What Happens to Your XEQT When You Die? Estate Planning Every Canadian Investor Needs

My buddy Dave is a great investor. He’s been buying XEQT religiously for five years, maxed out his TFSA, and has a solid RRSP. He’s 34 and has about $180,000 invested. He’s doing everything right — except for one thing.

He has no beneficiary listed on any of his accounts. No successor holder on his TFSA. No will. Nothing.

If Dave got hit by a bus tomorrow, his $180,000 portfolio would get tangled in probate, potentially face unnecessary taxes, and take months (or years) to reach his partner. All because he skipped a 15-minute task that he kept meaning to get around to.

Nobody likes thinking about this stuff. I get it. But if you’ve spent years building an XEQT portfolio, you owe it to yourself — and the people you love — to make sure it’s protected. This is one of the most important 15 minutes you’ll ever spend as an investor.

1. Why Investors Ignore Estate Planning

Let’s be honest about why most of us haven’t dealt with this:

• “I’m young, it doesn’t apply to me” — Except accidents and unexpected illness don’t check your birth certificate first
• “It’s morbid and depressing” — Sure, but so is your family spending $10,000+ on legal fees and waiting 18 months for probate
• “It seems complicated” — It’s actually one of the simplest things you can do as an investor
• “I’ll do it eventually” — The problem with “eventually” is that you never know when your deadline actually is

Here’s the thing: estate planning for investors isn’t about lawyers and trusts and complex documents (though those can help). The most important step is simply naming beneficiaries on your investment accounts. That’s it. On most platforms, including Wealthsimple, it takes about 5 minutes.

Let’s break down exactly what happens to your XEQT depending on which account it’s in.

2. What Happens to Your TFSA When You Die

Your TFSA has two different options for who receives it after death, and the difference is massive:

Option A: Successor Holder (Spouse/Common-Law Partner Only)

This is the gold standard. If you name your spouse or common-law partner as the successor holder of your TFSA, here’s what happens:

• Your TFSA transfers directly to your spouse’s name
• All investments stay intact — your XEQT shares aren’t sold
• No tax is triggered — the entire transfer is tax-free
• Your spouse takes over the TFSA as if it were their own
• The value at date of death does NOT count against their own TFSA contribution room
• Any growth between date of death and the transfer date is also protected

This is incredibly powerful. If you have $150,000 of XEQT in your TFSA and you pass away, your spouse receives $150,000+ in a TFSA — tax-free, no probate, no delays. The investments continue growing as if nothing happened.

Option B: Beneficiary (Anyone)

If you name a beneficiary (a child, sibling, friend, or even your spouse if you choose this instead of successor holder):

• The TFSA’s fair market value at date of death is paid to the beneficiary tax-free
• However, the TFSA ceases to exist — it’s collapsed and paid out as cash
• Any growth after the date of death but before the account is closed IS taxable (to the estate)
• The beneficiary receives cash, not the TFSA — it does NOT count as TFSA room for them
• The proceeds do bypass probate (in most provinces)

The Critical Difference

Bottom line: If you’re married or have a common-law partner, ALWAYS name them as your successor holder, not just a beneficiary. The difference could save thousands in taxes and preserve the tax-sheltered status of your entire XEQT portfolio.

3. What Happens to Your RRSP/RRIF When You Die

RRSPs get more complicated. Here’s the default:

Without a designated beneficiary: Your RRSP is included in your estate. The CRA treats it as if you withdrew the entire amount on the day you died. The full value is added to your final tax return as income and taxed at your marginal rate. On a $300,000 RRSP, the tax bill could be $100,000+. Then the remaining amount goes through probate.

That’s the nightmare scenario. Now here’s how to avoid it:

Spouse or Common-Law Partner as Beneficiary

If you name your spouse/partner as the RRSP beneficiary:

• The RRSP can be rolled over directly into their RRSP or RRIF — tax-free
• No deemed disposition. No income inclusion on your final return.
• Your spouse keeps the tax-deferred status intact
• The investments don’t need to be sold

This is the most common and most advantageous option.

