What Happens to Your TFSA and RRSP When You Die?
Jan 21, 2026
Most Canadians spend years building their RRSP and TFSA… but many have no idea what happens to these accounts when they die.
And this matters more than people realize.
Because if your accounts aren’t set up properly, the results can look like this:
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Your money is delayed in getting to your family
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Your estate pays unnecessary taxes
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Your beneficiaries inherit a confusing mess (at the worst possible time)
The good news? A few simple decisions today can protect thousands (or tens of thousands) of dollars later.
Let’s break down what happens to your TFSA and RRSP when you die — in plain English.
Important note: The information below is general education for Canadians and is not personalized tax or legal advice. Your exact situation may vary based on province and family structure.
What Happens to Your TFSA When You Die?
A TFSA is the simpler of the two because it is not taxable when you die.
That’s the main point to remember:
Your TFSA does not create an income tax bill on your final tax return.
But the details still matter because how the TFSA is set up can affect how smoothly it transfers.
There are two main options:
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TFSA Successor Holder (spouse or common-law partner)
If you have a spouse or common-law partner, you may be able to name them as the successor holder.
This is typically the cleanest option because the TFSA essentially becomes theirs and continues as a TFSA.
No tax.
No disruption.
No delays.
If you are married or in a common-law relationship, this is often the ideal setup. Naming a successor holder only applies to a spouse or common-law partner. You cannot name a child or other relative.
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TFSA Beneficiary (spouse, children, or anyone else)
If you name a beneficiary (for example, an adult child), the TFSA value transfers to them.
The transfer itself is not taxed.
However, your TFSA contribution room does not magically transfer to them the way people sometimes assume.
The key takeaway:
Your TFSA is generally tax-free when you die — but naming the right person the right way can make the process smoother.
What Happens to Your RRSP When You Die?
This is where people get blindsided.
RRSPs are pre-tax money.
You received a deduction when you contributed, which means the government will collect tax when the money comes out.
If you die with an RRSP, the question becomes:
Who receives it — and does the tax get triggered now?
There are two broad outcomes:
Best-Case RRSP Scenario: It Rolls to Your Spouse (Tax Deferred)
If you have a spouse/common-law partner and they are named properly as beneficiary, your RRSP can usually transfer to them on a tax-deferred basis.
That means:
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no immediate tax bill on your final return
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the money keeps growing inside registered accounts
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your spouse pays tax later when they withdraw it (or at their death)
This is one of the biggest tax advantages in estate planning for couples.
Worst-Case RRSP Scenario: No Spouse Rollover → Fully Taxable
If you do not have a spouse (or they are not named correctly), your RRSP is generally included as income on your final tax return.
That can be brutal.
Because it can push your final income into the highest tax bracket — meaning a large percentage of your RRSP may go to CRA.
Many Canadians don’t realize this until it’s too late:
A large RRSP with no spouse to roll it to can result in close to half of the account going to taxes.
And that’s before your beneficiaries receive anything.
Why Beneficiary Designations Matter (More Than Your Will)
This is one of the most important takeaways:
Beneficiary designations on registered accounts often override what your will says.
So even if your will is perfect, your RRSP and TFSA could still transfer differently than you intended if the beneficiaries aren’t updated.
This is why I recommend every woman does this quick “adulting check” at least once per year:
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check your RRSP beneficiaries
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check your TFSA beneficiaries
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check if your spouse is listed as beneficiary or successor holder (for TFSA)
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make sure it matches your current life situation
Divorce, remarriage, and changing family structures can make this messy fast.
RRSP Meltdown Planning: A Smart Strategy (Especially If You Don’t Have a Spouse)
If you don’t have a spouse to roll your RRSP to, your RRSP can become a tax time bomb if left too large for too long.
That’s where something called RRSP meltdown planning can come in.
This doesn’t mean “withdraw everything and pay a ton of tax.”
It means being intentional about drawing down your RRSP over time, based on your overall plan.
Some smart reasons to consider a gradual RRSP meltdown:
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you want to avoid a massive tax bill in your final year
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you want to keep your income in lower tax brackets over time
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you want more flexibility and after-tax wealth in retirement
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you’re planning as a single person and want to protect your estate
A well-designed drawdown strategy can reduce how much your estate loses to taxes.
The Bottom Line
TFSA: generally transfers tax-free, but setup matters.
RRSP: can be tax-deferred to a spouse, but fully taxable without that rollover.
Beneficiary designations matter more than most people realize.
If you don’t have a spouse, RRSP meltdown planning may be worth exploring.
This is one of those “set it up properly now” money moves that can protect your family and your legacy later.
Want help making sure yours is set up properly?
If you’d like a second set of eyes on your portfolio, accounts, and long-term plan, you can apply to work with me here:
(And yes, we’ll talk through which accounts you should prioritize and how to avoid unnecessary tax down the road.)
