- If you are the named successor holder, you immediately become the new holder and the account generally continues as a TFSA with its tax-free status intact, but if the deceased had an excess TFSA amount, you are treated as contributing that excess.
- If you are instead a beneficiary, you may contribute the amounts to your own TFSA as an exempt contribution, filing Form RC240 within 30 days.
- Quebec does not recognize the successor holder designation, though a Quebec surviving spouse can still make an exempt contribution.
After a spouse dies, you may want to tidy things up by moving their TFSA into an account of your own. Whether you can do that and keep the tax-free status depends on how your spouse's TFSA was set up and how you were named.
There are two main routes for a surviving spouse or common-law partner: becoming the successor holder, or receiving the funds as a beneficiary and making an exempt contribution. This article explains both in plain terms.
This article covers Canadian federal tax law, which applies in every province.
Route one: 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. On the holder's death, you immediately become the new holder and take ownership of the TFSA. Under the Income Tax Act, a survivor is someone who is, immediately before the holder's death, the holder's spouse or common-law partner.
Because you take over, the deceased is not considered to receive an amount from the TFSA on death, so the account continues as a TFSA with its tax-free status intact. There is no need to withdraw and re-contribute.
- You must have a valid social insurance number (SIN) or individual tax number (ITN).
- The issuer informs the CRA of the change in ownership when a successor holder takes over.
- Your own contribution room is not affected if the deceased had no excess amount, and you do not gain the deceased's unused room. If the deceased did have an excess, different rules apply, as explained below.
Moving it into another account of yours
A direct transfer between a successor holder's TFSAs does not affect their available contribution room. If you hold several TFSAs, room applies to all accounts collectively. Whether a particular financial institution will merge accounts or open a new one for you is a matter for the issuer.
Separately from any transfer, taking over as successor holder has its own rule for an excess: if the deceased had an excess TFSA amount, you are treated as making a contribution equal to the excess on the first day of the month after death. If that creates an excess in your accounts, it is taxed at 1% per month while it remains.
Route two: you are a beneficiary, not a successor holder
If you were named as a beneficiary rather than a successor holder, you receive the account's value rather than taking over the account. 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.
- The amount must be received and contributed by December 31 of the year following death, and total no more than the TFSA's fair market value at death.
- You send Form RC240 (Designation of an Exempt Contribution - TFSA) to the CRA within 30 days of making the contribution, unless the CRA allows a later date.
- Starting January 1, 2026, earnings accrued after death, up to the end of the rollover period, can be designated as exempt contributions.
Exceptions: 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.
Comparing the two routes
| Successor holder | Beneficiary with exempt contribution | |
|---|---|---|
| What happens to the account | Continues as a TFSA under your ownership | You receive the value and contribute it to your own TFSA |
| Effect on your room | Not affected if the deceased had no excess amount | Not affected by an exempt contribution |
| Paperwork | Issuer informs the CRA | Form RC240 within 30 days |
If you live in Quebec, which does not recognize successor holder designations, a surviving spouse or common-law partner may still contribute amounts received to their own TFSA without affecting unused room, if contributed by December 31 of the year following death and Form RC240 is filed within 30 days.
What to do next
- Find the TFSA contract and the will to see whether you were named as successor holder or beneficiary.
- Confirm your SIN is on file with the issuer.
- Ask the issuer whether the deceased had any excess TFSA amount.
- If you are a beneficiary, mark December 31 of the year after death and the 30-day filing window for Form RC240 on your calendar.
- Check your total contribution room across all your TFSAs before adding funds.
- Speak with a lawyer or accountant if there are several survivors, an excess, or a cross-border element.
Frequently asked questions
Can I keep the TFSA tax-free if I am the successor holder?
Generally, yes. The deceased is not considered to receive an amount from the TFSA on death, so the account continues as a TFSA with its tax-free status intact. The exception is an excess TFSA amount: if the deceased had one, you are treated as contributing that excess, and if that creates an excess in your accounts it is taxed at 1% per month while it remains.
Does becoming successor holder use up my contribution room?
Your own room is not affected if the deceased had no excess amount, and you do not gain the deceased's unused room. If the deceased did have an excess, you are treated as making a contribution equal to it, which can create an excess in your own accounts.
What is the deadline for an exempt contribution?
The amount must be contributed by December 31 of the year following death. Form RC240 goes to the CRA within 30 days of the contribution, unless the CRA allows a later date.
Does a common-law partner qualify?
Yes, a surviving common-law partner can be a successor holder. A common-law partner is someone you live with in a conjugal relationship who meets a further condition, such as 12 continuous months together or being the parent of your child.
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 – If you are a designated beneficiary of a TFSA — 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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