Death benefit from an
LIRA or an LIF
The balance of a locked-in retirement account (LIRA) or a life income fund (LIF) is no longer locked in when its holder dies. It is payable in a single instalment. It is paid in priority to the spouse. However, if that person has renounced it or if there is no spouse, it is paid to the successors (e.g.: heirs).
The obligation to pay a death benefit to the spouse only concerns LIRA or LIF contracts entered into with a person who participates or who participated in a supplemental pension plan (SPP) or a voluntary retirement savings plan (VRSP).
The deceased who held the LIRA or LIF may have been the spouse of a person who participates or who participated in an SPP or a VRSP. It is the case, for example, if the amounts contained in the LIRA or LIF came from the partition of benefits under the plan following the breakdown of the union. In that case, the contract does not have to provide that when the holder dies, the LIRA or LIF balance will be paid to his or her spouse. The contract may provide to whom the LIRA or LIF balance will be paid at the time of death, for example, to the holder's successors (e.g.: heirs).
Applying for the death benefit
To receive payment of the LIRA or LIF balance when its holder dies, an application must be filed with the financial institution that manages the LIRA or LIF.
Cashed amounts are taxable. However, taxable amounts can be deferred if the amounts can be transferred directly to a registered retirement savings plan (RRSP) or to a registered retirement income fund (RRIF). For more information, contact the Canada Revenue Agency by consulting the Transferring 
section of their website or by calling 1 800 959‑7383
Renunciation and revocation
Except if he or she has already received it, the spouse can renounce, at any time, his or her right to receive the LIRA or LIF balance when the holder dies. He or she can therefore renounce it after the holder's death, but before the amount has been allocated. A written notice on the matter must be provided to the financial institution that manages the LIRA or LIF.
The spouse may revoke his or her renunciation by written notice to the financial institution that manages the LIRA or LIF, but only before the holder's death.
Will
Despite the provisions in the deceased's will, the LIRA or LIF balance must be allocated based on the rules explained above. Those rules take precedence over the will.
A helpful example...
Yves remarried Lise. In his will, he provided that the amounts accrued in his LIRA will be paid to his children from his first marriage.
If Lise did not renounce her right to receive the LIRA balance when Yves dies, the financial institution must allocate the balance with interest to Lise, in accordance with the rules explained above, despite the provisions in Yves' will.
If Lise renounced her right to receive the LIRA balance before the amount is allocated to her by written letter to the financial institution, it must then allocate the LIRA balance with interest to Yves' children, in accordance with the rules explained above and the provisions in Yves' will.
Legal references
- Regulation respecting supplemental pension plans: