One important aspect of estate planning is consideration of whether it makes sense for couples to hold investments jointly or separately.
While TFSAs and RRSPs must be registered to individual owners, nonregistered investments can be held jointly.
In terms of estate administration, joint ownership has a couple of benefits in the event that one spouse passes away:
- The assets remain the sole property of the surviving spouse, resulting in the avoidance of estate administration taxes.
- The surviving spouse retains immediate access to the account.
Still, if you choose to transfer a solely owned investment into joint-ownership, there may be significant tax consequences, as the transfer will be subject to income attribution rules. In other words, any capital gains or income generated from the investment account will be attributed to the party who transferred them.
Every family situation is different, although these matters may be particularly relevant to individuals who have divorced and remarried. Likewise, couples who have children together may be more inclined to merge their accounts, especially if one spouse stays home with the kids or if one spouse earns significantly more income than the other spouse.
If you have questions about any of these matters, an estate planning lawyer with experience in financial planning can help.
To learn more, please visit Hagel Lawfirm's overview of personal finances and asset protection. We advise and represent individuals and families in Mississauga and throughout the GTA.