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We're in the midst of a great wealth transfer, with baby boomers expected to pass an estimated $1 trillion to younger generations through 2026 (1).

But receiving an inheritance may prove complicated for some beneficiaries. Only 64% of boomers have a will, according to research from the Logit Group (2).

And that's just one potential challenge. It's not unusual for pension owners and beneficiaries to feel lost amid the maze of rules, regulations and frequent changes surrounding pension inheritance and beneficiary designations.

Take the hypothetical case of Dave, a middle-aged man whose widowed father died 10 years ago. He left 50% of his RRSP savings to Dave and 50% to his estranged brother, Cameron. Dave hasn't spoken to Cameron in 15 years. When their father died, neither he nor the pension administrator could find him.

Recently, Dave was notified that his brother, who had been in a nursing home, had died. His death certificate lists him as married with no children, though Dave heard from a family friend that Cameron was also estranged from his wife, too.

Now Dave is wondering if he's entitled to the other half of his dad's pension.

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Taking the first step

In cases like this, it's typically best to consult a lawyer - especially if the deceased lived in another province or didn't have a will.

Inheritance law is handled at the provincial level, and so there may be differences between provinces that are important to consider. And while there is no inheritance tax in Canada, the estate of the deceased does owe capital gains tax and other related taxes on their investments. So, it's complicated - and navigating it alone can be tough.

Also, Dave doesn't necessarily have a clear-cut right to Cameron's half of the investments.

While Dave's father was able to name his sons as co-beneficiaries of his estate in his will, an RRSP account can only have a single beneficiary successor in the event of the investment holder's death.

Because Cameron was alive when their father died, the only way Dave could have inherited his brother's share is if Cameron explicitly declined it. Since the plan administrator never contacted Dave, that's unlikely.

Dave can try to find out whether Cameron's share was paid out, but that won't be easy - and he may know.

Read more: Here are 5 expenses that Canadians (almost) always overpay for - and very quickly regret. How many are hurting you?

Other considerations

Whether Dave inherits any of his brother's assets will depend on whether Cameron was still legally married, or lived in a province where common law spouses are recognized as inheritors. Depending on the stipulations in his will, his wife could inherit everything.

It could also depend on whether his brother had a will. If he did, he might have left the pension inheritance to Dave. But in some provinces, a surviving spouse is entitled to that money regardless, while in others, inheritances may be exempt from automatically going to the spouse.

If Cameron wasn't still married, didn't have a will and his assets went to probate - meaning they're distributed according to provincial laws - Dave might be entitled to some or all of the inheritance because he's next of kin.

As can often be the case with an inheritance - especially when no will is involved - things can get messy. If you ever find yourself in a situation like Dave's, legal guidance is almost always a must.

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Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

CPA Canada (1 ); Logit Group (2 )

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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