On the death of Mr. A, his Will provided a particular legacy of his RRIF to his surviving spouse (Mrs. B), who died half a year later before his estate was administered. CRA indicated that since Mrs. A died before receiving the legacy, the fair market value of the RRIF property was included in the income of Mr. A in his terminal return. CRA stated:
[S]ince Mrs. B died before amounts were paid under the RRIF to the legal representative of the deceased last annuitant … the conditions of paragraph (a) [of "designated benefit"] cannot be met.
Where … an amount from the RRIF of the deceased last annuitant is paid to the estate of the deceased and an Eligible Recipient [as described in s. 146(1) - refund of premiums] is a beneficiary of the estate (as legatee or heir), the amount is not paid to the Eligible Recipient "out of or under the fund" and this situation does not comply with paragraph (b)… .