What happens to your investments should you pass away?

This is a common question I get as a wealth advisor.  It is important to take a look at how you have your investments structured and to what are your intentions.

If you have a non-registered joint account with rights of survivorship with your spouse, and you pass away, the assets will simply go to your spouse.  All they need to do is open an individual account and we will move over the assets.  The investments do not have to be redeemed, but rather go “in kind” to the surviving spouse.  If you have a non-registered joint account with someone other then your spouse, for example your kids, the same would apply and the assets would move in-kind to an account in their name.  For non-registered accounts in single name, a probated will would be required that would state each of the beneficiaries and what percentage or dollar amount of assets they are to receive.  From there an estate account in the name of deceased would be opened and the assets distributed as per the will.

A tax-free savings account (TFSA) allows you to name a beneficiary or multiple beneficiaries.  If the beneficiary is your spouse, the surviving spouse would be able to rollover the TFSA into a TFSA in their name or existing account and move all assets “in kind”.  If your named beneficiary is not your spouse, the assets will be paid out to those beneficiaries named in the account.  If you name your estate as beneficiary, the assets are then distributed as per your will.

Registered accounts like registered retirement savings plans (RRSPs), locked-in retirement accounts (LIRAs), registered retirement income accounts (RRIFs), and prescribed registered income funds (PRIFs) also allow you to name a beneficiary on the account.  If you name your spouse, the assets move “in kind” to a registered account in the surviving spouses’ name.  If you name your someone other then your spouse, the assets would be paid out according to their share of the assets.  Similar to TFSAs, if you name estate as the beneficiary, the assets would go through the direction of your will.  It is important to note that the taxes would be owed on this money by the estate of the deceased as the taxes have never been paid on this money.

As mentioned above, we may require a probated will to transition your wealth to your beneficiaries.  This process can take time and it costs money.  In Saskatchewan, currently the fees are $7 per $1000 of the probate-able assets.  How can you avoid the probate process or at least minimize it?  Well, anytime you are able to name a beneficiary on an account or investment, those assets wouldn’t go through the will and would avoid probate.  Registered accounts, segregated funds, and insurance policies all allow you to name a beneficiary thus avoiding probate.  It is also important to note, that if you name someone as beneficiary on your investments or life insurance, the process to payout the proceeds are much quicker.

What is the next step?  Well, I would highly recommend speaking with a wealth advisor to determine what your wishes are and take a look at what would happen to your investments if you were to pass away today. 

Celeste Yuzdepski, Wealth Advisor, B. Comm, CFP, CIM, CFDS, FCSI

Information in this article is from sources believed to be reliable, however, we cannot represent that it is accurate or complete.  It is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell securities.  The views are those of the author, Celeste Yuzdepski, and not necessarily those of Raymond James Ltd.  Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decision.  Raymond James Ltd. is a Member - Canadian Investor Protection Fund.