BMO Financial Group

BMO Financial Group
BMO Bank of Montreal

BMO Bank of Montreal

February 25, 2012 08:00 ET

BMO Retirement Tip of the Day: Choose the Right Beneficiaries for Your RRSP, RRIF and TFSA

TORONTO, ONTARIO--(Marketwire - Feb. 25, 2012) - As the February 29th deadline approaches to make a contribution to a Registered Retirement Savings Plan (RRSP) and as part of its ongoing commitment to improving financial literacy, BMO Financial Group will be providing daily retirement tips during the month of February from BMO Retirement Institute Head Tina Di Vito's new book 52 Ways To Wreck Your Retirement…And How To Rescue It.

Tip Number 48:

Choose the right beneficiary for your RRSP, RRIF and TFSA

One of the biggest mistakes people make in estate planning is failing to name a beneficiary for their Registered Retirement Savings Plan (RRSP), Registered Retirement Income Fund (RRIF) and Tax Free Savings Account (TFSA). Failing to do this may result in the account(s) defaulting to the estate and incurring higher estate taxes.

  • Always consider naming a spouse as primary beneficiary on RRSPs and RRIFs, and as a successor account holder on TFSAs. If it is not appropriate to name your spouse, consider whether it is appropriate to name another beneficiary to allow the funds to be paid directly to the beneficiary and bypass the probate process.
  • Ask your financial institution if you can make a "contingency beneficiary designation" on your RRSP, RRIF and/or TFSA, should your primary beneficiary pre-decease you.
  • Review the beneficiary designations on your RRSP, RRIF, and/or TFSA and in your will to ensure they reflect each other, are appropriate and up to date. Your designations should be reviewed and updated after any major life event such as a marriage, birth, separation or divorce.

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