It’s important for couples to talk about money and planning together. These conversations aren’t always easy to have when a family situation is complex. Considerations need to be made when one spouse makes a significantly higher income, there are differing opinions on policies, or if you have a blended family.
There are advantages and disadvantages to joint ownership of investment policies with a spouse.
The Advantages
Upon death of one of the spouses, the other one will automatically become the sole policyholder, which means:
- No Income is taxable upon your death
- Does not form part of the estate – no probate process or probate fees
- Immediate access to these funds by surviving spouse
The Disadvantages
- Funds may be available to the surviving spouse’s creditors
- Cash may not be available in the estate to pay taxes and other debts after death, forcing the executor to sell other assets
- Funds may not be available for distribution to other recipients
There are 2 ways to enter a joint ownership relationship:
- Joint Tenant with Right of Survivorship (JTWROS)
- Tenancy in Common (TIC)
While each part in a JTWROS has a right of survivorship over the asset, those in a TIC do not. This usually means when a tenant dies, their ownership stake is passed on to an heir or other beneficiary of their choosing. Your investment and bank accounts are usually set up with JTWROS, while some real-estate can be sent with TIC.
Your legal and Financial Advisors will guide you on the best way to set up your assets given your unique family situation.
Disclaimers:
The information provided is based on current laws, regulations and other rules applicable to Canadian residents. it is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. This information is general in nature, and is intended for informational purposes only. For specific situations you should consult the appropriate legal, accounting or tax advisor.
Insurance products, including segregated fund policies are offered through Relevant Life Financial Group Inc., and investment representatives, mutual funds and referral arrangements through Quadrus Investment Services Ltd.
Quadrus, Quadrus and design, and Quadrus Investment Services Ltd. and design, are trademarks of Quadrus Investment Services Ltd., used under license.