique Russell Law Can Help

At Yanique Russell Law, we believe estate planning is about more than deciding who receives your property. It is about creating a thoughtful plan that protects the wealth you have built and helps your family navigate the transition from opportunity to ownership and from success to significance. 

Whether you are creating an estate plan, reviewing beneficiary designations, or dealing with the estate of a deceased spouse, understanding how your assets interact with Ontario’s family and estate laws is essential.

If you are considering your estate planning options or have questions about a surviving spouse’s equalization rights, contact Yanique Russell Law for advice tailored to your circumstances. To learn more or to book a consultation, visit www.yrusselllpc.com or call us at  416-800-9891.