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November 15, 2013

Leave More for Your Heirs

Learn how topping up TFSAs prudently can reap big rewards.

by Julie Cazzin, for MoneySense


To maximize the after-tax value of your estate, you probably know you and your spouse should move as much money as possible from non-registered accounts into TFSAs. “Proper estate planning requires understanding the tax consequences of different investments,” says Jason Heath, a fee-only adviser with Objective Financial Partners. “Topping up TFSAs prudently can reap big rewards.”

But with TFSAs, the devil is in the details. When you complete an application to open your TFSA, there’s a section where you can fill in the name of your “successor holder.” Only your spouse or common-law partner can be your successor. Like the “successor annuitant” on a Registered Retirement Income Fund (RRIF), the successor holder replaces the TFSA holder upon death and the plan continues with all rights passing to the successor. That means your TFSA continues growing tax-free until your successor dies.

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