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Retirement Planning with Grant Hicks
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 Grant
Hicks, C.I.M., FCSI is a professional speaker, co-author and
a Retirement Planning Specialist A leader in
the financial industry, Grant has been helping Vancouver
Island residents plan and create their retirement lifestyles
since 1989. |
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Creative Estate
Planning Strategies
What is a successor annuitant?
If you have to discuss your will or
estate plan with anyone, then ask him or her what a
successor annuitant is?
It can be a powerful estate planning
tool if used properly in the right circumstances.
Let me explain an example. Ron from Nanaimo came by
to discuss his situation with his new wife Jane that
is a second marriage. Ron is retired and accumulated
all of his assets before he met Jane. At age 70 Ron
wants to provide for his new spouse but feels that
he should be leaving the bulk of his investments to
his two children, Jim and Janet. He is leaving his
home to his new wife Jane so she can stay in the
same place and be finally comfortable when he dies.
But his largest asset is his RRIF of over $300,000.
He asked how he could leave it to the children when
Jane dies.
It gets complicated through
beneficiary designations and wills, since a RRIF can
pass tax-free to a spouse but can be taxable to his
children. I suggested naming Jane a successor
annuitant.
When you name your spouse as the
successor annuitant, Jane assumes complete control
of the RRIF as the successor owner on a tax deferred
basis, however by designating irrevocable
beneficiaries who are not your spouse (in Ron’s case
Janet and Jim his children) guarantees that the
assets will ultimately pass to them when Jane dies.
Naming irrevocable beneficiaries
effectively restricts your spouse’s ownership
rights. Jane can receive the income off of the RRIF
but will need written permission from the
irrevocable beneficiaries to increase or decrease
the income or take additional cash out.
Meanwhile if Jane and Ron pass away
at the same time or shortly after each other, the
funds will automatically be paid out to the
children. Ron will not have to change his will or
beneficiary designations since it will ultimately go
to his children Janet and Jim.
These features make the RRIF / RRSP
successor annuitant options an attractive solution
in second marriages for retirees.
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