Sunday, January 18, 2009

Designating Beneficiaries of Tax-Free Savings Accounts

In British Columbia you can designate a beneficiary of a Tax-Free Savings Accounts. If the beneficiary survives you, he or she will receive the funds as a designated beneficiary, instead of the funds passing under your will. This is similar to designated a beneficiary of a Registered Retirement Savings Plan.

Tax-Free Savings Accounts are new. Beginning January 1, 2009, Canadian taxpayers can contribute up to $5000 annually into a Tax-Free Savings Account. Interest and other income earned in a Tax-Free Savings Account is not taxable. Unlike Registered Retirement Savings Plans, there is no deduction for contributions.

In November, 2008, the British Columbia Government passed Bill 45, which included an amendment to section 49 of the Law and Equity Act. The amended section allows the annuitant (owner) to designate a beneficiary. The designation must be in writing and signed by the annuitant.

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