RRSP planning for death
Unfortunately my mother whom has been battling cancer has been given a couple months to live. Her finances are relatively straight forward, she and my father are retired and live in an in-law suite attached to my sisters house so they don't have a mortgage or really any other debt. My father just collects CPP and old age pension and my mother is collecting CPP and a small government pension (she was a nurse, but didn't pay in to pension plan until late in her career).
A while ago I helped her setup an RRSP and TFSA, the rrsp was to roll in 36k severance pay she received when she retired, to defer taxes. I opened a TFSA for her at the same time and she had $10k to contribute to that.
Both accounts were setup with beneficiaries like this (at questrade):
child 1: 10%
child 2: 10%
child 3: 10%
spouse: 70%
There are no minors or financial dependent children/grand children involved. The 36k RRSP is 100% cash right now, the 10k TFSA is invested in a couple stocks (I'm thinking about selling this now to convert to cash, or at the very least selling it soon after her death as I believe gains accumulated in an account after death can be subject to taxes in the beneficiaries hands).
So questions. Firstly, I understand this is not a lot of money we are dealing with here, but she is concerned that everything be taken care of when she dies and wants to be reassured about what will happen.
It's my understanding that her RRSP can roll over to my father and tax can be deferred. Does this still apply when other beneficiaries are named? I.e. can 70% go directly to my father's RRSP, then the other 30% to the kids and we'd only have to include 30% of the RRSP on my mothers final death taxes as taxable income i.e. $10,800 (30% of 36k) reported as income on her final taxes?
I understand the TFSA is tax free and we shouldn't need to worry about that account.
I'm starting to question if we set this up the best way or not, or if there could be anything else we should be doing right now to make this easier such as withdrawing some or all funds now and moving to her TFSA etc. Or rolling the entire amount to my fathers RRSP and then withdrawing small amounts from his RRSP to give to children.
Does Questrade take care of all of this distribution of the funds to the multiple beneficiaries? They have a form with all of our names, addresses and social insurance numbers afaik.
Also is there any other considerations I should be making here, about what happens to her CPP and work pension?
A while ago I helped her setup an RRSP and TFSA, the rrsp was to roll in 36k severance pay she received when she retired, to defer taxes. I opened a TFSA for her at the same time and she had $10k to contribute to that.
Both accounts were setup with beneficiaries like this (at questrade):
child 1: 10%
child 2: 10%
child 3: 10%
spouse: 70%
There are no minors or financial dependent children/grand children involved. The 36k RRSP is 100% cash right now, the 10k TFSA is invested in a couple stocks (I'm thinking about selling this now to convert to cash, or at the very least selling it soon after her death as I believe gains accumulated in an account after death can be subject to taxes in the beneficiaries hands).
So questions. Firstly, I understand this is not a lot of money we are dealing with here, but she is concerned that everything be taken care of when she dies and wants to be reassured about what will happen.
It's my understanding that her RRSP can roll over to my father and tax can be deferred. Does this still apply when other beneficiaries are named? I.e. can 70% go directly to my father's RRSP, then the other 30% to the kids and we'd only have to include 30% of the RRSP on my mothers final death taxes as taxable income i.e. $10,800 (30% of 36k) reported as income on her final taxes?
I understand the TFSA is tax free and we shouldn't need to worry about that account.
I'm starting to question if we set this up the best way or not, or if there could be anything else we should be doing right now to make this easier such as withdrawing some or all funds now and moving to her TFSA etc. Or rolling the entire amount to my fathers RRSP and then withdrawing small amounts from his RRSP to give to children.
Does Questrade take care of all of this distribution of the funds to the multiple beneficiaries? They have a form with all of our names, addresses and social insurance numbers afaik.
Also is there any other considerations I should be making here, about what happens to her CPP and work pension?