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TFSA Designations may cause Estate Problems

TFSA Designations may cause Estate Problems

The April 2015 federal budget made TFSAs more attractive by increasing the cumulative contribution limit to $41,000. But clients should know that financial institutions administer their customers’ TFSA accounts differently, and subtle differences could cost accountholders down the road.

Designation Basics

TFSA accountholders may designate their spouse or common-law partner as a successor-holder, and anyone else as a beneficiary. The successor holder and beneficiary designations vary across provinces (for example, Quebec only allows transfers to be done via the deceased’s estate). A successor-holder trumps a beneficiary if both are alive at the time of the original planholder’s death. And, a beneficiary trumps the deceased’s estate if the successor-holder is also dead.

The rest of the article can be read at Advisor.ca