Yes, your child can inherit your Tax-Free Savings Account (TFSA) tax-free, provided you have designated them as a beneficiary directly with your financial institution. While only a spouse can be a "successor holder" who takes over the plan, children can receive the proceeds tax-free up to the fair market value at the time of death.
Designated beneficiaries can include a survivor who has not been named as a successor holder, former spouses or common-law partners, children, a designated subsequent survivor holder who is the new spouse or common-law partner of the successor holder, and qualified donees.
Typically, the estate will pay any estate tax owed, with the beneficiaries receiving assets from the estate free of federal income taxes (see exception for retirement assets in the chart below). As a beneficiary, if you later sell or earn income from inherited assets, there may be federal income tax consequences.
Here are five mistakes to avoid when managing your TFSA.
Can you transfer a TFSA to another person? No, you can't transfer your TFSA to another person.
Any gifts exceeding $19,000 in a year must be reported and contribute to your lifetime exclusion amount. You can gift up to $13.99 million over your lifetime without paying a gift tax on it (as of 2025). The IRS adjusts the annual exclusion and lifetime exclusion amounts every so often.
You can designate a beneficiary (your adult child or anyone else) on the TFSA contract or in your Will. Your beneficiary will not have to pay tax on payments made out of the TFSA as long as the total payments do not exceed the FMV of your TFSA at the date of death.
Here are four you should consider.
The Worst Assets to Inherit: Avoid Adding to Their Grief
While state laws differ for inheritance taxes, an inheritance must exceed a certain threshold to be considered taxable. For federal estate taxes as of 2024, if the total estate is under $13.61 million for an individual or $27.22 million for a married couple, there's no need to worry about estate taxes.
What Assets are Exempt From Inheritance Tax?
Currently, there is no inheritance tax in California, which means beneficiaries in the Golden State do not face a direct levy on the portion they receive.
When you designate a beneficiary in an investment account — like an RRSP or TFSA — the person you named gets that asset when you die. The investment account is not considered part of your estate, in this instance. The executor's responsibility is to carry out the instructions in your will.
IHT may have to be paid on the estate if it's worth more than the tax-free threshold of £325,000. This means that the first £325,000 of your estate is tax-free – the 40% tax only applies to any assets over this threshold.
“29 Canadians have TFSAs worth $5 million or more.”
If you've been eligible to contribute to a TFSA since the beginning in 2009, your maximum cumulative contribution room in 2025 is $102,000. That's it. So how did 29 people turn just over $100K of contribution room into $5 million?
Yes, you can absolutely sell a home below market value—and legally gift the difference. It's a legitimate and frequently used estate planning strategy that can support younger generations, avoid probate, reduce capital gains, and reduce estate tax exposure.
The main difference is the timing of those tax charges. For example, when you provide a gift, you can choose the timing of that disposition to minimize the taxes owed. However, if you leave an inheritance, your estate will pay the taxes based on the market value at your date of death.