Using Inherited TFSA Money in a New Account After a Spouse Dies in Canada

After a spouse dies, you may want to open a new TFSA or move the money you received into one you already have. The goal is usually simple: keep the funds tax-free and avoid using up your own contribution room.

Whether that works depends on one question: were you named as successor holder, or did you receive the money as a beneficiary? The two routes have different rules and different deadlines.

This article covers Canadian federal tax law, which applies in every province.

Two routes, two sets of rules

For these rules, a survivor is an individual who is, immediately before the holder's death, the holder's spouse or common-law partner. 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.

• Successor holder: you take over the deceased's TFSA as its new holder.
• Beneficiary: you receive the account's value and may be able to contribute it to your own TFSA as an exempt contribution.
• Neither: if no one was named, the assets go to the estate and the will governs.

If you are the successor holder

A successor holder is the surviving spouse or common-law partner named in the TFSA contract or in the will, and on the holder's death they immediately become the new holder and take ownership of the account. A will designation must state that the successor holds all the same rights as the original holder, including the right to change beneficiary designations. You must have a valid social insurance number or individual tax number.

Because the deceased is not considered to receive an amount from the TFSA, the account continues as a TFSA with its tax-free status intact. Your own contribution room is generally not affected, and you do not gain the deceased holder's unused room. A direct transfer between your TFSAs does not affect your available room, and with several TFSAs your room applies to all accounts collectively.

In practice, this means you usually do not need to create a new account to keep the tax-free status. If you want everything in one place, a direct transfer between your own TFSAs does not affect your available contribution room. The issuer informs the CRA of the change in ownership when a successor holder takes over.

If you received the money as a beneficiary

A survivor who receives TFSA payments as beneficiary can contribute them to their own TFSA as an exempt contribution that does not affect their own available contribution room. There are three conditions to keep in mind.

Starting January 1, 2026, earnings accrued after the holder's death, up to the end of the rollover period, can be designated as exempt contributions. This is a recent change, so confirm the current CRA wording.

When the tax-free route does not work

• No exempt contribution is possible if the deceased's TFSA had an excess TFSA amount, or if payments are received by more than one survivor.
• If the deceased had an excess amount and a successor holder takes over, the successor is treated as making a contribution equal to the excess on the first day of the month after death; any resulting excess in their accounts is taxed at 1% per month while it remains.
• In Quebec, successor holder designations are not recognized, but a surviving spouse or common-law partner can still contribute amounts received to their own TFSA without affecting unused room, if done by December 31 of the year following death and Form RC240 is filed within 30 days.
• A non-survivor beneficiary cannot designate any amount as exempt and may contribute only if they have available room.

What to do next

• Find the TFSA contract and the will to see whether you were named successor holder.
• Ask the issuer how the account is being treated and what the value was at the date of death.
• If you are a beneficiary, mark December 31 of the year after death on your calendar before moving any money.
• File Form RC240 within 30 days of any exempt contribution.
• Check whether the deceased had an excess amount, and speak with a lawyer or accountant if the situation is unclear.

Frequently asked questions