Regarding the designation of beneficiaries for registered plans (e.g., RRSPs, RRIFs) in Canada, which statement is most accurate concerning the implications for estate administration?

Question: Regarding the designation of beneficiaries for registered plans (e.g., RRSPs, RRIFs) in Canada, which statement is most accurate concerning the implications for estate administration?

Answer options: ✅ A direct beneficiary designation on a registered plan means the assets bypass the estate and are not subject to probate fees.

• Only a spouse can be designated as a beneficiary for a registered plan to avoid taxes on death.
• If no beneficiary is designated, the registered plan assets are immediately escheated to the provincial government.
• Designating the 'estate' as the beneficiary ensures the assets receive preferential tax treatment upon death.

Correct answer: A direct beneficiary designation on a registered plan means the assets bypass the estate and are not subject to probate fees.

Explanation: When a direct beneficiary is designated for a registered plan, the proceeds pass directly to that beneficiary outside of the estate, thereby avoiding probate fees and delays associated with estate administration. This is a key advantage of beneficiary designations for registered products in Canada.