A quick task will pay off
Estate planning for tax-free savings accounts is pretty simple if you’re married or have a common-law partner.
The successor holder designation means your spouse can essentially take over your TFSA on your death on a tax-free basis, regardless of whether they have the contribution room. If you’ve built a considerable TFSA, your spouse or common-law partner would be able to keep it intact and maintain it into the future. You’re essentially ensuring your TFSA legacy.
”Where the successor holder designation can really be advantageous is if there’s a certain period of time after the date of death where the proceeds remain in the original TFSA and the account goes up in value,” Mr. George said. Spouses or common-law partners named as beneficiaries by a deceased TFSA holder can receive the proceeds in-kind or by cheque. Mr. George said they could also transfer the date of death value of the deceased person’s TFSA assets into their own TFSA without requiring TFSA contribution room. However, using the above example, the $1,500 increase in value after death would still be taxable to the beneficiary and would require TFSA contribution room to shelter it from tax going forward.
Spouse Beneficiary Death Partner Value Holder Date TFSA Wilmot George CI Global Asset Management
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