Per TDW online form, http://www.tdwaterhouse.ca/apply/forms/529214.pdf
Successor holder: Only your spouse or common-law partner, as defined in the Income Tax Act (Canada), can be a successor holder. In the
event of your death, the name on the Account is changed to the name of the successor holder, who will continue to hold and operate the
Account as their own.
Beneficiary: You can designate a beneficiary in your Account. In the event of your death, the beneficiary will receive the proceeds in the
Account and the Account will be closed if:
1. You have not designated a successor holder, or
2. The designated successor holder was not your spouse or common-law partner at the time of your death or has pre-deceased you.
My institution's policy is not available online, so I can't verify that it follows the same reasoning.
In Ontario the beneficiary seems to take precendence over the will, because the beneficiary designation makes the account pass directly to the beneficiaries and not through the estate. There is a legal case for arguing that a will created more recently might take precedence, but that would be a court battle.
In my case, I have a will that is clear on how my assets are to be distributed in the event of my death. I will keep my spouse as successor, and remove the beneficiary. In the event of a coincident death with my spouse, the assets will be distributed per the will.
Is it possible to have both a successor and a beneficiary? Yes
If so, does the successor take precedence? Yes
If so, is there a scenario when I would want to name a separate beneficiary? I think designation of a beneficiary, in addition to the successor, would be useful if you did not have a will and coincident death of spouse occurred. Funds would transfer faster and avoid probate taxes, being outside of the estate. Generally speaking, however, I think you'd be better off letting the will do its thing upon coincident death, and avoid conflict if the designations on the account and in the will are not the same.
Would ben/succ status on TFSA account take precedence over the will, or vice versa? Yes, ben/succ status on TFSA account seems to take precedence over the will.
Very thoroughly answered Ben. For some people the value of having a designated beneficary will increase with time as some of these TFSA's may get quite large, so keeping the money out of probate will become more important.