Financial

RRSP and TFSA Beneficiary Designations — Do They Override Your Will?

Q: Do RRSP beneficiary designations override a will in BC?

Yes. A beneficiary designation on an RRSP takes priority over what your will says. The RRSP funds go directly to the named beneficiary outside the estate. However, if your will specifically revokes the beneficiary designation (and was made after the designation), the will may take precedence under WESA.

Q: What is the difference between a TFSA beneficiary and a successor holder?

A successor holder (available only for a spouse) takes over the TFSA as their own — the account continues with no tax consequences and no effect on their own TFSA contribution room. A beneficiary receives the value of the TFSA, but any growth after the date of death may be taxable, and the TFSA is collapsed.

Q: Who pays the tax on an RRSP when someone dies in BC?

The full value of the RRSP is included in the deceased's final tax return as income. The estate is responsible for paying the tax — even if the RRSP funds went directly to a named beneficiary outside the estate. This can create a situation where the estate bears the tax burden while the beneficiary receives the full amount.

Short answer: usually yes. Beneficiary designations on registered accounts operate outside your will and your estate. Getting this right — or wrong — has major tax and distribution consequences.

Updated April 2026 · 9 min read

Key Takeaways

RRSP/RRIF beneficiary designations override your will — funds go directly to the beneficiary
The estate pays the tax on the RRSP, even though the beneficiary gets the money
TFSA successor holder (spouse only) is more tax-efficient than naming a beneficiary
No beneficiary named = RRSP/TFSA falls into the estate and goes through probate
Review designations after every major life event (marriage, divorce, death of a beneficiary)

How beneficiary designations work

When you open an RRSP, RRIF, or TFSA, the financial institution asks you to name a beneficiary. This designation is a separate legal instruction from your will. When you die:

The funds go directly to the named beneficiary
The funds do not go through your estate
Your will cannot redirect these funds (with a narrow exception under WESA)
The funds are not subject to probate fees

This is powerful estate planning — but it also means these designations need careful attention.

RRSPs and RRIFs at death

If you name your spouse as beneficiary

The RRSP/RRIF can be transferred (rolled over) to your spouse's own RRSP or RRIF tax-free. This is the most tax-efficient option — no immediate tax is triggered.

If you name a non-spouse beneficiary

The beneficiary receives the funds directly. However, the full value of the RRSP/RRIF is included as income on the deceased's final tax return. The estate is responsible for paying this tax.

This is a common planning failure. The beneficiary walks away with the full RRSP amount. The estate gets the tax bill. If the estate doesn't have enough other assets to cover the tax, the executor has a problem. In some cases, CRA can pursue the beneficiary directly for the tax.

If you name a financially dependent child or grandchild

There are special rules for financially dependent children (including those with disabilities) that may allow the RRSP to be transferred to the child's RRSP or RDSP, deferring the tax. The rules are complex and require professional advice.

If you name no beneficiary

The RRSP becomes part of the estate. It goes through probate, is subject to probate fees, and is distributed according to your will (or intestacy rules). The tax is still payable on the final return.

TFSAs at death

TFSAs have a unique option not available for RRSPs:

Successor holder (spouse only)

If you name your spouse as successor holder, they take over the TFSA as their own account. The account continues seamlessly — no tax, no collapse, and no impact on the spouse's own TFSA contribution room. This is the best option for spouses.

Named beneficiary

The beneficiary receives the value of the TFSA as of the date of death, tax-free. However, any growth in the TFSA after the date of death and before distribution may be taxable. The TFSA is collapsed.

No designation

The TFSA falls into the estate, goes through probate, and is distributed by the will or intestacy rules.

Can your will override a beneficiary designation?

Generally no. However, WESA introduced a nuance: if your will, made after the beneficiary designation, contains a provision that specifically revokes the designation, the will may take precedence. This is a complex area of law and should be handled by a lawyer.

The safest approach: keep your beneficiary designations consistent with your will. If you want your RRSP to go to your spouse, name them as both the beneficiary on the account and in your will.

Common mistakes

Outdated beneficiaries: Naming an ex-spouse who you forgot to update after divorce
No beneficiary at all: Missing the designation means the account goes through probate
TFSA beneficiary instead of successor holder: For spouses, successor holder is better
Ignoring the tax implication: Not planning for how the estate will pay the RRSP tax bill
Conflicting instructions: Will says one thing, designation says another

Checklist: review your designations

Log into each RRSP, RRIF, and TFSA account and confirm the named beneficiary
For TFSAs held with a spouse, ensure they're named as successor holder, not just beneficiary
Check life insurance beneficiary designations at the same time
Update after any major life event: marriage, divorce, death of a beneficiary, birth of a child
Ensure your will doesn't contradict your designations (or intentionally does, with legal advice)
Discuss the RRSP tax impact with your executor so they can plan for it

Frequently asked questions

Do RRSP beneficiary designations override a will in BC?

Yes, generally. The funds go directly to the named beneficiary outside the estate. A later will may revoke the designation under WESA, but this is complex — keep both consistent.

What is the difference between a TFSA beneficiary and a successor holder?

Successor holder (spouse only) takes over the TFSA seamlessly — no tax, no impact on their own contribution room. A beneficiary receives the value but the TFSA is collapsed and post-death growth may be taxable.

Who pays the tax on an RRSP when someone dies?

The estate is responsible for the tax (unless rolled over to a spouse's RRSP). This is true even if the RRSP funds went directly to a named beneficiary.

Disclaimer: This article provides general information about RRSP, RRIF, and TFSA beneficiary designations. It is not legal, tax, or financial advice. Tax rules are complex and change frequently. Consult a qualified BC lawyer and tax professional for your specific situation.