Financially Dependent Child or Grandchild

If you have a financially dependent child (under 18, or any age if they depend on you due to disability):

• The RRSP can be used to purchase an annuity paying out until age 18
• Or rolled into an RDSP for a disabled dependent
• Provides some tax deferral, though not as clean as the spousal rollover

Anyone Else

If you name anyone else (adult child, sibling, friend):

• The full RRSP value is included on YOUR final tax return (you’re taxed on it)
• The beneficiary receives what’s left after tax
• It still bypasses probate in most provinces

4. What Happens to Non-Registered XEQT When You Die

If you hold XEQT in a regular taxable (non-registered) account, the CRA treats death as a deemed disposition — meaning your investments are treated as if you sold everything at fair market value on the date of death.

Example: You bought $50,000 of XEQT over the years. On the day you die, it’s worth $120,000. The CRA considers this a $70,000 capital gain. At the 50% inclusion rate, $35,000 is added to your final tax return.

The spousal exception

If the non-registered account passes to your spouse (via will, beneficiary designation, or joint ownership), the deemed disposition is deferred. Your spouse inherits the investments at your original cost base. They won’t owe tax until they actually sell.

This is another reason joint accounts or proper beneficiary designations matter — they can defer significant capital gains taxes.

Summary by account type

5. The Probate Trap: How It Works and How to Avoid It

Probate is the legal process of validating a will and giving the executor authority to distribute the estate. The problem? It costs money and takes time.

Provincial probate fees

How beneficiary designations bypass probate

Here’s the key insight: investments with named beneficiaries pass directly to the beneficiary, outside of the estate. They don’t go through probate. They don’t incur probate fees. They transfer quickly.

This means:

• TFSA with a successor holder → direct transfer, no probate
• RRSP with a named beneficiary → direct payment, no probate
• Non-registered account with a named beneficiary (where available) → may bypass probate
• Investments with no beneficiary → fall into the estate, go through probate

Simply naming beneficiaries on your investment accounts can save your family thousands in probate fees and months of waiting.

6. How to Set Up Beneficiaries (It’s Easier Than You Think)

On Wealthsimple

Setting up beneficiaries on Wealthsimple takes about 5 minutes:

1. Open the Wealthsimple app or website
2. Go to your account settings
3. Select the specific account (TFSA, RRSP, etc.)
4. Look for “Beneficiary” or “Successor Holder” settings
5. Enter your beneficiary’s full legal name, date of birth, and relationship
6. For your TFSA, specifically choose “Successor Holder” if naming your spouse

That’s it. No paperwork to mail. No notary required. Just fill in the fields and save.

On other platforms

Most brokerages (Questrade, National Bank Direct Brokerage, etc.) require you to fill out a beneficiary designation form. Some let you do it online; others require a printed form. Check your brokerage’s website or call their support line.

7. Common Estate Planning Mistakes Investors Make

Mistake 1: Not naming any beneficiary

This is by far the most common mistake. If you don’t name a beneficiary, your investments fall into your estate, go through probate, and are distributed according to your will (if you have one) or provincial intestacy laws (if you don’t).

Mistake 2: Naming your “estate” as beneficiary

Some people write “my estate” as the beneficiary thinking it’s the same as naming a person. It’s not. Naming your estate means the account goes through probate — the exact thing you’re trying to avoid.

Mistake 3: Not updating after major life events

Got married? Divorced? Had kids? Your beneficiary designations should be updated after any major life change. A shocking number of Canadians have ex-spouses listed as beneficiaries on their RRSP or life insurance. The legal designation on the account typically overrides what your will says.

Mistake 4: Confusing “beneficiary” with “successor holder” on a TFSA

As we covered above, these are very different. If your spouse is listed as a beneficiary instead of successor holder, the TFSA collapses and they receive cash — losing the tax-sheltered status. Always check which option you selected.

Mistake 5: Assuming your spouse automatically gets everything

In most provinces, your spouse does NOT automatically inherit your investment accounts. Without proper beneficiary designations and a will, provincial intestacy laws determine distribution — and those rules may not match your wishes, especially in blended families.

