The largest taxable capital for most retirees is their RRSP/RRIF.
If one has a spouse, it is important to name the spouse as the beneficiary so the RRSP/RRIF can be roll over directly to the spouse without triggering tax. This will also by-pass the probate fee.
However when both owners (for example - husband and wife) passed away, tax will have to be paid before the RRSP/RRIF can be transferred to their children or grandchildren, because the taxable RRSP/RRIF is 100% taxable – this can mean 50% of the capital could go to tax.
If a couple have a total RRSP/RRIF of say $1,000,000, when both died, this capital will become the estate of the last deceased and almost $500,000 will be tax for our government.
The taxable capital RRSP/RRIF is indeed a tax time bomb!
Discuss with your Tax and Financial advisor to find a solution to diffuse such time bomb before it is too late.
The Estate Multipler can be one of the solutions.
However, RRSP is still the best tax shelter system given to us by our government!
One just have to know how to use it wisely.