Can my RRSP go tax-free to a financially dependent child instead of my spouse?

An RRSP can roll over on a tax-deferred basis to a financially dependent child or grandchild, not just to a spouse, though the mechanics and result differ depending on whether that child has a disability. If the financially dependent beneficiary doesn't have a physical or mental disability, the funds are generally used to buy an annuity that pays out over a limited number of years, with the payments taxed to the child as received, which can still produce useful tax deferral and income splitting since the money isn't dumped into the deceased's terminal return all at once.

If the financially dependent beneficiary has a physical or mental disability, the deferral can be more flexible, including a transfer into the child's own registered plan in some circumstances. In every case, "financially dependent" is not automatic just because the child is a minor or living at home — the CRA looks at the actual facts of the child's dependency on the deceased before death, and the estate generally needs to establish that dependency to claim this treatment.

Because the rules differ meaningfully based on age, disability status, and proof of dependency, this needs a plan-issuer and tax advisor review before the estate proceeds, especially where the answer isn't obvious.