TFSA After Death
What happens to a TFSA when the holder dies: successor holder vs beneficiary, tax on growth after death, the spouse exempt contribution and RC240, and probate.
The short version
- A TFSA's value at death is tax-free. Unlike an RRSP, nothing goes on the final return.
- Growth after the date of death is taxable to whoever receives it: a beneficiary or the estate.
- Name your spouse as successor holder and the TFSA simply becomes theirs: no tax, still sheltered, and it doesn't use their own contribution room.
- A spouse named as beneficiary instead can still move the money into their own TFSA without using room, as an exempt contribution, by December 31 of the year after death, filing form RC240 within 30 days.
- Naming a beneficiary or successor holder keeps the TFSA out of the estate and out of probate in the common-law provinces and territories.
TFSA After Death
The TFSA is the easy account at death. It was taxed going in, it grew tax-free, and it comes out tax-free, so there's no deathbed tax bill like the one an RRSP brings. The details are about what happens after: who it goes to, how fast, whether the shelter continues, and whether a single checkbox on a bank form was ticked years ago. That checkbox, successor holder versus beneficiary, is where families lose the most value for the least reason.
Successor Holder, Beneficiary or Estate?
| Who's named | What happens | Tax |
|---|---|---|
| Spouse as successor holder | The TFSA continues in the spouse's name, investments untouched | None. Stays tax-free; no effect on the spouse's own room. |
| Spouse as beneficiary | Paid out; spouse can contribute it to their own TFSA as an exempt contribution | Value at death tax-free; growth after death taxable unless rolled in |
| Children or anyone else as beneficiary | Paid out to them | Value at death tax-free; growth after death taxable to them. Re-contributing uses their own room. |
| No one, or the estate | Goes into the estate, through the will and probate | Value at death tax-free; growth after death taxed to the estate or beneficiaries |
Only a spouse or common-law partner can be a successor holder. In Quebec, designations generally have to be made in a will. The TFSA basics: TFSA rules and TFSA vs RRSP; how it compares to the RRSP at death: RRSPs and RRIFs at death.
Settling a TFSA after a death?
Tell the assistant who was named on the TFSA, its value at death and now, and whether a spouse survives. It explains what's tax-free, what's taxable, and the deadline for any exempt contribution.
Example: A $95,000 TFSA
| Scenario | Result |
|---|---|
| Spouse named successor holder | Spouse now owns a $95,000 TFSA, and keeps all their own room |
| Spouse named beneficiary; account worth $98,000 when paid out | $95,000 tax-free; $3,000 of growth reported as income. Up to $95,000 can go into the spouse's TFSA as an exempt contribution. |
| Two adult children named, $98,000 paid out | $47,500 each tax-free, $1,500 each taxable. Putting it in their own TFSAs uses their own room. |
| Left to the estate | Same tax result, but the $95,000 goes through probate; in Ontario that adds about $1,425 of estate administration tax |
Growth after death is reported on a slip (often a T4A) to the person who receives it. Probate by province: probate vs income tax. Estimate an estate's total tax with the estate tax calculator.
Timing Rules
- Exempt period: the TFSA stays non-taxable until the end of the year after the year of death, or until it's paid out, if sooner. After that, income in the account is taxable.
- Exempt contribution by a surviving spouse: during the same period, up to the value at death, with form RC240 filed within 30 days of the contribution.
- Overcontributions by the deceased stop at death; any 1% a month tax owed before death is the estate's; see TFSA overcontribution.
- The executor doesn't report the TFSA on the final return, but should list it for the clearance certificate if it went through the estate; see clearance certificate and executor duties.
TFSA After Death Questions
Is a TFSA taxable at death in Canada?
No. The fair market value of a TFSA at the date of death is not taxed and is not included on the final return. Income earned after death can be taxable to the beneficiary or estate.
What is the difference between a TFSA successor holder and a beneficiary?
A successor holder, who must be a spouse or common-law partner, takes over the TFSA itself, which stays tax-free. A beneficiary receives a payout: the value at death is tax-free, but growth after death is taxable.
Can my spouse put my TFSA into their own TFSA without using room?
Yes. A surviving spouse who receives the TFSA as beneficiary can make an exempt contribution, up to the value at death, by December 31 of the year after the death, and must file form RC240 within 30 days of contributing.
Do my children have to pay tax on my TFSA?
Not on its value at death. They pay tax only on growth between the date of death and the payout, and they need their own contribution room to put it into their TFSAs.
Does a TFSA go through probate?
Not if a successor holder or beneficiary is named, outside Quebec. If no one is named, it becomes part of the estate and probate fees apply.
Sources: CRA, If you are a designated beneficiary of a TFSA; CRA, What happens when a TFSA holder dies. Checked October 2026. The slip used for post-death income depends on how the TFSA was set up. The Ontario probate figure ignores the $50,000 exemption, which applies to the whole estate. Quebec rules differ.
Last reviewed October 5, 2026 against CRA and Government of Canada sources. How we check our facts.