Is a Registered Retirement Account Part of the Estate in British Columbia?

Many people hold RRSPs, RRIFs and TFSAs, often with a named beneficiary. When someone dies, families often ask whether those accounts go through the estate and what that means for fees and tax.

The answer depends on the account and the paperwork behind it. This article explains the points to check without assuming the answer for your situation.

This article covers the law of British Columbia.

Why the designation matters

How a beneficiary designation works for your particular account depends on the plan and your situation. It is worth reading the plan documents and confirming the details with a lawyer before you rely on it.

The rules can differ by account type and by the terms of the plan, so this page does not make a specific claim about what happens to an account when no designation is in place. Checking your own plan and your own circumstances is the safest way to know.

Probate fees

There is no probate fee if the estate is $25,000 or less. Above that, the fee is $6 per $1,000 (or part) between $25,000 and $50,000, plus $14 per $1,000 (or part) above $50,000. The value of the estate is the gross value of BC property in the Statement of Assets, Liabilities and Distribution.

Property that does not form part of the estate is a different category. For land held by survivorship, the law deals with it separately from the estate. For a retirement account, ask a lawyer whether the designation takes it outside the estate.

Joint accounts and adult children

Families sometimes add an adult child to an account. A gratuitous transfer to an adult child, including adding them to a joint account, is presumed to be held on resulting trust for the parent. The survivor must prove the parent intended to give them the right of survivorship in the balance.

The judge weighs all the evidence to find the parent's actual intention when the transfer was made. Use and control of the account is of marginal help and not determinative alone. Dependency of an adult child on the parent can be strong evidence to rebut the presumption.

Tax and the estate's other obligations

Tax on death is separate from probate. The amount depends on the type of account, who receives it and the deceased's other income, so an accountant should confirm it for you.

• A trust or estate return, if one is needed, is due no later than 90 days after the tax year-end, and any balance owing should be paid in the same 90 days.
• An estate qualifies as a graduated rate estate only for up to 36 months after death.
• If an estate is insolvent, the personal representative must apply the proceeds in the statutory order of priority for debts.
• A personal representative must not distribute the estate within 210 days, subject to the section's exceptions.

What to do next

• Make a list of every RRSP, RRIF and TFSA and note who is named on each.
• Ask each institution to confirm the designation on file.
• Review any joint accounts and whether the intention behind them is documented.
• Ask a lawyer how each account will be treated for probate and an accountant how it will be taxed.

Frequently asked questions