The beneficiary can be a spouse, child, parent or grandchild of the annuitant. For instance: The above list isn’t exhaustive. Latest appointments: Congratulations to Lysa Fitzgerald, Manulife Bank Vice President, Sales, Mario Cloutier, Manulife Bank National Head of Broker Sales and Tim Gillrie, Manulife Bank National Head of Advisor Sales. While these products can provide creditor protection, the protection is not complete, nor is it available in all cases. Seg funds may not provide protection from claims arising under family law to provide for a dependant. © Share this article and your comments with peers on social media, Don’t let courts choose who gets dead clients’ RRIFs, Restraints to testamentary freedom when drafting a will, Effective beneficiary designations when converting RRSPs to RRIFs, Tax consequences when your client leaves Canada, Pandemic complicates discretionary trust payouts, Task force recommends sweeping changes to OSC, Ontario offers small businesses grants of up to $20,000, Misleading news releases about pot sector draw regulator’s ire. Q: My wife will be 56 years old this year and has about $150,000 invested with a financial planner who wants to move it all into segregated funds. So if you’re potentially facing bankruptcy, creditor protection ensures that the funds in your segregated fund aren’t seized by creditors. Even though the account was structured as an RRSP, the investment product held within the policy was a seg fund. Planning helps reduce the negative impacts, Issues and strategies for Canadians thinking about transferring their U.S.-based retirement plans, Trustees must balance the interests of income and capital beneficiaries amid economic uncertainty, The proposals would radically alter securities regulation in Ontario, The decumulation game requires a dynamic strategy, More than 42,000 small businesses have applied for shutdown relief funds, Ex-CEO sanctioned for trading after issuing misleading press releases. But this protection may be lost in certain circumstances. 0000003287 00000 n document.write(CurrentYear) A segregated fund is an investment pool structured as a deferred variable annuity and used by insurance companies to offer both capital appreciation and death benefits to … The relationship in Quebec is between the owner and the beneficiary. Creditor protection has long been taken for granted as a benefit of life insurance products, including fixed-rate and segregated funds accumulation annuities. Keith Masterman , LLB, TEP is vice-president, Tax, Retirement and Estate Planning at CI Investments. Although they invested in stock markets, they were considered to be conservative products very prudently managed. trailer Evaluating companies on how they recruit, retain and develop their workforce, The growth of ETFs and how they fit into client portfolios. It is these companies that drive our economy. Certain RRSP and RRIF holdings are also protected from creditors under a provision of Canada's federal Bankruptcy and Insolvency Act, which came into force in July of 2008. Creditor protection may be waived for seg funds when dealing with a dependant. SEGREGATED FUNDS Summary on Creditor Protection ADVISING theClient. Seg funds may provide protection from creditors in the event of bankruptcy or lawsuits. The important thing is that you counsel caution if a client’s motivation in purchasing seg funds is creditor protection. This paper reviews the limitations of this creditor protection, and provides Creditor Protection Segregated Funds are creditor protected for registered & Non-registered Policies provided that the owner has a family class beneficiary. A seg fund usually has a higher MER than a mutual fund, partly to cover the fund’s insurance features. xref That means your assets within a segregated fund policy, whether registered or non-registered, may be protected from creditors, where a specific type of beneficiary – like a spouse or a child – has been named. Seg funds for estate planning: advantages and pitfalls. Potential creditor protection. Funds bypass probate (not applicable in Quebec) to go directly to your beneficiaries. Fee paid after a person dies ; seg fund MERs, by contrast, are paid annually for! 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