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Suggestions about what to do with RRSPs during estate planning

Many people are surprised by the complexity of their estates when they get older. Assets accumulate over time, and we don't really think about many of them that much. Every asset is important, however, when it comes time to do some estate planning. A valuable asset that many men and women in Ontario need to think about is their RRSP. How one chooses to distribute it after his or her death could have major implications for that person's heirs.

Depending upon when a person retires, and one's age at the time of death, there may still be significant amounts of money remaining in an RRSP. What happens to that money when the contributor passes away is a matter of some importance. For many people, the obvious solution is to have it turned over to their spouse. The money simply gets rolled into their own RRSP with no tax penalty.

For those without a spouse, the temptation may be to leave it to their children. On the surface, this seems like a generous gift. Unfortunately, the taxes will be very high on the money taken out of the RRSP. If the taxes cannot be paid out of the assets of the estate, the children will be left to foot the bill, meaning they won't receive the full value of the plan. 

Making preparations for those left behind is a kindness that won't be forgotten. A lawyer with extensive experience handling complex estates in Ontario can help ensure a person's desires are met.

Source: Global News - Toronto, "How not to lose your RRSP money, in Ryan Gosling GIFs", Jesse Ferreras National, Feb. 25, 2017

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