Get Ready to Die: Beneficiary and Successor Account Holder Forms for your Online Brokerage Accounts

The best time to get ready to die is when your demise is still a long, long time in the future. So if you are young and healthy and life is good, now is the time to get some of your financial paper work in order. One of the best and simplest things to do is to designate who the beneficiary and successor holder should be for your RRSP, RRIF, LIRA, TFSA and other online brokerage accounts.

I’ve been twiddling my thumbs waiting to shuffle off this mortal coil and waiting for my RRSP money to transfer into my new RBC Direct Investing RRSP account, and wondering if I should take bets on which will happen first. (The money left ING Direct on November 7. It’s now November 13 and it’s still “in transit.” What did they send it by? Speedy Snail Delivery Service?)

While waiting, I printed, signed and mailed in the Standard Beneficiary Designation. I’ve already filed similar forms for our BMO InvestorLine and CIBC Investor’s Edge accounts.
In this article, I’ll show you where to find the forms online, after I’ve convinced you that this matters.

Why Should You Designate a Beneficiary for your Accounts? Do You Like Giving the Government Money?

If you designate a beneficiary for your RRSP or RRIF, when you die the assets will be paid out directly to your beneficiary. The money will not be included in the amount on which your estate has to pay probate fees. You (well, you’re dead, so it’s your estate or your heirs) will pay the government less of your hard-earned money.

In some cases, the money will also be allowed to remain tax-sheltered. For example, if I die, my husband will get to add my RRSP money to his own, without ever taking it out of the tax shelter because he is my designated beneficiary. That saves him paying a lot of tax. Instead, he will pay taxes gradually as he makes planned withdrawals from my RRSP in the future.

(Unfortunately, in other cases the money will have to come out of the RRSP and be taxed before going to the beneficiary. For example, if I designated my children as the beneficiaries for my RRSP, the RRSP would be collapsed and the funds taxed before the after-tax proceeds would be distributed. It still wouldn’t incur probate taxes though.)

Designate Your Spouse or Partner as Your Successor Holder for Your TFSA

TFSAs are quirky.

If you have a spouse or a common-law partner whom you have lived with for at least 3 years or with whom you have children, you should designate this spouse/partner as the Successor Holder to your TFSA. According to Gordon Pape’s book “How TFSAs Can Make You Rich” you can only designate this person as a Successor Holder. You can’t designate a friend or other relative.

The Successor Holder will receive the TFSA in kind. They will not have to collapse the plan. They will not have to take the investments out of the plan. They will not have to pay probate fees or taxes on the value of the plan. Any profits earned after the death of the original TFSA holder are still tax-free.

If you don’t have a spouse or partner, you should designate a Beneficiary.

Designating a TFSA Beneficiary ensures that probate fees and taxes are not payable on the value of the TFSA.

However, the Beneficiary of a TFSA can’t keep the plan. They have to take the investments out of the TFSA. Once out, they become regular non-registered investments and any gains or income the investments earn from then on are taxable.

The Beneficiary will also have to pay tax on any income, gains or dividends earned by the investments in the TFSA from the day the person died until the day they get them. So say it takes 6 months for the Beneficiary to actually get a TFSA full of stocks. They will owe capital gains tax and dividend tax on any gains and distributions the stocks make between the day of death and the day 6 months later when they get the stocks.

You can see that it’s good to be a Beneficiary of a TFSA, but it’s even better to be the Successor Holder. That’s why you should designate your spouse or partner the successor if possible.

There may be cases when you don’t want the money going to your spouse or partner. That’s different. In that case, designate a Beneficiary or describe what should be done in your will.

What about Non-Registered Investment Accounts?

There is no form to designate a beneficiary for a non-registered investment account. You can state what should be done with your account in your will. Your estate will have to pay taxes and probate fees on the value of the account.

Don’t Put This Stuff Off! Designate Your Beneficiary Now

According to the RBC DI website, a Power of Attorney does *NOT* have the right to designate a beneficiary. That should ring some warning bells. Don’t put off designating your beneficiaries. You don’t want to be disabled and unable to make your wishes known realizing that you’ve just ensured your heirs will have to hand a large chunk of money over to the government for no good reason. Do it now. Get it done.

Update Your Beneficiary When Your Life Changes

If you marry, divorce, change common law partners or are widowed, please remember to update your beneficiary designations. Lawyers see many nasty cases where the beneficiary was not updated with unexpected, sometimes even tragic, results. It usually takes less than an hour to get this paper work done. Find the time.

Imagine paying even $100 more tax than you have to. Isn’t it worth filling in this form for $100?

What If My Beneficiary Dies First? Using Contingent Beneficiaries

In general, if your beneficiary dies before you die, you should just update your beneficiary form with your new choice. However, because sometimes people forget or life happens, in some cases you can file a form with both your Beneficiary and the name of your Contingent Beneficiary. The account would go to the Beneficiary normally, but if the Beneficiary has died before you die, then it will go straight to the Contingent Beneficiary.

