RRSPs and Your Estate

Jon Glougie

January 7, 2021

Most people are aware that they are able to roll their RRSP/RIF to a spouse, common-law partner or financially dependent child or grandchild with a mental or physical disability. What some people don’t always understand, is what happens to the RRSP/RIF if it is being left to anybody other than a spouse, common-law partner or financially dependent child. 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!