Goldtent TA Paradise

RRIF and death

1. Fullgoldcrown says:

   November 26, 2025 - 8:28 pm at 8:28 pm

   In Canada when you die, your RRIF or RRSP can be ported over to a spouse tax-free if you have a Successor Agreement on file.
   Otherwise the full value is added to you income when you are the last to die in a spousal relationship. There are ways to lessen the amount given to the CRA from your account through Life insurance or Charitable donations upon death.

   My accountant years ago mentioned even at the average of expected life expectancy, many still have sizeable amounts after a life of contributions. Mainly the self-employed who don’t have a work pension. i believe he was regularly seeing north of $500,000 still in the plan at death. That goes your final tax return if you did not plan ahead.

   During the Scamdemic, the CRA likely benefited by an increase in revenue from these individuals. Tax Revenue from employment may have dropped at the same time. The CRA/Government is desperate for revenue and these pots of unprotected funds are easy pickings.

   If you have a RRIF and invest in the PM miners it is quite possible that that a week or month’s return meets the required % for redemption each year and the plan still continues to grow. If one takes out over the required % each year you can end up losing your OAS through clawback. Thus, these plans continue to grow and your tax liability increases.

   If you have young family members with room to contribute to a RRSP, it may be wise to have them do some planning. Only use the accumulated contribution room to lower your marginal rate if you are in say the 40% bracket. If you use it to lower your tax to one of the lowest brackets it may not be wise as you may end up taking out funds at a much higher tax rate. Sure it compounds tax free but the tax bite grows with the size.

   In recent years owning your home outright was a great wealth builder especially if you could afford one within your means but of a higher value to be sold tax-free later. Instead of contributing to an RRSP, the TFSA should be maxed out and the rest invested in a non-registered account for long-term appreciation (buy and hold) and dividend income. Hope this makes sense.

   The CRA will be harvesting more revenue from RRIF’s as the Boomers expire. They may even step up their attack on OAS income thresholds and tax higher incomes more. It’s coming.

   An RRSP “meltdown” for early retirees is a great way of exiting work in one’s 50’s if your plan has appreciated well. It balances out your tax liabilities and may allow you to retire at the famous “Freedom 55” advertised a few decades ago.

   It’s all in the tax planning and a qualified Financial Tax pPlanner should be consulted as it may change one’s life.

   Log in to Reply
2. Kewl2 says:

   November 27, 2025 - 12:33 pm at 12:33 pm

   Columbia — regarding the “Successor Agreement” — is this a document that is prepared and filed with the bank or is it a separate document that forms part of a will etc. Am curious as to how it gets put into place and gets executed after a partner passes away? Am also not sure where to start down this trail……..many thanks in advance!

   Log in to Reply
   • Columbia says:

     November 27, 2025 - 2:54 pm at 2:54 pm

     The Successor Holder Agreement can be engaged at time of setting up the TFSA or RRSP/RRIF or after the fact. Enquire with your financial institution as to the procedure. Having the deceased partner’s TFSA and RRIF added to yours is the goal.

     It can also be changed along the way but only with the permission of the other party and allows these funds to pass to the partner without tax consequences.

     Same as bank and brokerage accounts, if desired, it is beneficial to have both names on these accounts so they stay out of probate and are seamless after the death one partner. “Joint Tenancy with Right of Survivorship” overrides the wishes of a will of the deceased person so that the surviving partner is protected. All my Stock Certs were designated as such to register with the DRIP.

     All of our assets from the home, vehicles, corporate holdings to all Financial accounts are listed as such.
     If one passes, it is only the personal effects that are not listed but usually have no value in probate.

     If you are the last to survive there are different rules that apply and they are included in probate if one still has them. I believe a TFSA can have a child as a beneficiary tax free up until the date of death at which time the child has to pay any taxes on income from that gift as if it was a non-registered account but it does not pass through probate. Always good to retain legal advice and have an up to date will. Hope that helps.

     Log in to Reply

Leave a Reply Cancel reply

You must be logged in to post a comment.