Estate Planning

Designating beneficiaries for RRSPs and RRIFs

Designating beneficiaries for RRSPs and RRIFs

One area of tax planning that does not receive enough attention is the designation of beneficiaries when it comes to Registered Retirement Savings Plans (RRSPs) and Registered Retirement Income Funds (RRIFs). When you open up an RRSP or RRIF, you are opening up a special contract under the Income Tax Act, which allows you to designate one or more beneficiaries.

Far too often, this is done too casually and without enough thought. More importantly, as your circumstances change, like marriage, divorce or children, you should consider reviewing your beneficiaries to make sure you have the right people designated.

Taxation of the RRSPs/RRIFs at death

The first place to start in understanding whom to list as a beneficiary is to understand the taxation of these contracts at death.

The general rule for an RRSP or RRIF is that the value of the RRSP or RRIF at the date of death is included in the income of the deceased for the tax return for the year of death. There are three exceptions to this rule where the tax can be deferred if the beneficiary of the RRSP, RRIF, or estate is:

  1. the spouse (includes common-law partner)
  2. financially dependent child or grandchild under 18 years of age, or
  3. financially dependent mentally or physically infirm child or grandchild of any age.

Who should be the beneficiary?

For obvious reasons, there are tax benefits to naming your spouse, dependent children/grandchildren under the age of 18 or dependent adult children who are mentally or physically inform.

That being said, anyone can be named the beneficiary. Most often, it is the spouse, children or the estate that are named but it does not have to be that way.

RRIFs and beneficiary designations

When you are converting your RRSP to a RRIF, you are setting up a new contract and you must designate a beneficiary at that time. If you assume the RRSP designation would continue to apply, that would not be the right assumption.

Successor annuitant for RRIFs

For RRIFs, when naming your spouse as beneficiary, you are given the option of having your spouse receive the RRIF as a lump sum or choosing your spouse as the “successor annuitant” to the RRIF.

If a successor annuitant election is not made, the deceased’s RRIF will be collapsed causing a disposition of the investments in the RRIF followed by a rollover to an RRSP or RRIF of the surviving spouse. There may be several disadvantages to this. It may not be a good time to sell the investments in the RRIF or there may also be selling costs to consider. Also, there is the issue of preparing all of the paperwork at a difficult and stressful time for the surviving spouse.

The successor annuitant designation is effortless. The spouse simply takes over from the deceased and continues to receive RRIF payments in his/her place. The investments in the RRIF are not affected by this, as there is no need to execute a new contract.

Probate fees

One key benefit is if a beneficiary is designated in the RRIF contract, the RRIF value will not be included in the calculation of probate fees on death. While probate fees are not as significant as income taxes, such a simple step will ensure that there is more available for your beneficiaries.

Giving money to charities

The most significant changes affecting estate planning relates to the ability to receive a credit of up to 100% of taxable income for donations made through a Will. This means that the tax on RRSPs and RRIFs arising from the death of the annuitant can be avoided completely if a donation equal to the value of the RRSP or RRIF is made in his/her Will.

This is a great opportunity for individuals to donate money to their favorite charity that would have otherwise gone to the government in the form of taxes.

RRSPs, RRIFs and estate planning

As you can see, the designation of the beneficiary in your RRSPs and RRIFs is one of the most important factors in how much taxes you are going to have to pay at the time of death. Yet, it is astonishing how many people make this decision without regard to the overall estate plan or simply forget to designate a beneficiary.

When setting up a RRSP or a RRIF, it is crucial that you make good beneficiary choices. It is equally important that you review the beneficiaries in the RRSPs, RRIFs and through your will from time to time. If you haven’t done this in a while, review it sooner than later.


  1. Dour

    Just recently my father passed away and thru my parents will my mother received the cash in the bank and a small RRIF of my dads which was transferred into mothers RRIF. There is a size able amount of cash and about $45000.00 in my mothers RRIF and no property. . There is a will in place naming her children the beneficiaries of the estate. In the event of her passing would the will have to go to probate because of the RRIF . If one of us was named a beneficiary of the RRIF what would the tax implication be on the beneficiary and would the will have to go to probate if there was only cash left.

