What you need to know about beneficiary and successor designations for your TFSAs, RRSPs, RRIFs and more.
Mindi Banach, Tax and Estate Planner at TD Wealth, helps to clarify the difference between a successor and a beneficiary — and how those differences can impact how your estate transfers registered accounts.
RETIREMENT
BY Susan Prince
July 2025
Whether you are opening a new investment account, or reviewing your estate plan, it’s crucial to understand how registered investment accounts are handled after your death. These accounts include the Tax-Free Savings Accounts (TFSAs), Registered Retirement Savings Plans (RRSPs), Registered Retirement Income Funds (RRIFs), Registered Education Savings Plans (RESPs) and First Home Savings Accounts (FHSAs).
RRSP: Only beneficiaries allowed
Unlike a TFSA, RRSPs only allow for beneficiaries. If a spouse or financially dependent disabled child or grandchild is named as beneficiary, the RRSP can be transferred on a tax-deferred basis. However, "if you name anyone else, there will likely be a tax implication for the estate," says Banach.
Disclaimer
The person who establishes the RESP is known as the subscriber. Until the RESP funds are distributed to the student (the beneficiary), the funds belong to the subscriber (typically the parent). If the subscriber dies before the RESP can be used, failing to name a successor subscriber could entangle the funds in the estate distribution process and result in delays.
RESP: Secure student funding by naming a successor
TFSA: Successor holder vs. beneficiary
The information contained herein has been provided by TD Wealth and is for information purposes only. The information has been drawn from sources believed to be reliable. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual's objectives and risk tolerance.
TD Wealth represents the products and services offered by TD Waterhouse Canada Inc., TD Waterhouse Private Investment Counsel Inc., TD Wealth Private Banking (offered by The Toronto-Dominion Bank) and TD Wealth Private Trust (offered by The Canada Trust Company).
TD Wealth Private Wealth Management represents the products and services available through TD Wealth Private Investment Advice (a division of TD Waterhouse Canada Inc.), TD Wealth Private Investment Counsel (offered by TD Waterhouse Private Investment Counsel Inc.), TD Wealth Private Banking (offered by The Toronto-Dominion Bank) and TD Wealth Private Trust (offered by The Canada Trust Company).
®The TD logo and other TD trademarks are the property of The Toronto-Dominion Bank or its subsidiaries.
"Whether you're designating a successor or a beneficiary, the primary benefit is that they both can allow your registered accounts to bypass probate," says Mindi Banach, Tax and Estate Planner at TD Wealth, "That means you don't have to go through the probate process."
We spoke with Banach who explained what the differences are between a beneficiary and a successor. Broadly speaking, a beneficiary typically receives the funds from the account, which then gets closed. A successor typically receives the account itself, along with its benefits. Here's a look at how these distinctions affect the transfer of each account:
With a TFSA, you can name either a successor holder or a beneficiary. But typically naming a spouse or common-law as a successor holder for your TFSA is more tax-efficient than naming them a beneficiary:
A successor holder must be your spouse or common-law partner. The TFSA can transfer to them automatically and tax-free without affecting their own contribution room.
A beneficiary can be anyone you choose. As beneficiary, they'll receive your TFSA balance tax-free, but there can be different tax consequences depending on whether they have available TFSA contribution room. If they have room, any income earned on the balance will be tax-free. If the beneficiary does not have room or does not have a TFSA, any income may be taxable.
Since the holder of a RRIF is an 'annuitant,' if you name your spouse/partner as your successor, they become the ‘successor annuitant.' A RRIF allows for either a successor annuitant or a beneficiary:
A spouse or common-law partner who is named as the successor annuitant of a RRIF inherits it. Neither the estate nor the successor annuitant pays taxes on the transfer, however, just as with a RRIF, any withdrawals will be regarded as income and taxed.
When a spouse, common-law partner or third party is named beneficiary, they receive the funds tax-free. Having said that, the estate may owe taxes on the RRIF’s fair market value.
