- Only a surviving spouse or common-law partner can be a successor holder, and they take over the account itself.
- You make or change the designation through your TFSA issuer, or in your will with the right wording.
- Anyone else you name is a designated beneficiary who receives the value instead of taking over the account.
If you hold a Tax-Free Savings Account (TFSA) and have a spouse or partner, you can choose what happens to the account when you die. Naming a successor holder is the option that lets the account carry on as it is.
This article explains who qualifies, how a common-law partner is defined for this purpose, how to make the designation, and the exceptions worth knowing about.
This article covers Canadian federal tax law, which applies in every province.
What a successor holder is
A successor holder is the surviving spouse or common-law partner named in the TFSA contract or in the will. On the holder's death, they immediately become the new holder and take ownership of the TFSA.
Because the successor takes over, the deceased is not considered to receive an amount from the TFSA on death. The account continues as a TFSA with its tax-free status intact.
Who qualifies
The Income Tax Act describes a survivor as an individual who is, immediately before the holder's death, the holder's spouse or common-law partner. The relationship is tested at that moment.
A common-law partner is a person who is not your spouse, with whom you are living in a conjugal relationship and who meets a further condition, such as having lived with you for at least 12 continuous months or being the parent of your child.
The successor holder must also have a valid social insurance number (SIN) or individual tax number (ITN).
How to make the designation
You contact your TFSA issuer to set or change a designation. The issuer informs the CRA of the change in ownership when a successor holder takes over.
You can also name a successor in your will. A will designation must state that the successor holds all the same rights as the original holder, including the right to change beneficiary designations.
- Check that the person is your spouse or common-law partner as defined above.
- Confirm they have a SIN or ITN.
- Ask your issuer how it records successor holder designations.
- If you use your will, make sure the wording gives the same rights as the original holder.
Successor holder compared with beneficiary
| Successor holder | Designated beneficiary | |
|---|---|---|
| Who can be named | Spouse or common-law partner | Anyone else, including family and organizations |
| What they receive | Ownership of the account | The account's value, not the account |
| Tax-free status | Continues | Generally tax-free up to fair market value at death |
A successor holder's own contribution room is not affected by becoming successor holder, if the deceased had no excess amount, and they do not gain the deceased holder's unused contribution room.
Exceptions to keep in mind
- Quebec does not recognize the successor holder designation for TFSAs, though a Quebec surviving spouse can still make an exempt contribution.
- If the deceased had an excess TFSA amount, the successor holder is treated as making a contribution equal to the excess, and any resulting excess in their accounts is taxed at 1% per month while it remains.
- If no successor holder or beneficiary is named, the assets go to the estate and the will governs distribution.
What to do next
Contact your issuer to see what is currently on file, and compare it with your will so the two do not conflict. If you live in Quebec, have a blended family, or are unsure whether your partner meets the common-law definition, a lawyer or accountant can confirm your position.
Frequently asked questions
Can my child be a successor holder?
No. A successor holder is a surviving spouse or common-law partner. Anyone else you name, such as a child, is a designated beneficiary who receives the account's value rather than taking over the account.
Do I name a successor holder in my will or with the bank?
Either. The designation can be in the TFSA contract or in the will. To set or change it, you contact your TFSA issuer.
Does the successor holder get my unused TFSA room?
No. They do not gain the deceased holder's unused contribution room, and their own room is not affected by becoming successor holder if the deceased had no excess amount.
What if no one is named?
The TFSA assets are directed to the deceased holder's estate, and the will governs distribution.
Sources
- CRA – If you are a successor holder of a TFSA — canada.ca
- Income Tax Act s. 146.2 — Justice Laws (federal)
- CRA – What happens when a TFSA holder dies — canada.ca
- CRA – Death of a TFSA holder (issuers) — canada.ca
- CRA – Definitions for TFSA — canada.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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