Ep 169: Beneficiaries, Successors & Your Retirement Accounts: How to Get It Right Before You Retire

Naming beneficiaries and successors might seem simple, but one wrong designation can lead to tax headaches, probate delays, or unfair outcomes for your heirs. In this episode, Joe Curry explains how to properly name beneficiaries across your RRSPs, RRIFs, TFSAs, and non-registered accounts — and how to avoid common estate planning pitfalls that could cost your family thousands.

Key Takeaways

Beneficiary vs. Successor — know the difference.
A beneficiary receives the account value after death, while a successor (available only to spouses) continues the account tax-free and without interruption.

RRSPs and RRIFs carry hidden tax traps.
Non-spouse beneficiaries may get the full payout, but the estate — and the executor — must handle the tax bill.

TFSAs can pass on tax-free growth — but only with the right setup.
Naming your spouse as a successor holder preserves the tax-free status; naming them as a simple beneficiary does not.

Non-registered accounts and property often go through probate.
Joint ownership or trust structures can help avoid delays and additional costs.

Keep designations up to date.
Life changes — and so should your beneficiaries. Ensure account designations align with your will to avoid confusion or accidental disinheritance.

Insights Worth Sharing

“How you name your beneficiaries can make or break your estate plan.”

“Your RRSP may bypass probate, but the tax bill doesn’t disappear.”

“A successor keeps the account alive; a beneficiary just inherits what’s left.”

“These aren’t set-it-and-forget-it decisions — review your designations regularly.”

“When your estate plan and income strategy work together, your legacy stays intact.”

Resources

Matthews and Associates – Book a Beneficiary Review Call

Related RPS Podcast Episodes:

Ep 110 – Estate Planning Fails: Real Stories of What Can Go Wrong with Ellie Muir (Clear Estate)

Beneficiaries & Successors.
Avoid Costly Estate Mistakes in Your Retirement Accounts

Here’s a scenario that surprises many retirees: all three of your adult kids are named equal beneficiaries of your RRSP. But when you pass away, the estate — and by extension, your executor — is responsible for paying the tax. If the estate doesn’t have enough funds, your executor could end up chasing siblings for money or, in some cases, paying out of pocket.

It’s a situation we see often, and one that’s entirely preventable with a little planning.

In this week’s episode of Your Retirement Planning Simplified, Joe breaks down how beneficiary and successor designations really work — and why they matter more than most people think.

When you name a beneficiary, they receive the proceeds of the account once it’s closed. But when you name a successor, available only for spouses or common-law partners, they actually inherit the account itself. That small distinction can mean a world of difference for taxes, timing, and control.

For instance, a spouse named as successor holder on a TFSA can continue the account without interruption — keeping all future growth tax-free. But if that same spouse is only a beneficiary, the TFSA stops being tax-free the day you pass away. Future gains then become taxable.

The same logic applies to RRIFs. A successor annuitant (your spouse) can take over the plan directly, while any other beneficiary triggers a full taxable withdrawal at death. That tax hits the estate, even though the funds bypass it.

Non-registered accounts don’t offer the same flexibility, but proper ownership can help. Joint accounts with right of survivorship or using a trust can avoid probate and keep assets accessible to a surviving spouse.

Joe also emphasizes keeping these designations current. Life events — marriages, divorces, or the loss of a loved one — can create mismatches between your will and your account paperwork. And because account designations override your will, an outdated form can accidentally disinherit someone you intended to include.

A quick review can help avoid both tax trouble and family tension. Joe suggests creating a beneficiary checklist that includes all RRSPs, RRIFs, TFSAs, pensions, and insurance policies. Then confirm each is current, consistent with your will, and tax-efficient.

When done right, clear and thoughtful designations can ensure your wealth passes quickly, fairly, and with minimal tax — preserving both your legacy and your loved ones’ peace of mind.

Learn more about our retirement planning process at MatthewsAndAssociates.ca.