ESTATE PLANNING It is commonly advised that the RRSP/RRIF holder designate a beneficiary of the plan. Advantages of this approach include:
- The funds transfer directly, avoiding probate.
- The status as a “refund of premiums” requires no elections. Refunds of premiums allow a tax-deferred transfer of funds.
- Reporting on transfers to a surviving spouse or common law partner can be avoided.
- The funds are not exposed to liabilities of the deceased’s Estate.
- It avoids the risk that a beneficiary will not sign the election, thereby requiring the Estate to pay tax on the account value or, that the opportunity is overlooked entirely by the Executor.
- However, there may be advantages to leaving funds to the Estate itself, such as:
- Enhanced planning opportunities, as the elections can be used to determine the precise amounts to be reflected as a “refund of premiums”, or reported on the terminal tax return.
- The elections can also be used to allow the Executors flexibility to determine how any “refund of premiums”, and other assets, will be allocated between eligible beneficiaries. This could be used to direct the “refund of premiums” to lower income beneficiaries and/or beneficiaries best able to utilize rollovers while directing other assets to other beneficiaries.
- Funding a Testamentary Trust. This may be especially desirable if no “refund of premiums” and/or rollovers are available (or if the plan holder does not want that amount of funds left to those beneficiaries).
Professional advice may be needed in this area.
DEFERRING OLD AGE SECURITY (OAS)
A person may defer receiving the OAS pension by not applying for it at age 65. The pension amount will be increased by .6% per month of deferral after your 65th birthday or July 1, 2013, and stays in effect until your 70th birthday.
It also appears that a person that turns 65 before July 1, 2013 could consider delaying the receipt of OAS payments for up to five years beyond the 65th birthday.
However, the OAS increase of .6% per month will not commence until July 1, 2013.
FINANCIAL CONSUMER AGENCY OF CANADA (FCAC)
The FCAC is an independent body working to empower Canadians to expand their consumer education in the financial sector.
FCAC operates a website, www.fcac-acfc.gc.ca/eng/index-eng.asp, with a host of information on various financial products and services available in Canada such as mortgages, credit cards, insurance products, and other banking services.
Consumer education on the site comes in the form of toolkits and calculators, written commentary, pamphlets, and questions and answers, all of which are fairly simple to use and understand. The website also provides an area devoted to education about fraud.
In addition, it provides direction for consumers on launching complaints against various federally regulated financial institutions and payment card network operators.
As the FCAC is an independent body, information bias is reduced.