Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Thursday, June 28, 2018

Can You Inherit a TFSA Tax-Free? [Canada]

CanadaA TFSA is a Tax Free Savings Account in which investment income, capital gains or other earnings are completely tax-free for a taxpayer as well as withdrawals from the account. Upon the death of the taxpayer there are other consideration.

If the taxpayer was your spouse and named you their "successor holder" the account transfers seamlessly and becomes your account without going through probate. If your spouse on the other hand named you as their beneficiary of the account, the value of the account as of their date of death can be paid to you or to your TFSA tax-free. If the value of the account rose in value after their death, you must include it in your income in the year of receipt; but as long as you claim it before December 31 of the year your spouse died you are able to file it as an "exempt amount." The account will also not be a part of their estate and there will be no need for probate fees.

If the estate is simply named as the beneficiary of the TFSA, probate taxes must be paid to the province of the deceased residence to validate their will.

See Jason Heath, Can You Inherit a TFSA Tax-Free?, Money Sense, June 27, 2018.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.

https://lawprofessors.typepad.com/trusts_estates_prof/2018/06/can-you-inherit-a-tfsa-tax-free-canada.html

Current Affairs, Estate Administration, Estate Planning - Generally, Non-Probate Assets, Travel | Permalink

Comments

Post a comment