A quick estate planning win for 2021: update your beneficiary designations

Jan 6, 2021 2:28:14 PM The MacMillan Estate Planning Team family estate planning, beneficiaries, estate plan

Want to know how to make a significant first step in your estate plan in an hour or less? Then complete the simple task of updating your beneficiary designations on your accounts. Not only will you ensure your wealth is transferred to the people you want it to, but it often takes hardly any time at all. You spend a lifetime creating your estate. Take an hour out of your day to define who benefits from it in the future. 

What are the benefits of naming a beneficiary?

By naming a beneficiary (which can be a person, entity, or charity) you are ensuring the transfer of your money upon your passing is as straightforward, transparent, and swift as possible. Akin to your Last Will and Testament, carefully thinking about who your beneficiary will be allows you to have control over how your assets will transfer to your heirs.  

What accounts have beneficiary designations? 

The most common accounts that allow you to name a beneficiary (or beneficiaries) who will inherit the account value upon your death are: 

  • Retirement accounts, including: 
    • Registered Retirement Savings Plans (RRSPs)
    • Registered Retirement Income Funds (RRIFs)
  • Tax Free Savings Accounts (TFSAs)
  • Registered Education Savings Plans (RESPs)
  • Pension Plans
  • Life Insurance Policies
  • Annuity Contracts
  • Certain non-retirement accounts called “Joint gift of beneficial right of survivorship” (JGBRSs)

Who can be a beneficiary? 

Anyone can be named the beneficiary. Usually, it is the spouse, children or the estate that are named.  Some opt to choose a trustee of a trust or a charity to be the beneficiary. There are differing tax benefits depending on your choice of beneficiary. 

For example, designating a charity as the beneficiary of your RRSP/RRIF will allow your estate to claim a charitable tax credit to offset a portion of the tax payable on the value of your RRSP/RRIF. The federal charitable tax credit rate is 15% on the first $200 donated and 29% thereafter. You can claim charitable tax credits up to 100% of your net income in the year of death. Provincial charitable tax credits may also be available.

How can you add a beneficiary to your accounts? 

Reach out to your provider or look on their website. Usually, you will need to provide some information about your choice of beneficiary, like their name, birth date and Social Insurance Number.  

Want to know more? MacMillan Estate Planning offers a holistic approach to estate planning with all the people, processes, and technology that you need to plan your estate – either in person or virtually. Our team of lawyers, accountants, financial planners, and counsellors offer a refreshing alternative to the banks, law firms and accountancy firms. Register for one of our upcoming seminars.

You can also take advantage of our complimentary virtual consultations; call us or email us: 1-833-266-6464 and inquiry@macmillanestate.com.

At MacMillan Estate Planning, our team of professional trust and estate practitioners, chartered accountants, financial planners, and legal professionals look forward to assisting you with the design of your estate plan and will ensure you build, protect, and enjoy your wealth. The information provided is general and may not be suited to your objectives or sufficient to ensure the protection of you and your family. You should not act on this information without providing MacMillan Estate Planning with the opportunity to ensure that it is suitable for your unique situation.

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