RRSPs and Your Estate

Jon Glougie

January 10, 2020

It’s that time of year again! The first 60 days of the year are also known as RRSP season. People are always focused on making last minute contributions to their RRSPs to ensure that they pay as little tax as possible now, while still saving/investing for retirement. What people don’t commonly think about, is what sort of tax liability that their RRSPs can present when passed on to a beneficiary(ies).

If you are planning on leaving your RRSP/RIF to anybody other than the aforementioned beneficiary(ies), it is important to understand the impact on your estate. Your RRSP/RIF will be transferred directly (and in its’ entirety) to your listed beneficiary(ies), however, your estate will still be left with a tax bill.

You will need to include the value of your RRSP/RIF in your final income tax return as income!

This means that, depending on the size of your RRSP/RIF, your estate may have a sizable tax bill to settle before the remainder of your estate can be distributed to the remaining beneficiaries. If your goal is to evenly split your assets amongst multiple beneficiaries, it is important to understand that an RRSP/RIF and non-registered assets left in the estate will be taxed differently.

If you would like to review your estate plan to ensure that your assets will be distributed as you intend them to be, let us know and we will be more than happy to help!