RRSP Funds Payable to a Named Beneficiary Not Part of the Estate in Saskatchewan

A recent decision from the Saskatchewan Court of Queen’s Bench held that RRSP funds payable to a named beneficiary do not form part of the testator’s (deceased will maker’s) estate.

Estate of Gary Gheyssen v. TTH Law Firm arose out of a dispute between the executrix of the estate and the lawyer administering the estate, specifically regarding his fees. The executrix argued that the amount of the RRSPs should not have been included in Part I of the Statement of Property, the area that contains the cumulative value of the testator’s estate by which the probate fees and the solicitor’s legal fees are calculated.

It is generally understood that assets that pass outside of a will, and without specific mention therein, do not form part of the testator’s estate. The Honourable Justice R. W. Elson explained at paragraph 9 why this is so:

“The concept of probate, a word derived from the Latin verb probare – meaning "to prove", is concerned with the process of proving a testamentary disposition and giving effect to it. It logically follows that those assets which are disposed of other than through a proved testamentary disposition should not be included as any part of it. As logical as this sounds, this matter has raised the question whether the Lieutenant Governor in Council has seen fit to follow the logic in the Regulations, as they pertain to retirement savings plans. For the reasons which follow, I have concluded that it has.”

The Administration of Estates Regulations, R.R.S. 1999, (the Regulations) is somewhat vague as to whether it follows the generally understood principle enunciated above. The estate solicitor argued that the legislation should be interpreted so as to include RRSPs in the estate of a deceased person. He noted that subsection 8(1) of the Regulations states that the value of an estate is to be the value of the deceased person’s property at the time of death and the deductions from that property in the subsections that follow do not include any reference to excluding RRSPs from that calculation. He also argued that since Section 2 of the Regulations specifically excludes RRSPs, the fact that section 8 does not is telling.

Although Justice R. W. Elson agreed that the Regulations could be clearer, he concluded that RRSPs were covered by the general exclusion from the value of an estate at subsection 8(3)(d) of the Regulations. Therefore, the value of the RRSPs did not form part of the estate of Gary Gheyssen in this instance and there is now precedential jurisprudence in Saskatchewan that provides clarity to the Regulations.

Greer Jacks is updating jurisprudence in EverGreen Explanatory Notes, an online research library of assistance to tax and financial professionals in working with their clients.