  2. Deanne

    I have three brothers and one sister. My sister is Power of Attorney for both parents. My sister took control over parents’ finances even though mother is still mentally competent. My sister instructed my parents to go to the Bank to have their annuity from an insurance company transferred into a RRIF. My sister had instructed parents’ by bullying and coercion to sign beneficiary designation for both their RRIFs and TFSAs designating my sister as the beneficiary. My brother had my mother revoke her Power of Attorney and he is her Attorney re: Enduring Power of Attorney. Unfortunately, my father has dementia. My sister had my parents go to a lawyer June 28, 2010 to sign Power of Attorney documents naming my sister as Attorney. 13 days later my sister took my father to a doctor who deemed father incompetent and January 4, 2011 second doctor deemed him incompetent which then activated Power of Attorney. September 4, 2010 sister instructed parents to go to the bank to sign designation beneficiary documents and to name her as beneficiary on all of their RRIFs and TFSAs. We are in the process of getting a court application to have sister removed as the Attorney for father. It has cost a lot of $$$$ because the lawyer who did the Power of Attorney documents has been protecting my sister so we had to hire our own lawyer to fight against her lawyer. If my father were to pass away my surviving mother will not receive any RRIF & TFSA payment proceeds and my sister will receive $100,000 tax free with the estate having to pay all the estate taxes. I am hoping the Judge will immediately realize my sister abused her Power of Attorney duties and will rectify the situation. Is there a pension law that stipulates that if a surviving spouse is still alive the beneficiary cannot be a non-dependent adult child. My siblings and I are wondering how the banks allowed what had transpired. Parents Last Will & Testament was done 30 years ago & is divided equally among siblings but we are worried my sister had parents change their Wills recently naming her as the sole beneficiary of their Wills. I would appreciate your reply to the above fiasco. Thank you, Deanne

  3. Andy

    Concerning naming a common-law partner as successor annuitant for a rif.
    My partner names me as successor annuitant to his rif many years ago. We separated, but remained best friends and changed nothing. Our bank accounts remained joint with right to survivorship. He left me everything in his will, I was his executor, power of attorney, etc.

    Can a separated couple still be a successor annuitant, or only a beneficiary. Hopefully I still can be the successor annuitant.


  4. Lucile

    If a husband and a wife have RRSP’s with a bank and each is named as the other’s beneficiary, will the bank roll the funds into the surving spouse’s name without asking for a copy of a Will?

  5. Janice

    Legally separated from my husband. I was notified of his death. I was notified that he had left one of his rrsp’s as me as the beneficiary and the excuter of the will thinks this was a oversite. Since in our separation agreement I was paid a settlement. The only part of the will I was mentioned in was that I was to get a his pension.

    Does one have anything to do with the other? I thought if you were named as a beneficiary that was what you were regardless of you being separated or devorced or whatever?

  6. Michelle

    My mother recently passed away and did not name my father as a beneficiary on her bank investments. Does he still qualify for survivorship or first to die rule?

  7. Franklin

    My father designated me (son) as the beneficiary of his RRSP. As I am not considered a qualified beneficiary (spouse, dependent child), am I able to transfer the proceeds directly into my own RRSP? If so, do I receive the full value of the plan or is taxed?

  8. Dawn

    My mother passed away recently (my father a year ago). she has RIFF’s and TFSA accounts and listed my sister (40 year old non-dependent adult) as beneficiary. the bank she deals with said that the investment funds cannot be released until probate is finalized. I am confused, if there was a beneficiary listed, why would they have to wait for probate?

  9. renata

    Want to designate several organizations and charities as beneficiaries to my RRIF. No persons.
    My Bank who are holding my RRIF cannot come forward with any form other than naming persons as beneficiaries. RRIF is under BC and Federal law.

    • Don

      The RBC Beneficiary Designation form allows you to designate either a successor annuitant OR one or more contingent beneficiaries. I am in Alberta. Not sure if this is provincially regulated.

  10. Peter

    You mention Probate fees. When designating a beneficiary, you say the RIF bypasses probate. You do not mention what happens in the case of having a successor annuitant instead. What happens then?

  11. Nancy Symons

    I am a Canadian living in the USA. I have both a RRSP and LIRA which are established in Ontario, Canada. My spouse is a non-Canadian citizen and my beneficiary for both. In the event of my spouse’s death can I designate my Canadian sister as the beneficiary if she has her own RRSP?

  12. Myron Kuziak

    Is it possible to designate both a spouse and a different person (a non-dependent child) or to an Inter-vivos Trust (named trustees) as direct beneficiaries of an RRIF annuitant on death so as to roll-over part of the RRIF to the spouse AND to pay the reaming proceeds of the RRIF to the child or the Inter-Vivos Trust? In the latter event, how does the tax on the collapsed RRIF remainder get handled?

    Can a 2nd RRIF be created for an existing RRIF annuitant to hold a designated amount of initial investment funds for the purpose of paying or transferring (rolling-over) to a spouse on the death of the annuitant where the amount to be placed in the 2nd RRIF is to be transferred from the annuitant’s first or original RRIF?

    Where does one find the portions of the actual statute or regulation that governs that process?

  13. Kathy

    I am a beneficiary under a will that contains a sizable RRIF and as I understand it the taxes will be paid by the estate. However I am told I must add this to my income tax return? Did I misunderstand what I heard?

  14. Neil

    Hi, I recently moved my RRSP, TFSA, RIF from Sunlife to Wealthsimple. I completed forms to make my wife beneficiary when Sunlife was managing my money but not for Wealthsimple. Do I need to name my wife beneficiary with Wealthsimple or will my Will suffice? Thank you very much!

  15. Timmy

    If the last surviving spouse names financially independent adult children as successors, is the RIF subject to probate fees and to the children have to pay tax on the money they receive? What about funds in a non-registered, cash account?

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