As a Distinct Society, Quebec is Always a Little Different

The rules for Beneficiaries and Successor Holders are a little different in Quebec. I’d suggest that you seek advice from your financial institution if you live in Quebec. I believe that you can only designate your beneficiary and successor in your will not by a form. However, I’m not a tax or financial expert so I recommend you speak to someone who is to find out the correct, current information.

To Find the Beneficiary and Successor Forms for RBC Direct Investing Brokerage Accounts

1. Sign in to your RBC Direct Investing account/s.
2. Click on the My Home tab.
3. Click on the Forms link in the long list across the top of the screen under My Home.
   Way down in the grey Forms box, click on the link called: Beneficiary Designation
   A long list of links to forms will be displayed.
4. The next step depends on the types of accounts you have
   • For RRSP, RRIF, LIF, PRIF, LIRA, LRIF, RLIF and RLSP accounts,
     If you want to designate one person as your Beneficiary, click on the link called: Designation of Beneficiary.
     If you want to designate more than one person, click on the link called: Designation of Multiple Beneficiaries
   • For TFSA accounts,
     if you want to designate a regular beneficiary, click on the link: Tax-Free Savings Account Beneficiary Designation
     If you want to designate a charitable corporation as the beneficiary, click on the link: TFSA Beneficiary Designation (for Charitable Corporations)

   (In all cases you will have to save the blank form to your computer or print it immediately.

5. To end your online session, click on the Sign Out button.
   For added security, clear your browser’s cache and close your browser session.
6. Open the form/s.
   Print the form/s.
   Complete the form/s.
   Generally you will need to report the name and address of the person who will be the Beneficiary or the Successor, and if you have it you can include their Social Insurance Number. Adding the SIN reduces the risk of a mistake being made if many people share the same name. (E.g. if your Beneficiary is John Smith or Mohammed Masoud.)
7. If necessary, have your signature witnessed by an agent at the appropriate bank or financial institution. The RBC DI RRSP form does not require you to get an agent’s signature. They sign it when they receive it.
8. Mail the completed form to RBC Direct Investing. They need an original with your signature for legal reasons.

To Find the Beneficiary and Successor Forms for BMO InvestorLine Brokerage Accounts

1. Sign in to your InvestorLine account/s.
2. Click on the Account Services tab.
3. Click on the Forms link.
4. Click on the tab for the first type of account you have. For example, click on
   • RSPs/RIFs
   • TFSAs
5. For a RSP or RIF, click on the link called: Beneficiary Designation and Successor Annuitant Form (RSP/RIF)
6. For TFSAs, click on the link called: Tax-Free Savings Account (TFSA) Successor Account Holder Appointment and/or Beneficiary Designation Form
7. When you’ve printed your forms, click on the Sign Out button.
   For increased security clear your browser cache and close your browser session.
   Open the form/s.
8. Print the form/s.
   Complete the form/s.
   You’ll need the name and address of the person who will be the Beneficiary or the Successor. If you include their Social Insurance Number you will reduce the risk of a mistake if many people share the same name. (E.g. if your Beneficiary is Cathy Smith or Fatima Khan.)
9. Mail the completed form/s to BMO InvestorLine. They need an original with your signature for legal reasons.

To Find the Beneficiary and Successor Forms for CIBC Investor’s Edge Brokerage Accounts

1. Sign on to your Investor’s Edge account/s.
2. From the long list on the left side of the screen, click on the link called: Forms.
3. Click on the tab: Registered Accounts.
   • For an RSP, click on the Registered Retirement Savings Plan (RRSP) PDF link. Section 8 of the form is the Designation of the Beneficiary.
   • For a TFSA, click on the Tax-Free Savings Account (TFSA) PDF link.  Section 6 of the form is the Designation of Successor Holder or other Beneficiary.
   • For a RIF, click on the Registered Retirement Income Fund (RRIF) PDF link. Section 8 of the form is the Designation of the Beneficiary.
   • For a LIRA, click on the Locked-In Retirement Account (LIRA) PDF link. Section 8 of the form is the Designation of the Beneficiary.
   • For a LIF, click on the LIF PDF link. [Don’t ask me why they didn’t type out Life Income Fund!] Section 8 of the form is the Designation of the Beneficiary.
   • There are quite a few themes are variations on the LIF. If applicable, click on the form for the kind you have. Chances are good it will be Section 8, but you can scroll through the form to find the correct section if it’s not.
4. Click on the Sign Off button.
   For added security clear your browser cache and close your browser session.
5. Print the required form.
   Complete and sign the form.
   Usually you will list the name and address of the Beneficiary or Successor. Including their Social Insurance Number will reduce the risk of a mistake if many people share the same name. (E.g. if your Beneficiary is Choudhary Singh.)
6. Mail it to CIBC Investor’s Edge. Legally, they will need your original signature.

Give It Time Then Check Your Beneficiary and Successor Designations Are Correct

It’s a good idea to keep an eye on your statements to check whether the correct Beneficiary or Successor gets named. Papers get lost. Until you see it’s registered properly, keep an eye on this.

Related Reading

• How to Open a RBC Direct Investing RRSP Brokerage Account

Join In
Do you have your Beneficiaries and Successors up to date? Did you ever meet someone who suffered because they weren’t set up correctly? Please share your experiences with a comment.