Question
Khadijeh recently passed away. She is divorced and her ex-husband has no claim over her assets. Her son Farrokh is 12 and has a disability
Khadijeh recently passed away. She is divorced and her ex-husband has no claim over her assets. Her son Farrokh is 12 and has a disability (and qualifies for the dividend tax credit).He has been named sole beneficiary of her RRSP. His Uncle, who is executor, has come to you, his financial planner, for advice. He'd like to know what needs to be done to transfer his sister's RRSP assets to Farrokh. What should you tell him?
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In Canada when an individual passes away and leaves behind a Registered Retirement Savings Plan RRSP the RRSP assets can be transferred to a financially dependent child or grandchild including a child with a disability without being subject to immediate taxation Heres what needs to be done to transfer Khadijehs RRSP assets to her son Farrokh 1 Contact the RRSP Provider The executor Khadijehs brother should contact the RRSP provider to inform them of Khadijehs passing and to initiate the process of transferring the RRSP assets to Farrokh 2 Provide Documentation The RRSP provider will likely require documentation such as a death certificate and proof of Farrokhs disability status to process the transfer 3 Designation of Beneficiary Form If Khadijeh had not already designated Farrokh as the beneficiary of her RRSP the executor may need to complete a beneficiary designation form provided by the RRSP provider 4 Open an Inherited RRSP Account Once the RRSP assets are transferred to Farrokh he may need to open an inherited RRSP account to receive the funds This account will be subject to certain rules and regulations regarding withdrawals and taxation 5 Tax Considerations While the RRSP assets can be transferred to Farrokh without immediate taxation any withdrawals made by Farrokh from the inherited RRSP account will be subject to taxation at his marginal tax rate However as Farrokh qualifies for the dividend tax credit this may help reduce the tax burden on any income generated from the RRSP investments 6 Consultation with a Tax Professional Its advisable for Farrokhs uncle as the executor and Farrokh himself to consult with a tax professional or financial ...
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Managing Human Resources
Authors: George Bohlander, Scott Snell
14th Edition
032431468X, 978-0324314687, 324314639, 978-0324314632
