Dear Nancy,
Recently my husband passed away. He had a very small RRIF account and a TFSA. Those are his only assets other than our house that is in joint name. The financial institution where his RRIF is confirms I am the successor annuitant to both accounts. The other family assets are already in my name. I was the higher income earner when we were working. My question is, should I still move my husband’s accounts into mine?
Natalie
Dear Natalie,
Your instincts are right to consider an alternative to transferring your husband’s accounts into yours. You should still transfer his TFSA into yours as the successor annuitant. His assets can be added to yours and remain tax-sheltered. It is a way to increase the value of yours and not being considered as an overcontribution. His RRIF however, depending on the value, could be declared as income in his year of death. If he had low income that year the value of his RRIF could be taxed at a much lower percentage that when eventually withdrawn from yours.
You need to seek professional tax and planning advice to see if it makes tax sense. The main factor that will impact the result would be the unknown date of your passing. That’s where a professional will be able to outline the various possibilities and help you decide what is the better option, either combine his RRIF with yours or have him pay the tax on his RRIF and receive the after tax assets.
Nancy Woods is senior portfolio manager and investment adviser with RBC Dominion Securities Inc. Visit her blog, “Nancy’s Notes” at nancywoods.com or send her your question to asknancy@rbc.com