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Can you inherit a TFSA tax-free?

Can you inherit a TFSA tax-free?

Can you inherit a TFSA tax-free?

Source: MoneySense
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Q: Is the money from a TFSA tax free as an inheritance? Any probate taxes?

—Linda

A: As a quick refresher, Linda, Tax Free Savings Accounts (TFSAs) are accounts where investment income, capital gains or other earnings are completely tax-free for a taxpayer. Withdrawals are also tax-free. Upon a taxpayer’s death, there are other considerations.

Probate fees are payable to a province to validate the will of a deceased person so that the executor or executrix can distribute the estate to the beneficiaries.

If the TFSA belonged to your spouse, Linda, and they named you as the “successor holder”, their TFSA effectively becomes your TFSA on their death and the account remains tax-free all along. There’s also no impact on your TFSA room. The account does not pass through their estate and that means there’s no probate payable.

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