Why Designate a Beneficiary?

Having a plan in place can give you peace of mind

You can not take your money with you. As a general rule, upon your death, the fair market value (FMV) of your RRSP/RRIF is included as income on your final tax return and taxed at your marginal rate.

To optimize the transition of your assets and lessen the strain on those you leave behind from potentially complex estate settlements, one of the things you can do is name a beneficiary on your registered accounts. This applies to the Registered Retirement Savings Plan (RRSP), Registered Retirement Income Fund (RRIF) and Tax-Free Savings Account (TFSA).

If you are a Quebec resident, you cannot name a beneficiary directly on any registered account but you can set this up in your will.

The Benefits of Naming a Beneficiary

Save Time and Money

• Subject to applicable laws, when a beneficiary is named, the plan assets can go directly to the beneficiary without having to wait for the estate to be settled
• You may save on probate fees (if applicable) as the value of your account is not included in the fair market value of all of the property you own at time of death. Note: There are no probate fees in Quebec but a small charge may apply.
• Can be one way to achieve tax deferral in the hands of your beneficiaries.

Choices and Flexibility

• You can name anyone as a beneficiary, such as your spouse/ partner, dependent child or grandchild
• You can name one or more beneficiaries and allot percentages of your assets to each in keeping with your wishes
• Beneficiaries can be changed by you at any time (irrevocable designations in B.C. excepted)

Options for Married or Common-Law Partners

• You can name your spouse as successor holder (TFSAs) or successor annuitant (RRIFs) rather than a beneficiary.

Read more about your account beneficiary choices here.

Some Key Information

• Your beneficiaries can be anyone you choose, you can have more than one and this information can be updated on your account at anytime
• B.C. has irrevocable beneficiaries where changes can only be made with consent.
• A successor annuitant (RRIF) or successor holder (TFSA) can only be your spouse or common-law partner
• You cannot name a beneficiary or successor holder/annuitant on non-registered accounts
• Beneficiaries can only be named in a will under Quebec legislation

Keep in mind, estate planning can be complex. For one, a named beneficiary on your account can override one named in a will, if there is a difference. When life events occur, you might wish to conduct a review to ensure your beneficiary information is still valid and consistent across your asset documentation. Checking in with an estate planner or tax advisor is always a good idea to make sure you’ve got the details right.

Ready to Designate a Beneficiary or Make a Change?

To designate or make changes to a beneficiary/successor holder, visit Beneficiaries or the Forms & Agreements page.

The information provided in this article is for general purposes only and does not constitute personal financial or tax advice. Please consult with your own professional advisor to discuss your specific financial and tax needs.