What happens if the RDSP beneficiary dies?
The RDSP must close by December 31st of the following calendar year of the beneficiary’s death and all amounts in the plan must be paid out.
- Any government grants and bonds that have been in the RDSP for less than 10 years must be repaid to the government.
- Proceeds from the collapsed RDSP will be distributed in accordance with the beneficiary’s will or, if the beneficiary doesn’t have a will, in accordance with the rules of intestacy in each province.
- The beneficiary’s estate will receive any funds left in the RDSP after any government grants and bonds are repaid.
- If the beneficiary of an RDSP does not have legal capacity to draft a Will upon the beneficiary’s death, a family member can apply to the court to be appointed as administrator of the estate, or The Office of the Public Guardian and Trustee (OPGT) will do the job of identifying inheritors according to the provincial formula set out in law.
- The estate may have to pay tax on the portion of the funds that come from investment earnings and any government grants or bonds (but not the contributions themselves).
- If a DAP had been made and the beneficiary is deceased, the taxable part of the DAP must be included in the income of the beneficiary’s estate in the tax year in which the payment is made.
For more information on how much the repayment will be, contact the issuer of your RDSP or go to Employment and Social Development Canada (ESDC).
Who to notify with regards to the death of an individual varies depending on the province:
For BC, here is a checklist of who to contact: https://www2.gov.bc.ca/gov/content/life-events/death/after-death/who-to-notify
Financial institutions should have an identified process available on their website and this may differ from institution to institution.
More information from the Government of Canada website