[Covariance]

Did it go through the will or was she the beneficiary of the account (on record with the FI)?

 

[Covariance]

Just as important, if the spouse was named as beneficiary, was she the successor annuitant or the sole beneficiary?

I assumed she was not successor as Ian says the balance was transferred by the trustee. But agree it would be best to be clear.

Ian was it transferred to her account, as opposed to her assuming his account (RIF)? And by trustee do you mean the Estate Trustee (aka executor) or the FI operating trustee for the BIL‘s RIF (trust)?

 

[Covariance]

I believe you can do just what you are trying to do but I am having some difficulty finding the CRA rule, and more importantly, the form where you do it. I think this form may do the job for you: T1090

T1090 Joint Designation on the Death of a RRIF Annuitant, PRPP Member, or ALDA Annuitant - Canada.ca

This form provides information for individuals on the Designated Benefit as a result of the death of a RRIF Annuitant.

www.canada.ca

It appears to allow you to divide the amounts of the RRIF between the two annuitants as long as one is a qualifying survivor, which a spouse is. You would just divide up your BILs RRIF between the two, as you would like it and sign the form in both spots as executor to both. That said, I am not familiar enough with all the boxes of the T4RIF that gets issued by the FI to be sure. Perhaps this info can be helpful and may shed light on the situation. RC4178

Death of a RRIF Annuitant, PRPP member, or ALDA Annuitant - Canada.ca

This Canada Revenue Agency (CRA) information sheet provides general information for individuals on the death of a Registered Retirement Income Fund (RRIF) annuitant.

www.canada.ca

Obviously the taxes on your sister's RRIF has to go on her final tax return since she did not have a qualifying survivor (spouse) when she died.

Also keep in mind, that I have noticed in life, as both a personal tax payor and an executor that for us living tax payors, not declaring income precisely as it is recorded on a T-slip can be a major problem, but not declaring income as it is recorded on a T-slip for a deceased person is just another day at the office for CRA. They don't seem to care and I think they must see this all the time. So don't worry as much that your declaration of income, on a tax return, is not precisely as stated on a t-slip. Of course it never hurts to include a letter explaining what you have done. Actually that is probably essential. Good luck.

It is my understanding she presented herself to the FI as beneficiary based on Ian’s disclosure above. They then acted on (her?) instruction and transferred all the assets to her RIF and closed his RIF. In which case she will receive a T4RIF with the value of the assets transferred and also be allowed a deduction of the same amount. The BIL will get a T4RIF with any withdrawals before death, or the required minimum withdrawal for the year.

The T1090 would have been an option had she not taken it into her RIF. Had she not done so, the portion she did not take would have been in the estate. But in reality she would not need the T1090 because it would have been taxed where Ian’s analysis suggests would have been better.

One final comment, Ian. If she had not passed would the tax still have been lower? If so, you may wish to understand who advised her and any recourse there, including the potential to correct the above account transfer.

Will await Ian’s response after consultation with his advisor.