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If there is a spouse, dependent child, or dependent grandchild, estate RRSP/RRIF proceeds can be rolled over tax-deferred to the beneficiary's RRSP, RRIF, or to an annuity. Otherwise, your estate will pay up to 50% tax on such remaining RRSP/RRIF capital, due in your final tax return. Consider pre-funding your tax liability by purchasing life insurance, which is received tax-free. The paid-out benefit can offset the depleted RRSP portion of your estate upon your death. Such policies can often be purchased for annual premiums as low as 2% of the full value of your current RRSP/RRIF holdings. In most provinces, you can specify your beneficiary in your RRSP or RRIF agreement or in your will. Consult your District Taxation Office or legal or tax advisors to get additional information specific to your situation.
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