What is the difference between a successor account holder and a beneficiary?
When you complete Citibank’s TFSA application, there is a section for you to indicate your successor. Only your spouse or common law partner can be your successor. If you designate your spouse or common law partner as the successor to your account, that means that upon your death, they become the new owner of your TFSA. There are no taxes that are owed as a result of this transfer of ownership and no taxes to be paid on the earnings of the TFSA. Also, there will be no impact on the successor account holder’s contribution room. If you do not have a spouse or common law partner, you may complete the beneficiary section of the application. By doing so, you are naming the person who will own your TFSA after your death. Upon your death, the account ceases to be a TFSA and any income earned from the date of your death will be subject to taxes in the hands of the beneficiary.
