What happens to my RRSP when I die?

If your spouse is the beneficiary, the RRSP can transfer tax-free to their RRSP or RRIF. If anyone else inherits (children, estate), the full RRSP value is taxable on your final tax return. Proper beneficiary designation is crucial for tax minimization.

Can I leave my RRSP to my children?

Yes, but it's fully taxable. The RRSP value is included in your income on your final return (potentially 50%+ tax), and children receive what's left after tax. Exception: financially dependent children or grandchildren under 18 or with disabilities get special treatment.

Is it better to name a beneficiary or leave RRSP to estate?

Generally, naming your spouse as beneficiary is best for tax-free rollover. Naming the estate subjects the RRSP to probate fees and potential creditor claims. However, if your will needs to equalize inheritances, estate may be necessary. Consult an estate planner.

RRSP Beneficiary Rules: What Happens to Your RRSP When You Die (2026)

RRSP on Death: The Basics

Scenario	Tax Treatment
Spouse/common-law partner beneficiary	Tax-free rollover to their RRSP/RRIF
Financially dependent child under 18	Can purchase annuity (special rules)
Financially dependent child (any age) with disability	Tax-free rollover to RDSP or their RRSP
Anyone else (adult children, estate)	Fully taxable on your final return

Tax Impact by Beneficiary Type

Spouse or Common-Law Partner

Feature	Details
Tax on death	$0 (deferred)
What happens	RRSP/RRIF transfers to spouse’s account
Requirements	Must be designated beneficiary or successor annuitant
Tax when withdrawn	Spouse pays tax on future withdrawals

Non-Spouse Beneficiaries (Adult Children, etc.)

Feature	Details
Tax on death	RRSP value added to your final return
Tax rate	Your marginal rate (potentially 50%+)
Example: $500,000 RRSP	~$200,000-250,000 tax
Children receive	After-tax amount

Example: $500,000 RRSP

Beneficiary	Tax Owed	Amount to Beneficiary
Spouse	$0 now	$500,000 (rollover)
Adult child (via estate)	~$225,000	~$275,000
Named adult child	~$225,000	~$275,000

Beneficiary Designation Options

How to Designate

Method	Pros	Cons
On RRSP account form	Bypasses probate, quick transfer	May conflict with will
In your will	Can coordinate with estate plan	Subject to probate
Both	Belt and suspenders	May create conflicts

Successor Annuitant vs Beneficiary (RRIF)

Designation	What It Means
Successor annuitant (spouse only)	RRIF continues in spouse’s name
Beneficiary	RRIF collapses, amount transferred
Which to choose	Successor annuitant is simpler for spouse

Special Cases: Financially Dependent Children

Under Age 18 (Not Disabled)

Option	Details
Purchase term annuity	Payments to age 18
Tax treatment	Taxed to child as received
Benefit	Lower tax rate, spread over years

Any Age with Disability

Option	Details
Rollover to child’s RRSP	If has contribution room
Rollover to child’s RRIF	Immediate rollover
Rollover to RDSP	Up to $200,000 lifetime limit
Tax treatment	Tax-deferred

Common Mistakes to Avoid

Mistake 1: No Beneficiary Designated

What Happens	Impact
RRSP goes to estate	Subject to probate fees
Probate delay	Months to access funds
Potential creditor claims	Estate is vulnerable

Mistake 2: Outdated Beneficiary

Situation	Risk
Divorced but ex still named	Ex-spouse may inherit
Deceased beneficiary named	Goes to estate
Child named (now adult)	May conflict with intent

Review beneficiaries after major life events.

Mistake 3: Assuming Will Overrides

Reality	Details
Beneficiary designation trumps will	Usually
Except in Quebec	Civil Code rules differ
Recommendation	Keep both aligned

Estate Planning Strategies

Balance Tax and Estate Goals

Goal	Strategy
Minimize tax	Name spouse as beneficiary
Equalize among children	May need estate to pay tax
Protect assets	Named beneficiary avoids creditors
Provide for disabled child	RDSP rollover

Strategy: Life Insurance to Cover Tax

Concept	Details
Problem	RRSP to children = big tax bill
Solution	Life insurance pays the tax
How	$200,000 policy covers $200,000 tax
Benefit	Children inherit full after-tax amount

Strategy: Planned Withdrawals Before Death

Concept	Details
Problem	Large RRSP at death = high tax
Solution	Draw down RRSP in lower-tax years
When	In your 60s-70s before age 71
Benefit	May pay 30% tax instead of 50%

RRSP vs RRIF on Death

Feature	RRSP	RRIF
Successor annuitant option	No	Yes (spouse only)
Beneficiary option	Yes	Yes
Tax treatment	Same rules
Best practice	Convert to RRIF, name successor annuitant

Probate Considerations

Named Beneficiary

Factor	Impact
Probate	Bypassed
Timing	Funds transfer quickly
Privacy	Not public
Creditors	Generally protected

Estate as Beneficiary

Factor	Impact
Probate	Required
Fees	1-1.5%+ of estate value (varies by province)
Timing	Delayed (months to years)
Privacy	Public record
Creditors	Accessible

Probate Fees by Province

Province	Approximate Fee on $500K RRSP
Ontario	~$7,500
BC	~$7,000
Alberta	$525 (capped)
Quebec	$0 (notarial will)

Quebec Differences

Feature	Rest of Canada	Quebec
Beneficiary designation	On account form	In will (for trusts)
Spouse definition	Common-law included	Some differences
Legal rules	Common law	Civil Code

Quebec residents: consult a notary or estate lawyer.