If you die with a TFSA, the account value at death is generally paid out tax-free. The tax treatment after death depends on whether you named a successor holder or a beneficiary.
Successor holder vs beneficiary
- Successor holder (spouse/common-law partner): account continues as TFSA.
- Beneficiary payout: amount at death is tax-free, but post-death growth may be taxable.
Common mistake
People often name the estate instead of a direct designation, which can delay payout and complicate tax treatment.
Planning checklist
- Confirm account designations are current.
- Align TFSA beneficiary instructions with your will.
- Keep records of date-of-death values.