It allows clients to pass assets to beneficiaries in a controlled manner while still maintaining ownership when they\u2019re still alive, Herman added. Segregated funds can act as a \u201cquasi-trust structure\u201d and provide benefits that non-registered mutual funds can\u2019t.<\/p>\n
As insurance products, segregated funds can be simpler when the beneficiary is a non-resident of Canada. Traditionally, executors must withhold non-resident tax of gross income distributed to the non-resident and open a withholding tax account with the Canada Revenue Agency. But segregated fund proceeds go directly to the beneficiary, bypass the estate and don\u2019t have withholding tax.<\/p>\n
Proceeds from a segregated fund can also be distributed over time to beneficiaries who aren\u2019t trusted to handle large lump sums, Herman said. Beneficiary settlement options let policyholders decide which beneficiary gets a lump sum and who gets a payment stream over time.<\/p>\n
Registered accounts<\/p>\n
Clients routinely name their spouses as beneficiaries of their TFSA, but miss the opportunity to name them as successor holders, Herman said.<\/p>\n
That additional step allows the spouse to move TFSA dollars from the deceased\u2019s account to the survivor\u2019s TFSA account in an exempt contribution, allowing tax-free growth of the full amount to continue, she added.<\/p>\n
Similarly, clients can name their spouse as a successor annuitant in their RRIF to avoid immediate tax consequences at death, Herman said.<\/p>\n
And, when someone converts their RRSP to a RRIF, the beneficiary designation doesn\u2019t carry over, so advisors should remind clients to update that information at the time of conversion.<\/p>\n","protected":false},"excerpt":{"rendered":"It allows clients to pass assets to beneficiaries in a controlled manner while still maintaining ownership when they\u2019re…\n","protected":false},"author":3,"featured_media":636806,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[15],"tags":[64,649,255,271343,271344,271345,620,271346,64323,67,132,68],"class_list":["post-636805","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-estate-planning","tag-personal-finance","tag-rrifs","tag-rrsps","tag-segregated-funds","tag-tax","tag-tfsa","tag-trusts","tag-united-states","tag-unitedstates","tag-us"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/116183441454560258","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/636805","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=636805"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/636805\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/636806"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=636805"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=636805"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=636805"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}