What happens after the death of an FHSA holder?

Last updated: October 22, 2025 | Reviewed by Paul Thorne

A First Home Savings Account (FHSA) can support more than your goal of buying a first home. It can also become a part of your estate. Understanding how an FHSA is handled after death can reduce confusion and help you make informed choices at a difficult time.

What happens to an FHSA if you die?

It depends on whether you’ve named a successor holder, a beneficiary or no one at all which means it will flow through to your estate.

Learning the differences of each path can help you make the best decisions yourself and for the people you care about.

Compare your FHSA inheritance options

Here’s a comparison table to help you understand what to expect if you name a successor holder, beneficiary, or no one at all. Each of the below assumes your estate and the survivor complete the transfers within an exempt period. The exempt period starts at the date of death and goes to December 31 of the year following death.

Successor holder (spouse/partner only) Beneficiary (spouse or other) No designation (flows to estate)
Who can be named? Spouse or common-law partner only. Anyone (spouse, family, friend, charity). Not applicable.
What happens to the FHSA? Account transfers directly and stays open (spouse/partner will need to withdraw funds or transfer to their RRSP or RRIF if they don’t qualify to open an FHSA at that time). FHSA is closed, funds paid out (a spouse/partner can choose to transfer amounts to their FHSA/RRSP/RRIF).

FHSA is closed, value becomes part of estate.
 

If a spouse/partner inherits the FHSA from the estate, they can choose ( to make an election with the estate’s legal representative) to transfer the amount to their own FHSA, RRSP or RRIF.
Who pays the tax? The recipient if they make a taxable withdrawal. The recipient. The estate.
Is the account taxed immediately? No, unless the surviving spouse/partner isn’t a qualified individual or doesn’t directly transfer the funds to an FHSA/RRSP/RRIF.

If you named your spouse/partner as the beneficiary: No, if they’re eligible for direct transfer to an FHSA/RRSP/RRIF.

If you named another person as the beneficiary: Yes.

 Yes, included in deceased’s final tax return unless an election is made to transfer to a spouse/partner and they qualify for direct transfer to an FHSA/RRSP/RRIF.
Can funds be directly transferred (tax-deferred)? Yes (conditions apply) Only spouse/partner may transfer to RRSP/RRIF (conditions apply) Only spouse/partner may transfer with joint election (conditions apply)
Goes through estate process? No No Yes
Best suited for… Couples planning jointly Single individuals or those with non-spouse heirs Single individuals or complex estate planning  

If you designated a successor holder

A successor holder inherits your savings accounts upon your death. You can only name a spouse or common-law partner as your FHSA successor holder. 

Provinces may need to update their laws to recognize a success holder named outside your will for provincial matters like estate distribution or probate. At this time, Nova Scotia recognizes designations for FHSAs. We’re awaiting clarification from other jurisdictions to determine their approach.

What happens to the FHSA when a designated successor holder is named?

They can continue to use it for an eligible first-time home purchase only if they’re eligible to open an FHSA at the time of their spouse’s or common-law partner’s death.

  • The FHSA remains registered 
  • The FHSA’s tax-sheltered status continues in the successor holder’s name

For more details about what counts as an eligible first-time home purchase, visit the main FHSA page.

Why might someone choose to name a successor holder?

Couples who have joint financial plans or are saving together for a home may want to designate their spouse or common-law partner as a successor holder because your spouse or common-law partner gets:

Seamless transfer

Your FHSA transitions directly to them without going through the estate, simplifying the process.

Continued tax benefits

They can continue to take advantage of the tax benefits the FHSA offers.

Flexibility

They can choose to make qualifying withdrawals, make a tax-deferred transfer to their own FHSA, RRSP or RRIF, or make taxable withdrawals, depending on their financial goals.

This option gives your spouse or common-law partner the most flexibility in how they want to manage the FHSA after you’re gone.

Joe and Mary: Planning for their first home

Joe and Mary are in their early 30s and saving for their first home. They each opened an FHSA and named the other as successor holder. If something unexpected happens, this helps make sure the surviving partner can continue using the account toward their shared goal, without delays or extra steps through their estate.

Casey and Jordan: Keeping their options open

Casey and Jordan opened FHSAs a few years ago but haven’t decided if or when they’ll buy a home. Life plans can shift, so naming each other as successor holders gives them peace of mind. If one of them passes away, the other can decide whether to keep the account, transfer it to their own FHSA, RRSP or RRIF, or withdraw the funds, depending on what makes the most sense at the time.

Successor holders - frequently asked questions

Only your spouse or common-law partner can be named as a successor holder. Other individuals, like your children, siblings, or friends, can only be designated as beneficiaries, which follows a different process and has different tax consequences.

