Courtesy of Janet Baccarani & Jennifer Black from DFS Private Wealth.
Tax season can be a challenge at the best of times – but, what if it’s following the loss of partner or spouse? What then?
Widows and widowers can face a variety of distinct issues come tax time. Memories are revived and emotions can come to the forefront again. And, then there’s the reality dealing with the numbers and the numerous questions that can go along with them.
Frequently asked questions addressed
Often there are questions and issues that many of us aren’t equipped to deal with after suffering such a loss: Now that I am on my own, should I invest in retirement saving plans (RRSPs) or pay down the mortgage? …Should I avoid RRSP’s altogether? …And, that’s just a small sampling of the questions.
A difficult and emotional situation requires expertise and understanding. Over the course of the next few weeks, I’ll be addressing some of the most frequently asked questions in this blog to help provide you with perspective and insight on the “next steps” in confidently moving forward come tax time. …Today, a look at the following: “What happens to YOUR RRSP if you die prematurely, and how best to leave a positive legacy?”
Leaving a positive legacy
Death is a certainty for all of us; hence we have to stop “pretending” that it won’t happen to us. Think about making plans for the inevitable. Have open discussions with family members, and put things in place to ensure there will be enough money for beneficiaries and dependants who are left behind.
The death of a loved one is hard enough to deal with; money concerns added in at the same time make it increasingly emotional and stressful. Leaving a positive legacy can be achieved with life insurance products that can cover debts and income tax liabilities. If the deceased person does not have a spouse or dependent child, the entire amount of any registered plan (RRSP or RRIF) must be included on their tax return in the year of death.
When your spouse passes away you have the option to roll the RRSP over to your own and consolidate them. This is usually the best option as it stays registered and therefore no tax will have to be paid on it at that time. In summary, leaving a positive legacy begins with planning ahead.
More tax information to come
I’ll be addressing more frequently asked questions pertaining to RRSPs and Tax Season and how they relate to widows and widowers soon, so please check back with Widowed.ca regularly. We’re here to help you take control of the future and get on with life. Should you have questions you’d like to see addressed in a future blog, please e-mail me at:
For more information on related topics, please contact DFS Private Wealth, the author of Managing Alone and founder of widowed.ca. We are here to help and answer any questions you have. Should you need a connection to a professional in your area we would be happy to make the introduction for you to someone you can trust. Contact Us today.