Lorne N. MacLean, a B.C. Family Law lawyer, warns persons going through divorce to address the following three issues relationg to pensions and life insurance:
1) If your spouse has a pension, an RRSP, life insurance policies, or RRIF’s, it is critical that you ensure that your lawyer obtains an interim injunction restraining your spouse from changing the beneficiary designation under any of these items. You want to ensure you continue to be the sole beneficiary under these assets or policies and if you are not, you should seek an immediate order compelling your spouse to name you as sole beneficiary under these assets or policies.
2) Once your divorce is completed and if you are retaining RRSP’s, life insurance policies and/or RRIF’s, ensure that you explicitly remove your spouse from being the beneficiary under any of these assets or policies. If you do no remove your spouse as beneficiary of these assets even if the Divorce Order or separation agreement specifies you were to retain the assets they will receive the death benefits even though this may be the last thing you want to happen!
3) You must also ensure that you prepare a new Will that explicitly revokes any previously made RRSP, RRIF or life insurance beneficiary designations. Failure to do so can have disastrous consequences. In a recent case where a husband failed to remove his ex wife as beneficiary under his RRSP, she received the entire RRSP and the deceased former husband’s estate had to pay the tax on the deemed disposition of the entire RRSP upon his death.