Mistake 6: Not having a will

Beneficiary designations handle your investment accounts, but a will covers everything else: property, personal belongings, guardianship of children, and specific bequests. A basic will can be done through an online service for $50-$200. There’s no excuse.

8. The Estate Planning Checklist for XEQT Investors

Here’s your actionable to-do list. Most of this can be done in a single afternoon:

1. Name a successor holder on your TFSA — Must be your spouse or common-law partner. This is the single most valuable estate planning step for your investments.

2. Name beneficiaries on your RRSP — Your spouse for tax-free rollover. If no spouse, consider the tax implications for other beneficiaries.

3. Name beneficiaries on all other accounts — FHSA, RESP (successor subscriber), non-registered (where available).

4. Create or update your will — Use an online service (Willful, LegalWills.ca, etc.) or visit a lawyer. Budget $100-$500.

5. Create a power of attorney (POA) — Both for finances and healthcare. If you become incapacitated, someone needs legal authority to manage your accounts.

6. Document your accounts — Keep a simple list of all your investment accounts, institutions, and approximate values. Store it with your will. Your executor needs to know where your money is.

7. Tell someone — Make sure your spouse, executor, or a trusted person knows where your will is and that you have investment accounts. A perfectly set up estate plan is useless if nobody knows it exists.

8. Review annually — Add a calendar reminder every January to review your beneficiary designations. Update after any major life event (marriage, divorce, birth of a child, death of a beneficiary).

9. Special Situations

Common-law partners

In most provinces, common-law partners have the same rights as married spouses for TFSA successor holder and RRSP rollover purposes. But the definition of “common-law” varies by province and by federal/provincial context. Generally, you need to have lived together in a conjugal relationship for at least 12 continuous months. If this applies to you, make sure your designations are in place — common-law partners don’t automatically inherit anything without proper documentation.

Blended families

If you have children from a previous relationship AND a current spouse, estate planning becomes critical. Without clear designations and a will, your assets might not be distributed the way you intend. Consider consulting an estate planning lawyer — the cost ($500-$2,000) is nothing compared to the family conflict and legal battles that can arise.

RESP considerations

If you’re the subscriber on a Registered Education Savings Plan, consider naming a successor subscriber (usually your spouse) in your will. If the subscriber dies without a successor subscriber, the RESP may need to be collapsed — which means returning government grants (CESG) and potentially triggering tax on investment earnings.

10. Why This Matters More Than You Think

Let me put this in perspective. If you’re building an XEQT portfolio for 20-30 years, you could easily accumulate $500,000 to $1,000,000+. That’s life-changing money for your family.

Without proper estate planning:

• Your family could pay $7,000-$15,000 in probate fees (depending on province)
• Your RRSP could trigger a $100,000+ tax bill on your final return
• Your TFSA’s tax-free status could be permanently lost
• Your family could wait 6-18 months to access the money
• Provincial intestacy laws might send your money to people you wouldn’t have chosen

With proper estate planning (15 minutes of your time):

• Accounts transfer directly to named beneficiaries — no probate
• TFSA continues tax-free in your spouse’s name — no tax
• RRSP rolls over to spouse — no immediate tax
• Your family gets the money within weeks, not months
• Your wishes are followed exactly as you intended

The return on investment for 15 minutes of estate planning is potentially hundreds of thousands of dollars. There’s no XEQT return that comes close.

The Bottom Line

You’ve put in the hard work of building an XEQT portfolio. You’ve automated your contributions, stayed the course through market volatility, and let compound interest do its thing. Don’t let all of that be undermined by something as simple as a missing beneficiary designation.

Go to your Wealthsimple account right now. Name your successor holder. Name your beneficiaries. Then draft a will if you don’t have one. This is the ultimate set-it-and-forget-it task — you do it once, update it after life changes, and your family is protected forever.

Future-you will thank present-you. And more importantly, the people you love will never have to deal with a preventable financial mess during the worst time of their lives.

Related posts:

• XEQT: TFSA vs RRSP — Where Should You Hold It?
• XEQT Retirement Planning Guide
• XEQT Tax Implications: Canadian Investor’s Guide
• TFSA Investing Guide
• RRSP Investing Guide