Do RRIF Taxes Reduce a Will Legacy in Ontario?

Does a Will Clause About RRSPs Automatically Cover RRIFs?

No — not unless the will says so. In Bozek v. Drongosky, 2026 ONSC 4245 (CanLII), the Ontario Superior Court of Justice held that a clause referring to a “Registered Retirement Savings Plan” did not extend to a Registered Retirement Income Fund. The two products have different legal identities, and the court applied the ordinary meaning of the words the testator chose.

This matters because the clause in question required certain taxes to be deducted from a $150,000 legacy. If the RRIF had been caught by that clause, the legacy would have been reduced. The court found it was not caught, so the legacy was payable in full.

What Is the Difference Between an RRSP and a RRIF for Estate Purposes?

For estate purposes, an RRSP and a RRIF are treated as separate legal instruments, even though one typically converts into the other during retirement. Under the Succession Law Reform Act, s. 51(1), a RRIF designation operates on its own terms. The court in this case noted that the deceased’s RRSP designation had been revoked and replaced by a RRIF designation before death — meaning the RRSP no longer existed as a live instrument at the time of death.

Because the will clause was written around the RRSP, and the RRSP was gone, the clause had nothing to grab onto. The RRIF stood separately, and its designated beneficiary received the proceeds outside the estate entirely.

Are RRIF Beneficiaries Personally Liable for the Estate’s Income Tax?

Generally, no — and this decision reinforces that point. When a person dies holding a RRIF, the full value of the fund is included in their income for the year of death. That creates a tax liability in the estate. However, whether any of that tax burden flows through to the people who received the RRIF proceeds depends on what the will says, not on the tax mechanics alone.

The court reviewed competing calculations from two accounting experts and ultimately rejected the argument that the designated beneficiaries should absorb the RRIF-related tax. The will did not clearly impose that obligation on them, and courts will not read in a burden that the testator did not express.

Can a Beneficiary’s Statements About the Testator’s Intentions Be Used in Court?

Only within strict limits. Courts interpreting a will use what is called the “armchair rule” — they consider the surrounding circumstances at the time the will was made to understand the testator’s language, not to override it. Evidence of what someone else believed the testator intended is a different matter.

In this case, one party offered statements about what the testator meant. The court applied the Evidence Act, s. 13, which requires corroboration before a court can act on the testimony of an interested witness about what a deceased person said or intended. Because the statements were uncorroborated, the court declined to rely on them and confined itself to the will’s language and the surrounding circumstances.

Does Interest Accrue on an Unpaid Legacy in Ontario?

Yes. Under a long-standing rule of convenience, a pecuniary legacy that remains unpaid one year after the testator’s death begins to earn simple interest at 5% per year. That year is sometimes called the “executor’s year” — it is the period during which an estate trustee is expected to gather assets, pay debts, and make distributions.

In this case, the legacy had not been paid more than a year after death, and the estate trustee had not sought timely court directions to justify the delay. The court ordered simple interest at 5% per annum from the first anniversary of the death. This is a real financial consequence for estates that sit on unpaid legacies without a good reason.

Practical Takeaways for Estate Beneficiaries and Executors

• Check whether the will references RRSPs, RRIFs, or both. A clause written around one type of registered plan may not capture the other. If the deceased converted their RRSP to a RRIF before death, the will’s RRSP language may no longer apply.
• Designated RRIF beneficiaries are not automatically on the hook for terminal-year tax. The estate pays that tax unless the will clearly says otherwise. Get legal advice before agreeing to any deduction from your entitlement.
• Executors should move promptly. If a legacy is not paid within one year of death, interest starts running at 5% per year. If there is a genuine reason for delay, seek court directions early.
• Intention evidence needs corroboration. If you are relying on something the deceased told you about their wishes, that evidence may be inadmissible or carry little weight unless it is supported by other evidence.
• Get professional accounting and legal advice on RRIF tax allocations. This case involved competing expert calculations. The numbers matter, and getting them wrong can lead to costly litigation.

Our Ontario wills and estates lawyers regularly advise beneficiaries and estate trustees on exactly these kinds of disputes — from interpreting ambiguous will clauses to understanding how registered plans interact with estate taxes.

If you are dealing with an estate in the Hamilton or Burlington area and have questions about a legacy, a RRIF designation, or an executor’s obligations, our Burlington wills and estates team is available to help. We also assist clients across the province, including through our Hamilton office.

UL Lawyers offers a free initial consultation from our Burlington office and serves clients across Ontario. If you have questions about a will, a registered plan, or an estate dispute, reach out to our estate litigation and planning team to discuss your situation.

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This article is automated commentary on a public court decision and is for general information only — not legal advice. Decisions rely on facts unique to each case. If you are affected by a similar issue, contact a lawyer for advice specific to your situation.