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Gifts of Registered Funds (RRSP/RRIF)

Savings for your retirement has become an essential part of a complete financial plan. However, your strategy should also consider what happens to your RRSP or RRIF when you pass away.

Upon your death, where a surviving spouse is a named beneficiary, these registered savings are transferred to his/her name without a tax liability. However, when there is no surviving spouse (or disabled child) listed as the beneficiary, these accounts are deemed to be disposed of and 100% if the remaining balance is added to your income in the year of your death. If other income was earned in the year of your death, this could easily be subject at the highest marginal tax rate.

Canadians can now receive tax credits for charitable gifts of up to 100% of their income in the year of their death (retroactive one year). For some, it may be wise to consider gifting assets like these directly to charities through a beneficiary designation.