Two decisions taking about ten minutes each — a will and the right beneficiary designations — determine whether decades of careful saving reach the people you intended.
Dying intestate (without a will) means provincial formulas decide who inherits, and in some provinces a common-law partner receives nothing. On a TFSA, naming your spouse as successor holder rather than beneficiary transfers the account intact and preserves its tax-free status; a beneficiary just receives the cash. At death, an RRSP or RRIF with no eligible rollover is fully included as income on the final return — often the largest single tax bill of a lifetime.
If you die intestate, your province's formula decides who receives what. Those formulas are rigid, they vary considerably between provinces, and they frequently produce outcomes nobody would have chosen.
Common surprises:
Every other lesson here optimises percentages. This one determines whether your partner keeps the home. Provincial rules differ sharply, so check your own province — and then write the will.
A straightforward will from a Canadian lawyer typically costs a few hundred dollars, and reputable online will services cost less for simple estates. It is one of the very few places in personal finance where a small, one-time expense removes a genuinely catastrophic risk.
Registered accounts pass by designation, not by will. Whatever your account paperwork says overrides your will, which is why an out-of-date designation naming an ex-partner is such a common and painful problem. Check them after every marriage, separation, divorce or death in the family.
On a TFSA there are two different designations, and the difference is substantial:
| Successor holder | Beneficiary | |
|---|---|---|
| Who can be named | Spouse or common-law partner only | Anyone |
| What happens | The TFSA transfers intact and becomes theirs | The account is closed and the value is paid out |
| Tax-free status | Preserved entirely | Growth after the date of death is taxable |
| Effect on their room | None — it does not use any of their own room | They must have room to re-shelter it |
A spouse dies holding a $120,000 TFSA. The survivor has their own maxed-out TFSA.
Named as successor holder: the account transfers intact. The survivor now holds two TFSAs worth $120,000 more, entirely tax-free, using none of their own room. All future growth stays sheltered.
Named as beneficiary: the TFSA is closed and $120,000 is paid out. With no contribution room available, that money must go into a taxable account, where every future dollar of growth and income is taxed for the rest of their life.
Similar logic applies elsewhere. An RRSP or RRIF can name a spouse as beneficiary for a tax-deferred rollover into their own plan — the critical move described below. And in Quebec, beneficiary designations on registered plans generally must be made in a will or marriage contract rather than on the account form, so the rest of this section works differently there. If you are in Quebec, confirm with a notary.
One practical benefit beyond tax: designated assets bypass probate entirely. They pass directly to the named person, faster and without probate fees, which the next section prices.
This is the largest single tax event in most Canadians' lives, and it happens after they die.
At death you are deemed to have disposed of your assets at fair market value. For an RRSP or RRIF, that means the entire balance is included as income on your final tax return, in one year, unless it rolls over to an eligible recipient.
A widowed Ontario retiree dies holding a $600,000 RRIF, leaving everything to two adult children. Their other income in the year of death is $25,000.
Who can receive a tax-deferred rollover? The balance can transfer without triggering that inclusion to:
Anyone else — adult independent children, siblings, friends, charities — triggers the full inclusion. Note that this is a debt of the estate, not of the beneficiaries: if the RRIF passes directly to a named beneficiary while the tax bill lands on the estate, other heirs can end up paying tax on money they did not receive. That specific mismatch has caused a great many family disputes and is worth planning around explicitly.
Three approaches, all covered elsewhere in this course. Draw the RRSP down earlier during low-income years, paying tax at 20–30% instead of leaving it to be taxed at 53.53% — the “RRSP meltdown” of Lesson 8.3. Shift assets toward the TFSA, which passes to a successor holder with no tax at all. And for larger estates, hold a permanent life insurance policy sized to the expected bill, so heirs receive tax-free proceeds to pay it — one of the genuine uses for permanent insurance from Lesson 7.2.
Probate is the court process confirming a will's validity and the executor's authority. Provinces charge for it, and the amounts vary enormously.
| Province | Approximate cost on a $500,000 estate |
|---|---|
| Ontario (Estate Administration Tax) | ~$6,750 — roughly 1.5% above the first $50,000 |
| British Columbia | ~$6,900 |
| Alberta | Capped at $525 regardless of estate size |
| Quebec (notarial will) | No probate required |
Assets passing by beneficiary designation — registered accounts, life insurance — and assets held in joint tenancy with right of survivorship generally bypass probate and are not counted. That is a real advantage, but joint ownership as a probate-avoidance tactic carries genuine risks: it exposes the asset to the co-owner's creditors and divorce, can trigger an immediate deemed disposition, and has generated a great deal of litigation between siblings. Do not add an adult child to a property title to save probate fees without proper advice.
Finally, the documents that matter while you are alive. A power of attorney for property lets someone manage your finances if you become incapable; a power of attorney for personal care (named differently by province) covers medical and living decisions. Without them, family must apply to a court to be appointed — expensive, slow, and happening during a crisis.
These are arguably more likely to be needed than a will. A will handles a certainty that arrives once; a power of attorney handles the years of cognitive decline that many people experience first. They are usually prepared at the same time, by the same lawyer, in the same appointment — which makes leaving them out a strange thing to do.
Unless it rolls over to an eligible recipient, the entire balance is included as income on your final tax return in a single year — often pushing the estate into the top marginal bracket. A $600,000 RRIF in Ontario can generate roughly $287,000 of tax. A spouse or common-law partner can receive it as a tax-deferred rollover into their own plan, as can a financially dependent child or grandchild. Anyone else triggers the full inclusion.
A successor holder — who can only be a spouse or common-law partner — takes over the TFSA intact, keeping its tax-free status, with no effect on their own contribution room. A beneficiary simply receives the value; the account is closed, growth after the date of death becomes taxable, and they need their own contribution room to re-shelter the money. On a large TFSA the difference is permanent and can be worth many thousands of dollars.
Not everywhere. Provincial intestacy rules differ sharply, and in several provinces including Ontario a common-law partner has no automatic right to inherit when there is no will — they may have to bring a legal claim to receive anything. A married spouse generally does inherit, though usually not the entire estate when there are children. For an unmarried couple, writing a will is the single most important financial document either of you can sign.
Educational purposes only — not financial, investment or tax advice. RiskStock is not a registered dealer, adviser, or tax professional. Nothing in this course is a recommendation to buy or sell any security or product. Tax and benefit figures are for the 2026 tax year, were verified against official sources on 2026-07-27, and change annually — confirm your own numbers with the CRA and a qualified professional before acting.