A little personal finance project for this spring: Go through all your registered accounts to ensure you’ve named a beneficiary.
Or, in the case of tax-free savings accounts, a successor holder. Or, in the case of registered retirement income funds, a successor annuitant. I was reminded of these estate planning intricacies after readers responded to a recent newsletter that addressed some misinformation about what happens to your RRIF after you die.
Financial planner Jane Bolstad said in that newsletter that a RRIF can be transferred tax-free to a qualifying beneficiary, which would be a spouse/common-law partner or a financially dependent child or grandchild. Readers then asked for more information about naming a beneficiary, which reminded me of a guide I wrote a few years ago on naming a beneficiary for TFSAs, RRIFs and registered retirement savings plans.
How to create a legal will in Canada
I got some help on that project from Wilmot George, vice-president of tax, retirement and estate planning at CI Investments. I checked with Mr. George recently to make sure all the points in the guide are still up to date, and he said they are.
The background here is that in all provinces but Quebec, you can name an individual as a beneficiary for an account right on the application form. You don’t have to, though. If you prefer, it’s possible to name your estate as the beneficiary and leave it to your will to say which account assets go to whom. The guide assumes you’ll name beneficiaries on the account form.
Here’s a quick summary on TFSAs, which appeal to the widest segment of the population.
With a TFSA, married or common-law individuals have the choice of naming their spouse a beneficiary or a successor holder. Naming your spouse as beneficiary means your TFSA would be collapsed on your death. Naming them successor holder means your account would carry on under the spouse’s name. You’ll find more info on this in the guide.
Subscribe to Carrick on Money
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.
Rob’s personal finance reading list
A hot coffee tip
For a great cup of coffee every time, grind your own beans. Here’s a review of some coffee grinders at a variety of prices. Over time, the grinder will pay for itself if you end up drinking more coffee at home.
Choosing the DINK lifestyle
Double income, no kids. Why more young adults are choosing this path in life.
Stop buying food bank hampers
A Vancouver food bank CEO explains the downside of buying those pre-packaged bags for food banks sold at grocery stores. These bags often include items that aren’t healthy or all that useful. Better to donate directly to a food bank.
Are your government benefits keeping up with inflation?
A look at how well Canada Pension Plan retirement benefits and other federal and provincial government programs have kept pace with inflation. Some good news here, and some less than ideal news.
Q: Are bank index mutual funds a good choice over exchange-traded funds when someone is contributing a couple of times a year, given that fees are higher than for many index ETFs?
A: Bank index funds do have higher management expense ratios, which means they will likely have slightly lower returns than ETFs tracking the same stock and bond indexes. The advantage of bank index funds is that you can buy them at no cost – many brokers charge commissions to buy ETFs. Also, you can have your dividends automatically reinvested in your index mutual funds. You can do this with ETFs as well, but you need to have a substantial holding and set up a dividend reinvestment plan with your broker. ETFs are the best vehicle for index investing because their MERs are so low. But bank index funds are not a bad second choice.
Do you have a question for me? Send it my way. Sorry I can't answer every one personally. Questions and answers are edited for length and clarity.
Today’s financial tool
This food inflation calculator lets you track prices for a wide range of grocery store items for the past six years. Chicken drumsticks are the standout bargain.
Listen to this
A Statistics Canada podcast on inflation: In a Movie About the Economy, Is Inflation the Bad Guy?
The money-free zone
A reader suggested this one: Epitaph, by King Crimson. “Though it’s a bit of a downer, Epitaph is a song for our social media-tainted times.” Epitaph was on the King Crimson debut album, In the Court of the Crimson King, and overshadowed by another song that plays well in 2023, 21st Century Schizoid Man.
From the Twitterverse
Must reading if you’re a fan of covered call exchange-traded funds, which have developed a big following because of their high yields.
What I’ve been writing about
- Young adults are giving up on home ownership, and a lot of them are furious about it
- Check your big bank savings account – you could be making ‘0.000 per cent’ interest
- ETF Buyer’s Guide 2023: The complete series
More Rob Carrick and money coverage
Subscribe to Stress Test on Apple podcasts or Spotify. For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group.
Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Why millennials and Gen Z are Alberta-bound for a more affordable life • Rising interest rates brought pain for new homeowners – and opportunity for house hunters • Why more Canadians are choosing to be child-free or delay parenthood • Love in the time of inflation: How to manage rising costs when dating • You’re not bad at money – you’re suffering from money shame • Retirement might look different for Gen Z and millennials. Here’s how to plan for it • Recession-beating tips for the job market, housing, investing and the cost of life • Is the middle class dead for millennials and Gen Z?
- ✔️ The housing file: A house isn’t special. Get your head straight about the reality of home ownership • The good, the sad and the unaffordable: Saving for a home down payment in Canada’s big cities • Property taxes are popping in some cities – how worried should you be about other tax hikes? • Our other real-estate problem – people have too much wealth tied up in houses • Borrowers and savers, here’s how to time the eventual rollback of interest rates
- 📈 Investing: Canada’s top digital broker is TD Direct Investing, with an assist from the TD Easy Trade app • 2023 Globe and Mail ETF buyer’s guide part one: Canadian equity ETFs • For the ultimate in cheap investing, check out the Freedom .08 ETF Portfolio • Yes, there is risk in Canadian bank deposits for the unwary and complacent • CDIC covers bank deposits, but who protects your investments if your broker goes bust? • Answers to your questions about the low-risk ETF paying almost 5% • Happy fifth birthday to one of the all-time best investing products for everyday people • An investing strategy that wins cleanly over the long term by outperforming in bad years like 2022
- 💰 Your money: Mortgage holders, savers and GIC investors, it’s time to change your thinking on interest rates • How much debt is each generation of Canadians carrying, and how do you compare? • For the sake of their financial futures, young people should leave Toronto and Vancouver • This practical new spin on a savings account might just peel you away from your big bank • Rental fraud grows amid rise in fake, falsified tenant applications • Are Canadians worse off financially now than in the 1980s? • From groceries to auto loans, here’s how much more it costs to live right now • When saving for retirement, should you change your asset mix over the course of your career? • Do retirement income needs always rise alongside inflation? Not necessarily • When the bank suggests you lock in your variable rate mortgage, it has an angle