RRIF: Successor annuitant vs. beneficiary
If an FHSA holder dies while the account is still active, only the spouse or common-law partner can be designated a survivor and therefore, the successor holder of an FHSA.
As long as the successor holder is a qualifying individual (i.e. someone who hasn't owned a home in the previous four years and is under the age of 71), the FHSA can be transferred tax-free.
FHSA: Successor holders only
Life changes such as marriage, divorce, new children or the death of a spouse can affect your designations. Note: Separation or divorce doesn’t automatically remove an ex-spouse as a beneficiary. In some provinces, Wills may no longer apply to ex-spouses after divorce, but registered account designations remain unless changed.
Banach says designating beneficiaries or successors helps protect your assets and may avoid costs and delays. To ensure your money goes to the right people, you should consult with your financial institution, your lawyer, accountant or advisor for tax planning.
Keep designations up to date
The information contained herein has been provided by TD Wealth and is for information purposes only. The information has been drawn from sources believed to be reliable. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual's objectives and risk tolerance.
TD Wealth represents the products and services offered by TD Waterhouse Canada Inc., TD Waterhouse Private Investment Counsel Inc., TD Wealth Private Banking (offered by The Toronto-Dominion Bank) and TD Wealth Private Trust (offered by The Canada Trust Company).
TD Wealth Private Wealth Management represents the products and services available through TD Wealth Private Investment Advice (a division of TD Waterhouse Canada Inc.), TD Wealth Private Investment Counsel (offered by TD Waterhouse Private Investment Counsel Inc.), TD Wealth Private Banking (offered by The Toronto-Dominion Bank) and TD Wealth Private Trust (offered by The Canada Trust Company).
®The TD logo and other TD trademarks are the property of The Toronto-Dominion Bank or its subsidiaries.
Disclaimer
TFSA: Successor holder vs. beneficiary
"Whether you're designating a successor or a beneficiary, the primary benefit is that they both can allow your registered accounts to bypass probate," says Mindi Banach, Tax and Estate Planner at TD Wealth, "That means you don't have to go through the probate process."
We spoke with Banach who explained what the differences are between a beneficiary and a successor. Broadly speaking, a beneficiary typically receives the funds from the account, which then gets closed. A successor typically receives the account itself, along with its benefits. Here's a look at how these distinctions affect the transfer of each account:
RRSP: Only beneficiaries allowed
Unlike a TFSA, RRSPs only allow for beneficiaries. If a spouse or financially dependent disabled child or grandchild is named as beneficiary, the RRSP can be transferred on a tax-deferred basis. However, "if you name anyone else, there will likely be a tax implication for the estate," says Banach.
A successor holder must be your spouse or common-law partner. The TFSA can transfer to them automatically and tax-free without affecting their own contribution room.
A beneficiary can be anyone you choose. As beneficiary, they'll receive your TFSA balance tax-free, but there can be different tax consequences depending on whether they have available TFSA contribution room. If they have room, any income earned on the balance will be tax-free. If the beneficiary does not have room or does not have a TFSA, any income may be taxable.
RRSP: Only beneficiaries allowed
Unlike a TFSA, RRSPs only allow for beneficiaries. If a spouse or financially dependent disabled child or grandchild is named as beneficiary, the RRSP can be transferred on a tax-deferred basis. However, "if you name anyone else, there will likely be a tax implication for the estate," says Banach.
RRIF: Successor annuitant vs. beneficiary
Since the holder of a RRIF is an 'annuitant,' if you name your spouse/partner as your successor, they become the ‘successor annuitant.' A RRIF allows for either a successor annuitant or a beneficiary:
FHSA: Successor holders only
If an FHSA holder dies while the account is still active, only the spouse or common-law partner can be designated a survivor and therefore, the successor holder of an FHSA.
As long as the successor holder is a qualifying individual (i.e. someone who hasn't owned a home in the previous four years and is under the age of 71), the FHSA can be transferred tax-free.