By Pankaj Babbar, licensed advisor at SAI Insurances · 3 min read
1-minute read
The short answer
- Passing on wealth well is mostly about planning ahead — not about how much you have.
- Permanent life insurance can create a tax-free amount for your heirs that's generally paid outside your estate.
- Registered accounts let you name a beneficiary or, for a TFSA, a successor holder. Those choices can make a big difference to taxes and timing.
- Out-of-date designations are a common, avoidable problem — review them after any big life change.
- Talk openly with your family, and coordinate with your lawyer and accountant.
Detailed guide · 2 min read
It's not just for the very wealthy
"Wealth transfer" sounds like something for large fortunes, but it applies to anyone with a home, savings or registered accounts. Without a plan, more of it can go to taxes and fees, and it can take longer to reach the people you meant it for.
Permanent life insurance as a transfer tool
A permanent life insurance policy pays a set amount whenever you pass away. With a named beneficiary, that amount is generally received tax-free and outside your estate. Families use it to leave a known inheritance, to cover taxes the estate will owe, or to equalize what each child receives.
Beneficiaries on registered accounts
Registered accounts have their own rules for what happens at death, and the names you put on file matter:
- RRSP / RRIF: naming a spouse or eligible dependant can, in many cases, allow the savings to transfer with tax deferred. Other beneficiaries may receive the money while the estate pays the tax.
- TFSA: naming your spouse as a successor holder generally lets the account continue in their name. Other people can be named as beneficiaries.
- Rules differ by province (and in Quebec, designations often must be made in a will).
The most common, avoidable mistake
An ex-spouse still named on a policy. A beneficiary who has passed away. An estate named "by default" because no one was ever filled in. These happen often, and they can undo an otherwise good plan. Review every designation after marriage, separation, a birth or a death in the family.
Have the family conversation
Money can be a hard topic, but your family knowing your wishes — and where your documents are — prevents confusion later. It doesn't have to cover every number; it just needs to happen.
Build the team
A good plan usually involves a lawyer for your will and powers of attorney, an accountant for the tax picture, and an advisor for insurance and investments. Each sees a different piece. See also the role of life insurance in your estate plan.
How we help
We review your current policies and account designations, suggest where insurance can fill gaps, and help you keep everything up to date as your family changes — in English, Hindi or Punjabi. Learn about our life insurance and investment options.
This article is general information, not legal, tax or financial advice. Rules on beneficiary designations, successor holders, estate taxes and probate depend on your province and circumstances and can change. Speak with a lawyer and a tax professional; your licensed advisor confirms the insurance and investment details.