Monday, 5 June 2017

What's in a Name? - What's On Your Mind - June 2017 Edition

Did you know that not naming a beneficiary can cost your estate extra taxes on your death?  Anytime you do not name a beneficiary on your registered plans you are adding to the probate taxes payable on death.  Not only would your estate have more taxes to pay but if your will is challenged, this money could get tied up for years sitting in limbo.  

Most people have a named beneficiary on their insurance policies.  So why doesn't everyone have a named beneficiary on their registered plans?  I see situations where it is overlooked, especially on group plans at work.  Until I get to review a group plan with a client, they were not even aware they had no beneficiary named.  I have also seen this happen at registered plans at the bank.  

Sometimes people are unsure who to leave their money to when they do not have a spouse, partner, children or close relatives.  This is no excuse.  There are charities that could benefit from this money or close friends you could name.  What you need to know is your beneficiary could change anytime your circumstances change, so naming someone is better than not naming anyone.  Anytime you change your mind about who you named, it can be changed with your financial institution or the benefits people at work that administers your group plan.

Naming your estate as beneficiary on your registered plans automatically add to the taxes your estate will pay.

You can name more than one person on any of your registered plans.  So where should you have a named beneficiary?  The following is some of the more common places:  group plans at work including retirement plans, TFSA and DPSP; registered plans at financial institution which include, retirement savings plans (RSP), locked in retirement accounts (LIRA) and tax free savings accounts (TFSA).  There are other registered accounts such as LIF, RIF, etc. that should also have a named beneficiary.  Most plans with an insurance company allow for a named beneficiary as well.  

You cannot name a beneficiary on non-registered investment accounts; bank accounts etc.  If you have a segregated account with an insurance that is non-registered, they will allow a named beneficiary because of the insurance wrapper the product has.

If you do not want to pay any more taxes than you actually have to on your estate, you may want to review all registered plans you have. Ensure you have a named beneficiary wherever possible because having a name does matter.

Linda J. Levesque, CFP®, FMA, FCSI®
Sr. Investment Advisor
Director, Private Client Group
HollisWealth Insurance Advisor
HollisWealth Insurance Agency Ltd.
Levesque Wealth Planning
HollisWealth, a division of Scotia Capital Inc.
One Corporate Plaza, 2075 Kennedy Road, 5th Floor, Toronto, ON M1T 3V3
Tel: 416-412-8018 / 1-800-322-4030  Fax: 416-332-6772

‘Saving Today for a Richer Tomorrow’™

You can, as long as you include this complete statement with it: Linda J. Levesque, Senior Investment Advisor and Director, Private Client Group of HollisWealth is an author of The 5 Minute Wealth Plan, Saving Today for a Richer Tomorrow, in The Road to Success with Jack Canfield and in The Authorities, Powerful Wisdom from Leaders in the Field.  If you're ready to jump-start your life, have more fun and joy in all that you do, get a FREE consultation from Linda J. Levesque 

This article was prepared solely by Linda J. Levesque who is a registered representative of HollisWealth®
 HollisWealth is a trade name of Scotia Capital Inc. and HollisWealth Insurance Agency Ltd.  HollisWealth is a division of Scotia Capital Inc., a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.  Brokerage services provided by HollisWealth are provided through Scotia Capital Inc. Insurance products provided by HollisWealth are provided through HollisWealth Insurance Agency Ltd. ® Registered trademark of The Bank of Nova Scotia, used under licence. The views and opinions, including any recommendations, expressed in this article are those of Linda J. Levesque alone and not those of HollisWealth. Levesque Wealth Planning is a personal trade name of Linda J. Levesque. HollisWealth and the Scotiabank companies do not provide income tax preparation services nor do they supervise or review other persons who may provide such services.

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