Estate Planning - Over Stuffed Registered Accounts (Video 4)

When I start working with a new couple in their early retirement years, I often encounter the same issue repeatedly: overstuffed registered accounts like RRSPs and RRIFs. These accounts are one of the biggest liabilities for an estate strategy. Yes, liability—not asset.

Here’s what many don’t realize:

• During their working years, a couple each accumulates $400,000 in RRSPs, totaling $800,000.
• If one spouse passes away, the survivor inherits the full $800,000 in their registered account.
• Upon their death, the estate doesn’t receive $800,000.

Why? The final tax is calculated at the highest marginal tax rate—nearly 54% in Ontario. That means the beneficiaries, usually the children, face a massive tax bill, leaving them with almost half of the estate gone.

What’s the Estate solution?

If the estate doesn’t have the liquidity to cover this tax, we need to address it now.

We encourage retirees to:

• Spend their money tax-efficiently.
• Recycle RRSP or RRIF assets into tax-smart vehicles like permanent life insurance and TFSAs, which transfer fully intact and tax-free to beneficiaries.

Otherwise, the CRA wins and the beneficiaries lose.

At Tayler Insurance & Estate Planning, we help you grow your wealth, minimize taxes, and protect your legacy."