Does my will control my RRSP or TFSA?

Usually not, if you named a beneficiary on the account. Those accounts pass directly to the named person outside the will. Only if you named your estate (or named no one) does the asset flow through your will.

Who pays the tax when I leave my RRSP to my child?

Typically the estate pays the income tax on the RRSP's value, while the named child receives the funds. That can unfairly burden your other beneficiaries, so plan the designation and the will together.

Can my spouse inherit my RRSP without triggering tax?

Generally yes. Naming a spouse or common-law partner allows a tax-deferred rollover, so tax is postponed until the survivor withdraws the funds or dies. Confirm the setup with your institution.

What happens if my named beneficiary has died?

If no valid beneficiary survives, the account usually falls back into your estate and is distributed under your will — often with probate fees attached. Review designations after any death in the family.

RRSP and TFSA Beneficiary Designations: What You Need to Know

Registered accounts — RRSPs, RRIFs, and TFSAs in Canada — are some of the most misunderstood assets in estate planning. They usually pass directly to the person you named as beneficiary on the account, completely outside your will. That can be efficient, or it can quietly wreck an otherwise careful plan. This article explains how these designations work and the tax traps to watch. It is general information, not legal or tax advice — confirm details with your financial institution and an advisor.

Do registered account designations override my will?

Yes. If you name a beneficiary on your RRSP, RRIF, or TFSA, that account generally passes directly to that person and does not flow through your will or your executor.

This means an outdated designation — naming an ex-spouse, or a beneficiary who has since died — can send the money to the wrong place no matter what your current will says. Designations must be reviewed alongside your will.

What is the difference between naming a person and naming my estate?

Naming a person means the asset bypasses your estate, which can avoid probate fees and get money to that person quickly. Naming your estate means the asset flows into your will and is distributed under it.

Each approach has trade-offs. Naming individuals is simple but rigid; naming your estate gives your executor flexibility but may expose the asset to probate fees and creditors. The right choice depends on your goals.

Who pays the tax on an RRSP or RRIF at death?

Here is the trap most people miss: with an RRSP or RRIF, the full value is generally added to the deceased's final income and taxed in the estate, even though the money may go to a named beneficiary directly.

So if you name one child as RRSP beneficiary and split everything else equally, that child receives the RRSP tax-free while your estate (and therefore your other beneficiaries) pays the tax bill. This can produce a deeply unequal result you did not intend.

When can an RRSP or RRIF roll over tax-free?

A tax-deferred rollover is generally available when the beneficiary is a spouse or common-law partner, a financially dependent child or grandchild, or a dependent child with a disability. In those cases tax can be deferred rather than triggered at death.

Naming a spouse as the RRSP/RRIF beneficiary (or successor annuitant for a RRIF) is a common way to defer tax until the survivor later withdraws the funds or dies.

How are TFSAs treated at death?

TFSAs are different: withdrawals are tax-free, so there is no income inclusion the way there is with an RRSP. But growth after the date of death can become taxable depending on how the account is set up.

A spouse can be named as successor holder, which lets them effectively take over the TFSA and keep its tax-free status. Naming a spouse as beneficiary (rather than successor holder) is less seamless, so the wording matters.

How does iFinallyWill help coordinate this?

iFinallyWill guides you through your will and reminds you that registered accounts and insurance pass by designation, so your overall plan stays consistent. Keeping your will current with lifetime updates is part of that picture.

The designations themselves are changed at your bank or investment provider, not in the will. After updating your will, log in to each financial institution and confirm the named beneficiaries match your intentions — and consider an advisor for the tax side.

Frequently asked questions

Does my will control my RRSP or TFSA?: Usually not, if you named a beneficiary on the account. Those accounts pass directly to the named person outside the will. Only if you named your estate (or named no one) does the asset flow through your will.
Who pays the tax when I leave my RRSP to my child?: Typically the estate pays the income tax on the RRSP's value, while the named child receives the funds. That can unfairly burden your other beneficiaries, so plan the designation and the will together.
Can my spouse inherit my RRSP without triggering tax?: Generally yes. Naming a spouse or common-law partner allows a tax-deferred rollover, so tax is postponed until the survivor withdraws the funds or dies. Confirm the setup with your institution.
What happens if my named beneficiary has died?: If no valid beneficiary survives, the account usually falls back into your estate and is distributed under your will — often with probate fees attached. Review designations after any death in the family.