# Death of spouse- RRSP tax issues?



## imaginenewmedia (Apr 4, 2012)

My wife recently passed away. We are both named as beneficiaries of each others plans. I am 62, and retired on a pension of about 40k a year. She was 63 with no income (other than CPP) and has about 120K in rrsp's and about 20k in TFSA. Headroom in my RRSP plan is maxed out. Any advice on how I would pay minimum amount of tax in this situation?
Thanks


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## Jaberwock (Aug 22, 2012)

imaginenewmedia said:


> My wife recently passed away. We are both named as beneficiaries of each others plans. I am 62, and retired on a pension of about 40k a year. She was 63 with no income (other than CPP) and has about 120K in rrsp's and about 20k in TFSA. Headroom in my RRSP plan is maxed out. Any advice on how I would pay minimum amount of tax in this situation?
> Thanks


The RRSPs and the TFSA can pass to you with no taxes. It does not matter whether you have contribution room in your RRSP or TFSA.

Ask the bank, or financial company that holds your RRSP and TFSA's to transfer them to your own RRSP and TFSA. As you are a named beneficiary of the plans, this can be done without going through probate.


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## AltaRed (Jun 8, 2009)

Agree with Jaberwock. The OP was a bit short on detail, but I would add that the Executor of the estate take a notarized copy of the Will and a copy of the funeral home Statement of Death to the financial institution(s) that hold the RRSP and the TFSA and they will arrange (via a Letter of Direction) for a rollover of the accounts to the beneficiary. No taxes involved. 

The OP did not ask, but I will add that while it is true these accounts do not go through probate, IF there is a an auto registration or joint ownership of the house involved, most provinces will require those to go through probate. The OP probably already knows he needs to let CPP know right away (if the funeral home has not also done so) to stop payments, and to seek, if applicable, the CPP death benefit.


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## imaginenewmedia (Apr 4, 2012)

Thanks for the prompt replies. We do have joint ownership of our home (fully paid for). There is no will, and there are no children. There are no other significant assets to speak of. I have set up a meeting with my lawyer next week, and am still awaiting death certificates etc. from the funeral home. As my wife was in the lowest tax bracket, is there any way to transfer part of the rrsp to her income for the year, and therefore pay lower taxes on that amount than I would say, when I withdraw it later?


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## AltaRed (Jun 8, 2009)

imaginenewmedia said:


> Thanks for the prompt replies. We do have joint ownership of our home (fully paid for). There is no will, and there are no children. There are no other significant assets to speak of. I have set up a meeting with my lawyer next week, and am still awaiting death certificates etc. from the funeral home. As my wife was in the lowest tax bracket, is there any way to transfer part of the rrsp to her income for the year, and therefore pay lower taxes on that amount than I would say, when I withdraw it later?


Too bad about no Will. That will complicate timely settlement since the province will now have to get involved as Administrator. I can almost guarantee that you cannot do anything with her estate until the province (Court) appoints an Administrator/Executor ...which they may well appoint you (especially if no other close relatives including siblings of your deceased wife). I don't think a portion of the RRSP can be collapsed or withdrawn into your deceased wife's estate. The directions are clear with a beneficiary' designation. All of the RRSP most likely needs to roll over to you intact.

You are right though. The first thing to do is to contact your lawyer and have him/her make application to the Court? for an appointment of Administrator/Executor.

The second thing YOU do is to get your own Will done. Do you want some stranger in some provincial bureaucracy making decisions on your Estate?


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## imaginenewmedia (Apr 4, 2012)

AltaRed said:


> The second thing YOU do is to get your own Will done. Do you want some stranger in some provincial bureaucracy making decisions on your Estate?


You got that right! I'll discuss that with my lawyer too. (I do plan on dying broke though!)


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## betsu63 (Mar 4, 2011)

unless things have changed in the last 8 years not having a will in Ontario with no children didn't really make it hard to settle the estate when my husband died. I had to get a letter at the lawyers that attested I was the legal spouse and there were no children. The RRSP went to me through the bank with no probate. The house went to me as well with no problem.His name was left on the deed.


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## imaginenewmedia (Apr 4, 2012)

betsu63 said:


> unless things have changed in the last 8 years not having a will in Ontario with no children didn't really make it hard to settle the estate when my husband died. I had to get a letter at the lawyers that attested I was the legal spouse and there were no children. The RRSP went to me through the bank with no probate. The house went to me as well with no problem.His name was left on the deed.


