Should I Name My Child as Beneficiary on My RRSP?

Short answer

It's often the best way to have probate tax, but what seems simple can cause income tax problems, estate unfairness, or missed opportunities—especially if you have more than one child.

Long answer

Naming a child as a direct beneficiary on your RRSP might seem like an easy way to avoid probate (and probate tax). But the income tax treatment isn't always what people expect—especially for RRSPs, which are taxed on death unless the beneficiary is a spouse or dependent.

It's like you took all the money out on the day you died, and CRA goes after the estate for that tax first, while the named beneficiary gets the full pre-tax account balance.

So if the RRSP goes to Linda directly, but the tax bill comes from the estate where the pot is split between the other kids Anne and Tom, it's effectively like Anne and Tom are paying the tax from their share. And that will be a big fight.

It can also create resentment if your Will divides everything equally but one child receives extra outside the estate.

Or, if your Will assumes those funds are available to cover debts or other gifts, naming a beneficiary might undermine your plan.

Beneficiary designations work best when they’re deliberate, coordinated with your Will, and you understand the tax and fairness implications.

If your designations don’t match your plan, they’ll break it.

Book a call before your RRSP hands one kid the money—and all the others the tax bill.

This content is for general information only and does not constitute legal advice. Please consult a lawyer about your specific situation.