Q: My husband set up an RRSP account for me, but now my broker wants to roll everything into one account called a spousal RRSP. Does having my RRSP labelled a spousal RRSP give my husband more access to it, now and if I die?
—Billie Collinge, Nanaimo, B.C.
A: Your spousal RRSP is just that: Yours. It is an account that your spouse can contribute to and then claim a tax deduction on his tax return—which helps minimize the tax he pays now. The general idea is to shift assets to the lower-earning spouse, who can withdraw more in retirement at a lower tax bracket. But your spousal RRSP belongs to you. You control what the money is invested in and when you withdraw it. And you pay the tax, provided the money has been in the account for at least three years. Jason Heath is a certified financial planner at Toronto-based Objective Financial Partners and he explains that when you die, “Your RRSP is paid out to the beneficiary that you designate for that account. You can choose anyone, so the fact that it’s a spousal RRSP is irrelevant—your beneficiary designation is key. Assets that are held jointly or naming individuals as beneficiaries will generally avoid the probate process and resultant costs.” In the event of a divorce, spousal RRSPs are treated the same way as other family assets, and split as a part of the settlement. Ask your broker why she wants to roll everything together. Perhaps it is to reduce trustee fees by having fewer accounts? That’s a good opening for you to ask about fees in general, to ensure that you’re paying the least amount of money, for the most value. Also double-check your beneficiary designations and take another look at both your wills to ensure that your current wishes are accurately reflected.
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