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Monday, February 28, 2022

If you receive a substantial RRSP can you still bring a claim for dependent's relief?

A reader raised a really interesting question recently so I decided to share it with all of you. Can you still claim dependent's relief when you received a substantial RRSP? Here is the question:

"I live in Ontario, I am a dependant (common law) of the deceased. The RRSP was rolled over to me. I was not named in the will. My question is since I received the rrsp and has all the same penalties as a locked rrsp can I still go to court with a dependancy claim? The rsp is larger than the value of the estate, but that's the fault of the executor as he sold the house (I was not on the house) without a valuation and below fair market value and didn't sell anything,just gave everything away even to non beneficiaries. So would a judge deny my claim with the rsp being larger than the estate? considering it's for my retirement and I'm on a disability and I don't have the same standard of living like I use to!" 

The fact that the RRSP is larger than the estate is not reason enough on its own to defeat your claim for dependent's relief. The RRSP and the estate are two separate entities. It's not a matter of receiving one or the other.

A claim for dependent's relief allows you to ask the court to award you a share of the estate when you were not adequately provided for by the estate. Not by assets outside of the estate. I expect that the executor, in defending against your claim would say that you don't need anything because you received the RRSP money, but that would not likely be successful. I'm not saying it's completely irrelevant, but it's not the deciding factor. If your lifestyle prior to your husband's death has been materially reduced by his death, then by all means bring your claim and try to rectify the situation. 

If there are a lot of claims (such as minor children) against an estate with few assets, the fact that you received the RRSP might be more important. In a tough case like that, a judge has to consider a lot of people and try to stretch an estate as far as it will go. It's a balancing act that shouldn't involve the RRSP but it could, depending on the circumstances. In your case, it sounds as though there are assets; there is at the very least a house. Given that you did not inherit the house or contents, it seems to me that you are entitled to receive something from the estate.

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