No. Inheriting an FHSA from a deceased spouse or common-law partner doesn’t affect the surviving successor holder’s FHSA contribution room. However, the account retains its tax-exempt status only if they’re eligible to open an FHSA at the time of your death. If they do not qualify at that time, they’ll need to transfer it to their FHSA, RRSP, or RRIF.

No, the transfer won’t affect your spouse’s or common-law partner’s RRSP contribution room. These types of transfers are considered rollover amounts, not contributions.

However, certain conditions must be met for the transfer to qualify. It’s best to connect with an advisor to understand your options and ensure everything is set up correctly.

If your spouse or common-law partner inherits your FHSA and they aren’t eligible to open an FHSA or doesn’t want to retain the FHSA, they have a couple of options.

Your spouse:

  • may choose to transfer the inherited amount to their own FHSA, RRSP or RRIF on a tax-deferred basis (certain conditions must be met for the transfer to qualify).
  • can withdraw the funds and pay tax at their marginal tax rate.

An advisor can help you learn what’s best for your situation

If you designated someone as a beneficiary

A beneficiary is someone you name to receive the funds after the death of an FHSA holder. But unlike a successor holder, they don’t take over the account.

Provinces may need to update their laws to recognize a beneficiary named outside your will for provincial matters like estate distribution or probate. At this time, Nova Scotia recognizes designations for FHSAs. We’re awaiting clarification from other jurisdictions to determine their approach.

What happens to the FHSA when a designated beneficiary is named?

Your legal representative will work with the financial institution to:

  • close the account,
  • withdraw the funds and
  • pay it to your beneficiary.

How the funds are handled and who pays taxes on it depends on the relationship between you and the person you’ve named as the beneficiary.

If you designated your spouse or common-law partner as a beneficiary

If your spouse or common-law partner is named as the beneficiary (but not the successor holder):

  • your legal representative will work with the financial institution to close your FHSA
  • your spouse or common-law partner may be able to make a direct transfer to their own RRSP/RRIF or
  • if they qualify, your spouse or common-law partner can make a direct transfer to their FHSA on a tax-deferred basis or
  • your spouse or common-law partner can receive it as a taxable distribution. This means the amount withdraw will be taxed as income on your spouse’s or common-law partner’s tax return in the year received.

It’s best to speak with an advisor and a tax specialist to understand your options and ensure everything is set up correctly.

If you designated other individuals as the beneficiary

While it’s common to designate your spouse or common-law partner as the beneficiary, you can name almost anyone as a designated beneficiary for your FHSA like adult children, parents, siblings, other family members, friends, non-relatives, and even charities or organizations (though this may come with unique tax implications).

In general, if someone other than your spouse or common-law partner is named as the beneficiary:

  • your estate will close your FHSA
  • the beneficiary will receive a lump-sum payment (subject to withholding tax),
  • the full FHSA value will be taxed as income on the recipient’s tax return in the year received

There are also other specific situations to consider that can impact how the funds are handled and who ends up paying the tax.

Some other examples to consider:

  • Minors: If you name a minor as beneficiary, the funds may need to be held in trust or handled by a guardian until they reach the age of majority (depending on what province or territory they live in).
  • Non-residents: If your beneficiary lives outside Canada, additional tax reporting or withholding may apply.
  • Conflicts with a will: If there’s a difference between your will and your FHSA beneficiary designation, the most recent designation (validly executed) will apply.

Why might someone choose to name a beneficiary?

While naming a spouse or common-law partner as a successor holder can often be tax-efficient, some people may choose to designate a beneficiary because they want to:

  • leave funds to adult children or other loved ones, or
  • meet a legacy or charitable giving goal

Emery: No spouse, but wants to leave something to family

Emery doesn’t have a spouse or common-law partner, but they’re close with their adult niece, who’s been like family. By naming her as a beneficiary on their FHSA, Emery can pass along any remaining funds without the account going through the estate process, saving paperwork and delays.

Rae: Supporting a cause close to her heart

Rae recently updated her will and financial accounts to reflect her long-term values. She named a registered charity as the beneficiary of her FHSA, allowing the funds to go directly to a cause she cares about, without passing through the estate or triggering added taxes.

FHSA beneficiary - frequently asked questions

If your beneficiary passes away before you, the FHSA will go to your contingent beneficiary (if you’ve named one). If you haven’t, then your FHSA becomes part of your estate, which follows a different process and has different tax consequences.

If you name your estate as the beneficiary of your FHSA, you may still benefit from the tax-deferred transfer.  

