Designated beneficiaries of registered retirement accounts (RRSP, RRIF, TFSA.) As the saying goes, the only guarantees in life are death and taxes, and unfortunately there are tax issues to deal with upon the death of an individual.  If you have registered retirement accounts like an RRSP, RRIF, or TFSA, it is important to understand what will happen to these accounts when you die and what the tax implications will be for you and your beneficiaries.

Did you know that you can name a beneficiary of your registered retirement accounts separately from your will and that this “beneficiary designation” will take precedence over any wishes stated in your last will and testament?

Do you know who the beneficiary of your registered retirement accounts (RRSP, RRIF, TFSA) is?

These are important questions you should be asking yourself, considering this May 10, 2021 story from CBC. ( This story demonstrates the importance of reviewing RRSP beneficiary designations. The article discussed the unfortunate cascade of events where, in 2018, a 50-year-old individual went to the hospital for stomach pain and was diagnosed with cancer. He passed away three weeks later, leaving a spouse and a child. It appeared as if the deceased had not reviewed the designated beneficiary on his $685,000 RRSP, which remained his mother from the time when he had originally set it up while single. Not only did this mean that the surviving spouse and child would not receive these savings, but also that they were effectively liable for the tax on the RRSP funds. Although the will included a clause making the spouse the 100% beneficiary of the estate, this did not override the RRSP beneficiary designation.

When you designate a beneficiary of a registered retirement account, this allows the bank or investment company to distribute the assets of the account directly to the beneficiary without going through probate. Essentially the registered account never becomes part of the estate.  The beneficiary will have no tax liability on the assets received, but for an RRSP or RRIF account, the deceased will still be required to report the value of these accounts at the date of death on their final T1 personal tax return. This could result in a significant tax liability for the estate.  As long as there are other assets in the estate, the payment of taxes should not become a problem. However, in other situations, the registered account may be the only significant asset of the deceased.  Therefore, it is important to understand who is responsible for the taxes on these registered accounts to ensure that other arrangements are made to ensure that the estate can cover any taxes payable on the registered accounts.

The case mentioned above serves as a good reminder to review whether insurance and registered account beneficiary designations match the current intent of the parties.

We trust you enjoyed reading this article “Designated beneficiaries of registered retirement accounts”. If you have any questions relating to this post or any other tax topics, please feel free to contact us at 403-509-3290 or

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