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Successor Owners and Annuitants



This time, let’s take a look at successor owners and annuitants. Generally, these options apply to non-registered contracts. A successor owner is the person who will take over ownership of the contract in the event of the primary owner’s death. And, a successor annuitant is the individual upon whom the benefits will be based after the primary annuitant’s death. Regarding successor owners, there are a couple of things to consider. No death benefit is paid when an owner dies as this benefit is based on the annuitant. And, there could be tax implications for both the deceased’s estate and the new owner when the primary owner passes away. The tax issues should be reviewed with an accountant to make sure the contract is set up properly. Successor annuitants also require consideration before they are chosen. I did a quick survey of our providers to see how the death benefit process works when there is a successor annuitant. My question to them was: “In the case where the market value is less than the guaranteed minimum death benefit at the time of the primary annuitant’s death, is the account topped up before the successor annuitant takes over?” The answer I got back was no, the market value carries on under the successor annuitant and there is no top up. The only time a top-up will occur (if required) is at the time of the death of the successor annuitant. Bearing this in mind, I suggest not using successor annuitants unless there is a compelling reason to do so. Particularly for couples, it is much better for a surviving spouse to receive the greater of the market value or the guaranteed minimum death benefit before it is moved to their name. If you have any questions regarding this topic, please let me know. Please join me in welcoming Rick Gallant to QFS. Rick will be working with me supporting our advisors in Atlantic Canada and Quebec. He can be reached at rick.gallant@qfscanada.com or 1-902-316-0232. And, our next Money Monday is on March 26th when we’ll have RBC and La Capitale presenting. In the near future, Rick will be hosting Money Mondays in his territory as well! Take care, Scott Edgington Director, Investment Sales Qualified Financial Services Inc. scott.edgington@qfscanada.com


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