To achieve this, your spouse or common-law partner and legal representative of your estate may jointly elect to directly transfer the FHSA to: 

  • an FHSA in your spouse or common-law partner’s name, subject to conditions; or 
  • their RRSP or RRIF. 

Your spouse or common-law partner and legal representative can also elect to transfer the proceeds to your spouse as taxable cash. In this case, your spouse or common-law partner includes the value of the FHSA in their income and pays the tax rather than your estate.  

Alternatively, your estate’s legal representative can choose to retain the FHSA proceeds and have the estate pay the tax. The after-tax proceeds becomes part of your estate and passes to your heirs. 

Unlike an RRSP, you don’t automatically include the value of the FHSA in your final tax return. The tax liability depends on who inherits the FHSA. 

  • Spouse as recipient. Your spouse can inherit the FHSA and transfer the balance in the account directly to an FHSA, RRSP or RRIF. They may have to pay tax or transfer to their RRSP/RRIF if they aren’t eligible to hold an FHSA. 
  • Non-spouse recipient. A non-spouse recipient includes the fair market value of the FHSA in their income in the year received. They pay tax at their marginal tax rate. Withholding tax applies at the same rate that applies to lump-sum payments from an RRSP/RRIF. 
  • Estate as recipient. If your estate is the recipient, the estate includes the fair market value in its income. The estate pays the tax at its marginal tax rate. Withholding tax applies at the same rate that applies to lump-sum payments from an RRSP/RRIF.

If you let your FHSA flow through your estate

Here’s what happens to your FHSA if neither a successor holder nor a beneficiary is designated:

  • The FHSA is closed
  • The funds are included as part of your estate
  • The full account value is generally treated as income on your final tax return
  • The estate is responsible for paying any tax owed

The net amount that remains after taxes is distributed according to the terms of your will or if there’s no will, under jurisdictional intestacy laws (laws for when there isn’t a valid will when a person dies).

Why someone might choose this route?

Some people choose to let their FHSA pass through their estate for personal or legal reasons like:

  • They want all assets handled by their legal representative under one legal process
  • They want to distribute funds through their will
  • They have more complex estate goals (e.g., trust for minors or someone living with a disability)

This route can offer flexibility, but it may also lead to higher taxes or slower access to funds.

An advisor can help you decide if it’s the right choice for your situation

Alex: Wants to leave all decisions up to the executor

Alex hasn’t named a successor holder or beneficiary. He prefers to have everything handled through his will and trusts his executor to divide the estate as outlined. He’s comfortable with the idea that the FHSA may be taxed before distribution.

Devon and Jamie: Complex family planning

Devon and Jamie have a blended family, and their estate plans involve multiple stepchildren and extended relatives. Rather than naming one person as a direct beneficiary, they’ve chosen to let the FHSA go through their estate so it can be distributed in a more structured way, according to their will. 

Harper: Unsure who should inherit

Harper is still thinking through who she wants to leave her FHSA to. In the meantime, she’s left it to flow through her estate. While it may mean some added taxes or delays, it gives her flexibility to update her will later, when she feels more certain.

FHSA estate - frequently asked questions

The account will be handled by your legal representative, typically the legal representative named in your will. They’re responsible for: 

  • Notifying the FHSA issuer of your passing 
  • Working with the issuer to close the account 
  • Coordinating tax reporting and payments 

Ensuring that distributions are made in line with your will or applicable succession law

Yes. Even if a spouse or common-law partner wasn’t named as a success holder or beneficiary, they may still receive the FHSA proceeds through the estate.

Also, depending on the situation, they might still be able to roll the amount over to their own FHSA, RRSP or RRIF without immediate tax consequences.  

Connect with an advisor to learn how

Yes. If your FHSA flows through the estate, it may take longer for your beneficiaries to receive the funds. It can also mean your beneficiary can end up with less money. The funds form part of the general estate and may be used to pay off any debts or claims against your estate first. 

By naming a beneficiary directly, the full value of your FHSA goes to them without being reduced by general estate expenses or debts.  

An advisor can help you determine what downsides you may face in your specific situation.

Connect with an advisor to learn more

More resources

How to choose a legal representative for your estate

Who will look after your assets after your death and carry out the terms of your will? Naming a legal representative – or agreeing to be one – takes serious thought.

Learn how to pick an executor

Your probate questions answered

What is probate and how does it affect your will? Learn why you need to know about probate when making your own will or executing someone else’s.

What’s probate?

No children? Here’s how to plan your estate

There are a few essential things to know if you don’t have children or grandchildren to leave your money and property to.

Estate planning with no heirs

This information is meant for educational and illustrative purposes only. Some conditions, exclusions and restrictions apply.

Many people do. Whether you’re planning ahead or managing a loved one’s account, we can help. 

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