Can You Add a Beneficiary to a Investment Account
Each type of investment account has rules for naming beneficiaries (or other designations). To assist you sympathise your choices, allow's pause it downwards by account type. Note for Quebec residents: Yous cannot proper name a beneficiary, successor holder or annuitant on a registered account. The proceeds of your plan volition be role of your estate. If you lot wish to designate a person to receive them, yous must exercise so in a will under Quebec legislation.
RRSP Account Holders
You can proper noun anyone you wish as a beneficiary (or beneficiaries) of your Registered Retirement Savings Program (RRSP). However, to benefit from the deferral of taxes upon your decease, the named beneficiary of your RRSP must be:
- Your spouse or common-law partner;
- A financially dependent child or grandchild under 18 years of age; or
- A financially dependent mentally or physically infirm child or grandchild of any age
RRIF Account Holders
As with RRSPs, you can name anyone you wish as beneficiary (or beneficiaries) of your Registered Retirement Income Fund (RRIF). To benefit from the deferral of taxes, the qualifications are the same as with RRSPs above. Nevertheless, with RRIFs, you likewise accept the option of naming your spouse every bit a "successor annuitant" rather than beneficiary. (For RRSPs, y'all tin can't proper name a successor annuitant. Naming i or more beneficiaries is your only choice.)
What is a successor annuitant?
With RRIFs, yous can cull to name a "beneficiary" or "successor annuitant" to inherit your RRIF avails. A successor annuitant can but be a spouse or common-law partner and the designation enables them to take on ownership of your RRIF without the demand to transfer funds out of the business relationship.
Upon your expiry, your successor annuitant assumes ownership of your RRIF account, with no taxation consequences to your manor. Your spouse or mutual-law partner would just replace you as the holder of your RRIF, or they could transfer your RRIF investments into their own RRIF business relationship and go along to receive your RRIF payments. If the RRIF investments are rolled into the successor annuitant'due south RRSP instead of a RRIF, their RRSP contribution room would be unaffected.
What if I proper name a casher rather than a successor annuitant?
When a surviving spouse or common-law partner is named as a casher instead of a successor annuitant, the RRIF account is treated differently. It is closed after the avails are transferred to the beneficiary, though tax deferral options tin even so be available.
TFSA account holders
When you lot leave TFSA assets to your spouse or partner, you can cull to designate them as a "successor holder" instead of a casher.
What is a successor holder?
A "successor holder" is who you name to inherit your TFSA assets, and can simply be your spouse or common-law partner.
Upon your death, your successor holder assumes ownership of your TFSA account and isn't required to transfer funds out of the account. They would merely supersede you as the holder of your TFSA, and their own TFSA contribution room would be unaffected. Naming a successor holder also effectively ensures that income earned in your TFSA account after your death is not taxed.
If you have a spouse or common-police force partner, you might cull to name him or her equally a successor holder, rather than as a casher. In this mode, income earned in your TFSA afterward death is not taxed.
What if I name a beneficiary rather than a successor holder?
If someone other than a spouse is named to inherit the assets in your TFSA, this person is considered your "beneficiary" and is entitled to receive the assets up to the date of your decease taxation-gratuitous. Income earned in your TFSA after decease is taxable. After the avails are transferred, your TFSA account is airtight.
If your spouse is the beneficiary of your TFSA, he or she tin brand an "exempt contribution" to their own TFSA, provided sure requirements are met. In the absence of naming a successor holder, income earned in a TFSA after expiry is taxable.
Some Key Information
- You lot cannot proper name a casher or successor holder/annuitant on not-registered accounts.
- You can have more than i beneficiary, and this data tin can exist updated on your account at any time.
- A successor annuitant (RRIF) or successor holder (TFSA) tin can only be your spouse or common-law partner.
- British Columbia residents have the option to proper name irrevocable beneficiaries. Changes can just be made with the beneficiary's consent.
Registered Business relationship Cheat Sheet
| If y'all have a: | You lot tin can proper name: |
| RRSP | One or more beneficiaries |
| RRIF | 1 successor annuitant or ane or more than beneficiaries |
| TFSA | Ane successor holder or one or more beneficiaries |
| RESP | I beneficiary for an individual RESP Multiple beneficiaries for a family RESP Note: Unlike other registered accounts, an RESP's funds are not necessarily distributed when y'all laissez passer abroad. If at that place is a joint or successor subscriber to the RESP, the RESP tin remain open until amounts are paid to the business relationship's beneficiary when he or she attends a qualified post-secondary education programme. If there is no successor subscriber, sometimes the RESP needs to exist closed and the assets distributed. For more information, read Understanding RESPs and RESPs: FAQs. |
Locked-in Plans: There may be restrictions on designating a beneficiary for a Locked- in Retirement Account (LIRA), Life Income Fund (LIF) and Locked-in Retirement Income Fund (LRIF) accounts. Most jurisdictions legislate that such funds be provided to your spouse/common-law partner, should yous have one. Check with a revenue enhancement counselor or estate planner in your province of residence near these types of plans.
Set up to get started? Access our View & Designate Beneficiaries page or access our forms directly.
The information provided in this commodity is for general purposes only and does not establish personal financial or taxation advice. Please consult with your own professional person advisor to discuss your specific financial and revenue enhancement needs.
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Source: https://www6.royalbank.com/en/di/hubs/investing-academy/chapter/naming-a-beneficiary/jv7atetx/jv7ateum
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