CRA treats an amount paid from a deceased’s RRIF to the RRIF of the surviving spouse who was excluded under the will as qualifying as a designated benefit

A couple separated without proceeding to an official division of their assets. When Monsieur subsequently died, his will excluded Madame. She made a claim against the executor, and they then agreed in writing to transfer the property in the deceased’s RRIF to her for contribution to her RRIF. CRA indicated that the usual rules for a transfer from a deceased’s RRIF to that of his surviving spouse applied so that:

• The rollover for a spousal RRIF-to-RRIF rollover under s. 146.3(14) on the breakdown of a marriage was not available because the transferor annuitant was dead.
• However, if the executor and the surviving spouse made a joint designation on Form T1090, the value of the property in the deceased’s RRIF could qualify as a “designated benefit” and be excluded from the deceased’s income and included in the surviving spouse’s income.
• The surviving spouse, in turn, would be eligible to take a deduction under s. 60(l) for the transfer of an “eligible amount” to her RRIF.

Neal Armstrong. Summaries of 6 October 2017 APFF Financial Strategies and Instruments Roundtable, Q.5 under s. 146.3(14) and s. 146.3(1) – designated benefit.