Planning your estate and future finances can be overwhelming and stressful. Terms like successor annuitant, RRSP, RRIF, TFSA, beneficiary, are thrown at you and you have to try to understand what they mean and what you should do with them.
Thankfully, you are not alone. Our team of estate planning experts with over 20 years of experience can guide you along the way.
The successor annuitant beneficiary is widely misused and misunderstood. Let’s learn more about what it is and why should you use it!
What Is a Successor Annuitant?
A successor annuitant is a spouse or common-law partner who you name as the sole beneficiary of your Registered Retirement Savings Plan (RRSP) or Registered Retirement Income Fund (RRIF). This allows them to act on your behalf, upon your death, and gain access to your accounts tax-free. Your successor annuitant takes full ownership of your accounts so your surviving spouse or partner are then able to transfer your RRIF investments into their own RRIF account — no taxes and no probate to worry about.
It is important to note that you can only name your spouse or partner as your successor annuitant.
What Is a Successor Holder?
A successor holder is someone who can control your Tax-Free Savings Account (TFSA) assets. Simply put, upon your death, this person is granted ownership of your account and becomes the account holder.
There are 2 important things to note:
- This person must be a spouse or common-law partner
- The successor holder’s TFSA contribution is not affected
When Should You Consider a RRIF Successor Annuitant?
Families come in all shapes and sizes and are all different in their own way. When the time comes to consider a successor annuitant and/or beneficiaries, there are many options you can choose from that depend on your family’s unique situation.
Here are some examples of situations where you would want to ensure you have a successor annuitant and beneficiary in place before passing.
- You want to give your surviving spouse financial stability during the remainder of their lifetime, but also want to give some of your remaining assets and income to your children.
- Your spouse or common-law partner may be suffering from mental or physical illness.
- Your spouse may be financially irresponsible. You are worried they may cash your assets and income, and in the long run, may not be able to afford everyday living expenses.
A key benefit of having a primary beneficiary on a RRIF contract is that the amount of your RRIF will not be part of your estate, and therefore will avoid the fees, filing requirements and delays associated with probate. This simple step will allow for more of your assets to be passed down to your loved ones.
You can use our probate calculator to calculate your probate taxes and see the estimated Ontario Estate Administration Tax payable on your estate.
As mentioned above, there are many scenarios that come with planning your estate and every situation is unique. Having a plan in place for the unexpected is the best kind of reassurance. Speak with one of our experts today who have years of experience in dealing with many different scenarios surrounding successor annuitant and beneficiary options.
Probate Can Be Avoided, Our Experts Can Help
Your financial advisor can help you decide if a successor annuitant option is right for you, and most importantly, the most efficient way to protect your estate.
Let us assist you with your financial future! We have helped many people just like you. Call us today for a free consultation!