Thanks betsu63 I'll find out soon enough. Your situation sounds identical to mine. I'll post the results back here as soon as I can.


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## AltaRed (Jun 8, 2009)

betsu63 said:


> unless things have changed in the last 8 years not having a will in Ontario with no children didn't really make it hard to settle the estate when my husband died. I had to get a letter at the lawyers that attested I was the legal spouse and there were no children. The RRSP went to me through the bank with no probate. The house went to me as well with no problem.His name was left on the deed.


That title will have to be dealt with when the property is sold and AFAIK, only the Executor of you husband's estate can do that. I wouldn't leave a stale title in place for years or decades.


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## twa2w (Mar 5, 2016)

In most provinces, if the house is joint with right of survivorship, it is relatively simple to have the deceased parties name removed from title. Only a copy of death cert is usually needed. Sometimes an affidavit and or a letter of direction but a simple call or visit to the local land titles office can clarify that.( or the lawyer xan handle this)
With the rsp with a beneficiary noted, it will pass to the assigned beneficiary. This could be as simple as a visit to the bank with a copy of the death cert, but each bank is different and they may want a bond of indemnity signed and or an affidavit. Again a simple visit and phone call hopefully.
If there was no Bene named on the rsp, the spouse has the option of doing a rollover into their rsp or having it cashed out and taxed in the deceased name. Not sure if you could split this esp. with a beneficiary designation in place. I believe you can but I dont have full Internet access to check right now. This would however be complicated by the fact that the money from the rsp would be payable to the estate therefore the OP may have to apply to be administrator of the estate in order to deal with an estate account etc unless he has a very understanding and knowledgeable banker.
As is, no need to have estate administrator as house is joint and registered plans have Bene's.
Generally simple to trasnfer to surviving spouse, transfers are tax free. With a little work and pushiness, wou likely don't even need a lawyer. Ensure a final tax return is done for deceased within the required time frame.
cpp death benefit will be payable to the 'estate of' but with a bond of indemnity, most banks will allow the surviving spouse to cash. It is only 2500 max so not much risk to the bank esp for a long time client.


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## OhGreatGuru (May 24, 2009)

AltaRed said:


> ... I would add that the Executor of the estate take a notarized copy of the Will and a copy of the funeral home Statement of Death to the financial institution(s) that hold the RRSP and the TFSA and they will arrange (via a Letter of Direction) for a rollover of the accounts to the beneficiary....


If the spouse is the named beneficiary, these pass outside of the Estate, and there should be no requirement for direction from an Executor for those assets. Same with any JWROS assets, such a jointly owned home. That's one of the reasons for having named beneficiaries and joint accounts. OP must then look for any assets that do not pass outside of the estate, and talk to his financial institution. If the amounts are not large they may accept an affidavit from the spouse rather than forcing the appointment of a provincial trustee.


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## twa2w (Mar 5, 2016)

OhGreatGuru said:


> If the spouse is the named beneficiary, these pass outside of the Estate, and there should be no requirement for direction from an Executor for those assets. Same with any JWROS assets, such a jointly owned home. That's one of the reasons for having named beneficiaries and joint accounts. OP must then look for any assets that do not pass outside of the estate, and talk to his financial institution. If the amounts are not large they may accept an affidavit from the spouse rather than forcing the appointment of a provincial trustee.


In theory, that is true about rsp with Bene passing outside a will, but most FIs will require a letter of direction from executor. Several reasons. A couple are that in some provinces, benefiviary designations in wills can supercede what the bank has on file ie if the will says rsp goes to Bob but the rsp docs say Fred. Or if the rsp Bene is a minor. Another reason is if there are no assets in the estate other than the rsp, some of the proceeds of the rsp may have to be used for taxes.the letter of direction protects the bank. Ther are a couple of other reasons as well that I won't go into.
As an FYI. A provincial trustee is almost never appointed in the absence of a will where there are surviving spouse, child, parent, sibling. One of these relstives applies to the courts to become administrator of the estate and once granted, they have essentially the same powers as a executor. They have a more complex job sometimes as they have to follow the succession rules and I believe submit a final accounting to the provincial authority.


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## twa2w (Mar 5, 2016)

Yes, most FIs will accept affidavits and bonds of indemnity from a spouse. Each FI has limits they like to stick to. Usually about 30 to 50 k with no will when dealing with sole name assets. With a reg product with a Bene, the amount the OP mentioned should be ok. To some extent this may depend on the relatioship the survivor has with the FI and how knowledgeable/comfortable the local manager is in dealing with estates.


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