All About Estates

“Survivor Payment” from a TFSA to a Spouse who was not the Designated Beneficiary

In Technical Interpretation 2016-0679751E5 the CRA considered whether a survivor payment could be made out of deceased’s TFSA to the deceased’s spouse, in circumstances where the spouse was not the designated beneficiary of the TFSA. In this case, the executor wished to satisfy a legacy to the deceased’s spouse out of the property of the deceased’s TFSA. The estate, and not the spouse, was the beneficiary of the TFSA.

A survivor payment generally allows a spouse or common-law partner to add amounts received from his or her deceased spouse or common-law partner’s TFSA to his or her own TFSA as an “exempt contribution”. This means that the contribution room in the surviving spouse’s or common-law partner’s TFSA is not affected by the addition of the funds. “Survivor payment” is defined as “A payment received by a [surviving spouse or common-law partner of a deceased TFSA holder] during the rollover period, as a consequence of the holder’s death, directly or indirectly, out of or under an arrangement that ceased to be a TFSA because of the holder’s death”.

The CRA was of the opinion that the decision by the executor to pay the legacy to the spouse out of the property of the deceased’s TFSA could satisfy the conditions for a “survivor payment”. Generally, the CRA indicated that it would be consider such a payment to have been made “as a consequence of” the deceased TFSA holder’s death provided that the payment was made in accordance with the terms of the deceased’s Will. In addition, the payment must also be completed during the rollover period (the period beginning on the deceased’s death and ending at the end of the calendar year following his or her death).

 

About Katie Ionson
Katie Ionson is an Associate in Fasken Martineau DuMoulin LLP’s Wealth Management, Charities and Not-for-Profit Group. As part of her wealth management practice, Katie assists clients with Wills, powers of attorney, trusts, marriage and domestic contracts, and trust and estate administration. She has experience using estate planning to address a variety of client objectives, including income splitting arrangements, asset protection and business succession issues. Katie is engaged in a broad practice in the areas of charities and not-for-profit law, which includes preparing applications for charitable status, assisting clients with transitioning to the new federal or provincial not-for-profit legislation, drafting endowment and gift agreements and advising on administrative and tax-related issues. Email: kionson@fasken.com

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