Creative Estate Planning With Your Tax-free Savings Account (TFSA)

By on August 26, 2014

By Adrian Spitters, FCSI, CFP, FMA and Win Wachsmann.  You’ve worked long and hard to build your asset base of investments and real estate.

Only you (and of course your spouse/partner) know of the blood, sweat and tears you’ve expended along the way.

You’ve maxed out your RRSP’s and RESP’s.

You’ve maxed out your spousal RRSP.

How else can you grow your assets and reduce taxes?

Well, the Tax-free Savings Account (TFSA) instituted by Minister of Finance Jim Flaherty in 2008 is one such program.

This program allows you, starting in 2009, to contribute $5000 (or $5500 in 2013, 2014) to that tax-free account. That means that even if you haven’t contributed previously, you can contribute $31,000 as of 2014. And you can catch up on any missed contributions – at any time.

All the money you put in is after tax money and all the investment income and growth you earn is also tax free.

Since it’s after tax money, your contribution is not based on a percentage of your earnings – unlike an RRSP.

Some of the benefits of the registered TFSA are that you can:

  1. hold any investment that is RRSP eligible. This includes stocks, bonds, mutual funds, Exchange Traded Funds (ETF), Guaranteed Investment Certificates (GICs), Real Estate Investment Funds (REITS) and even cash (of any country).
  2. withdraw your money at anytime and pay no tax on the withdrawal. A TFSA is great for a rainy day fund. It allows for short and long term savings as well as withdrawals when an emergency arrives (a new roof, wedding, etc.).
  3. use it to fund independent, primary school education as well as save for post-secondary education as opposed to RESP withdrawals which are taxable,
  4. gift a contribution to a spouse/partner’s TFSA. A high income partner can give an amount up to the annual contribution limit to a lower income or zero income spouse/partner thus effectively making an $11,000 contribution in 2014.
  5. give your children who are over the age of 18 an amount up to their contribution limit every year to contribute to their own TFSAs. (You cannot however, set up a TFSA jointly or “in trust” for a child.)
  6. designate a surviving spouse/partner as “successor holder” . They then receive the TFSA tax exempt. (check with your wealth advisor for the paperwork required to meet all the government requirements.)
  7. that upon your death, the beneficiary of your TFSA is someone who is not your spouse/partner. The proceeds bypass the estate and go directly to the beneficiary thus avoiding provincial probate taxes. Think of this as an another opportunity to help fund a favourite charity.
  8. if you live offshore and still have property in Canada keep contributing to your TFSA. Be aware that other countries may have rules limiting the tax-exempt benefits of the TFSA.

As you can see, the TFSA has a number of creative tax and estate planning opportunities that will allow you to grow and transfer your money and keep those infernal taxes down,

As with any financial planning strategy, it is always wise to seek the advice of a qualified wealth advisor to see how TFSAs will assist you in your existing saving and investment plans.

Adrian Spitters, FCSI, CFP, FMA, is a Senior Wealth Advisor with Assante Capital Management Ltd.  He can be reached at aspitters@assante.comor visit his website at

Win Wachsmann has been helping businesses improve their marketing and helping them get ready to sell their business. He doubles as an author, journalist, syndicated columnist, filmmaker and businessman who makes his home in the Fraser Valley of British Columbia. His articles and columns can be found in some of the finest offline and online magazines, journals and media properties.
He can be reached at




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