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December 11, 2021

Share my pension? No way, we've been separated for years.

In the rush to first open that RRSP, you probably signed reams of documents. But, if your circumstances have changed at all, now might be a good time to review just what you signed -- particularly when it comes to your beneficiary.

1056041_man_woman_heart_5It's pretty standard advice: If you're married or living in a common-law relationship, you're probably better off to name your spouse or partner as the beneficiary.

This way, your RRSP assets can be rolled over to his or her plan at your death, allowing you to avoid paying tax until the surviving spouse is faced with his or her own final tax return.

Reassess this in the event of divorce or remarriage, however. There have been cases where pension money went to a former spouse after the ex’s death, even though he'd embarked on another long-term relationship.

An Ontario man, although separated from his wife of 23 years, never signed a separation agreement and neglected to change beneficiaries. A few years later, he moved in with a new common-law partner who subsequently qualified as a wife for the purpose of determining survivor benefits.

Even though the couple was clearly together at the time of his death, the courts awarded the pension assets to the estanged wife since they were still in her name.

“The pension-earning spouse has to ensure, if possible, that he or she changes the survivor-benefits designation if another spouse has come into the picture,” Toronto lawyer Stephen Grant told the Globe and Mail.

Divorced? Did you bother reviewing those beneficaiary designations? How did things work out?

By Gordon Powers/MSN Money 



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...