Halifax women call for more protections for RRSP after husband’s sudden death

After her husband’s sudden death left her and her teenage daughter with the prospect of losing most of the couple’s life savings, a Halifax woman called for more protection for certain retirement savings plans.

In August 2018, Dianne Taylor’s husband Tim Taylor felt uncomfortable.

The 50-year-old went to the emergency room and was diagnosed with stomach cancer. By then, it had spread to his lungs.

He died only three weeks after the diagnosis.

In her grief, Dianne Taylor also tried to raise her then 13-year-old daughter.

She hardly knew there was another shock.

It turns out that the beneficiary listed in Tim’s Registered Retirement Savings Plan (worth $685,000) is not his wife. Although his will left everything to Taylor, most of their savings were assigned to Tim’s mother.

She said: “It’s just that when you feel that you have nothing, I have to deal with a beneficiary problem.” She pointed out that Tim is a banker, not a financial environmentalist.

The widow says more protection is needed

Taylor urges others to check his listed beneficiaries to discover things like retirement savings plans (RRSP) and life insurance policies. But she also wants to see protections similar to the Nova Scotia Pensions Benefits Act.

She said: “There must be a gap in the law. This kind of thing will never happen.”

Friends of the Taylor family told the Canadian Broadcasting Corporation that Tim’s wife and daughter are his entire world. (Submitted by Dianne Taylor)

Derek Gerard, a pension professional consulting actuary, said that in Nova Scotia, pensions must be registered in the province and must comply with the Pension Benefits Act.

He said that according to the bill, if a pension plan member dies, the spouse will automatically enjoy the priority of death pension, even if there are other beneficiaries.

He said: “It was rejected by the law, and in the case of death, the spouse becomes the beneficiary.”

Gerard is also Tim Taylor’s family and friend, and he said that RRSP does not have the same protection that seems inconsistent.

He said: “When people become partners in a marriage or relationship, these assets are shared retirement assets.”

“If a spouse can appoint most of his own property to someone outside of the marriage, it will be completely inconsistent with the rest of our treatment of marriage and partnership.”

The revocation clause in does not change the name

Taylor and her husband listed their assets, including the RRSP, when they made their will years before they fell ill. The will stipulates that if one of them dies, 100% of their respective assets will go to the other party.

They even included a revocation clause in the will, which will cover the issue if the beneficiary is forgotten.

Taylor said: “Surprisingly, this is not the case.”

Taylor said that when Tim first opened the RRSP when he was young (before they got married), he listed his mother as a beneficiary.

As the years passed, she said that there were no documents to record the beneficiaries, so she thought he had forgotten.

When problems arose after Tim’s death, Taylor said she was confident that it would be beneficial to her to solve the problem. She thinks they can prove his intention to the court.

But the lawyers disagreed.

BoyneClarke’s lawyer Brian Casey said: “We studied whether his will will change the title he left in the RRSP, but unfortunately, we came to the conclusion that this will not be resolved.”

Casey said this situation is not unique to the Taylor family. People sometimes forget their assigned name, and then when life changes (for example, the second child arrives) and the beneficiary is not updated, it may lead to an “ugly situation”.

Casey said that a similar case occurred in Nova Scotia in 2016, which means that there is precedent that Taylor will not succeed.

Taylor said: “I had a 13-year-old daughter at the time. I had to bear financial responsibility at the time, and fighting against it in court was actually irresponsible for me.”

Taylor was only 50 years old when he died of cancer. (Submitted by Dianne Taylor)

“Now, there are no protective measures”

Regarding the terms in the will, Casey said that these terms are usually too general to change a specific name.

“Unfortunately, the message you want to convey is that you need to keep these things up to date.”

However, this also brings another blow: RRSP will not only pay the beneficiaries, but also the inheritance to pay the tax. In her case, this will be 54% of the $685,000.

Taylor’s matter has been settled out of court. Because Tim has a life insurance policy, the money is used to provide the after-tax value of the RRSP to the listed beneficiaries. Taylor said that if he did not have this policy, then the problem would “eliminate the entire industry.”

Taylor said: “RRSPs should enjoy the same protection as pensions. They are all retirement savings, they are all family assets.”

“Currently, there are no protective measures.”

Taylor took a photo with his daughter, who was only 13 years old when his father died. (Submitted by Dianne Taylor)

Request change

Taylor would like to see legislation that protects the family, even starting with the requirement to clearly list the beneficiaries.

In Quebec, the beneficiary must be appointed by a will in accordance with provincial legislation.

A spokesperson for the Nova Scotia Department of Finance said that this issue is part of the federal tax law.

The Canada Revenue Agency has not yet responded to CBC’s request for comment.

Taylor said that she had considered the possibility that the listed beneficiaries were intentional, but she believes that this is not the case.

“When he was dying, he cared very much about me and my daughter. I couldn’t even start to imagine that he knew and never said anything.”

Taylor left behind his wife Dianne and daughter. (Submitted by Dianne Taylor)

Gerrard agreed and said that Tim’s wife and daughter are his entire world.

He said: “He breathes for them every day. He wants to take care of everything for his daughter’s well-being and her future.” He added that this has damaged Tim’s daughter, who is 16 years old and is not protected.

“We can take any measures to protect this in the future, and I think it is very important that all of us can do this.”

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