The Benefit of Gifting Your RRSP/RRIF

RRSPs and RRIFs are a great way to save for your retirement, however it is wise to consider what will happen to your RRSP or RRIF when you die. If you are married and your surviving spouse is named as the beneficiary, these accounts are transferred with zero tax liability. However, without a surviving spouse (or disabled child) listed as the beneficiary, the accounts are deemed to be sold and 100% of the fund balance is considered personal income on your final tax return. Under these conditions, your retirement accounts can increase your estate’s marginal tax rate to the highest level and create a significant tax burden on your estate.

The good news is if you make a charity the beneficiary of your retirement account(s), you eliminate the tax on the donated portion. You retain ownership and use of the funds during your lifetime, receive a favourable tax receipt for the portion of the funds you donate, and avoid probate fees by removing these assets from your estate. You can choose to donate all or a portion of your retirement funds by naming multiple beneficiaries.

Donating your RRSP or RRIF is easy to do. Contact your plan provider and ask for a Change of Beneficiary form. Naming LFC as the beneficiary and then filling out a Gift Allocation Agreement gives you the ability to share your RSP with multiple ministries and/or organizations.