Tax Free Savings Accounts at Death

If a surviving spouse or common-law partner is designated as a successor holder of the TFSA either in the TFSA contract or in the deceased taxpayer’s will, the successor becomes the owner of the TFSA.

The successor holder acquires all the rights to the TFSA, including the right to remove funds from the account on a tax-free basis or to transfer those funds to their own TFSA without using TFSA contribution room.

A surviving spouse or common-law partner may receive the TFSA fund on a tax-free basis by transferring those funds to their own TFSA without using TFSA contribution room. Use Form RC240 Designation of an Exempt Contribution Tax-Free Savings Account (TFSA) to designate the amount to be transferred.

A designated beneficiary (other than a surviving spouse or common-law partner or qualified donee) may receive the TFSA proceeds on a tax-free basis but may not transfer those funds to their own TFSA unless they have available TFSA contribution room.