However, there is one exemption to this rule—the exempt contribution. Say, you name your spouse or common-law partner as your TFSA account beneficiary. They may be able to use the assets in your TFSA to contribute an amount not limited by their available contribution room. In this case, they would “roll over” the assets in your TFSA to their TFSA.

There is a short window after a TFSA holder’s death to make an exempt contribution. If you want to ensure your surviving spouse or common-law partner can keep your TFSA intact, it is much simpler to name a successor holder. Still, this provision allows a spouse or common-law partner to use your TFSA assets to make a TFSA contribution above their available contribution room. 

Registered Retirement Income Funds

On your RRIF, you can list either a beneficiary or a successor holder. For naming a beneficiary, the beneficiary can be anyone you like or can even be your estate, just as with a TFSA. But with naming a successor holder, the successor annuitant designation for RRIFs is limited to your spouse or common-law partner, also similar to a TFSA. 

Note that a beneficiary designation on your RRSP does not “carry over” when you convert your RRSP to an RRIF. Instead, you must make a new designation, whether a beneficiary or a successor annuitant. The successor annuitant designation can only be elected for RRIFs, not RRSPs.

Differences between a beneficiary and a successor annuitant for an RRIF

Naming a successor annuitant allows your spouse or common-law partner to take over your RRIF when you die, without the need to transfer out the funds. As with a successor holder for a TFSA, the successor annuitant for an RRIF would effectively assume ownership of the RRIF account with no tax consequences to the estate.

The successor annuitant then has the following options: 

• continue receiving the RRIF payments, 
• transfer the assets into their own RRIF,  
• or if they prefer to delay the income, they may transfer the assets into their RRSP (if 71 or younger). 

If they decide to move the RRIF assets to their RRSP, their RRSP contribution room would not be impacted. (That is, they don’t need to worry about whether they have enough RRSP contribution room.)

If you name your spouse or common-law partner as a beneficiary of your RRIF (to be clear: not a successor annuitant), the assets in your RRIF will be transferred to your spouse, and your RRIF account would then be closed. However, your estate will not have to include the RRIF’s value in your final tax return or pay income tax. This is also true if you name a financially dependent minor child or grandchild as your beneficiary. In that case, the beneficiaries will receive the assets of the RRIF up to the date of death. 

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