Not All GIC’s are the same!
Not All GIC’s are the same!
Guaranteed Interest Investments with banks, Credit Unions or Online banks such as Tangerine etc. do not have the same benefits as GIC’s with the Life Insurance Companies.
GIC’s and other investments with banking Institutions are subject to probate at the death of the owner or owners of the GIC’s, bank accounts or other investments. Life Insurance Company GIC’s and Investment Funds/Segregated Funds can have named beneficiaries and can easily bypass the Probate process thereby avoiding probate fees, legal fees, time delays and lack of access to “Frozen” accounts.
Probate is the Court procedure for:
- A formal approval of the will by the Court as the valid last will of the deceased.
- Appointment of the person(s) who will act as the executors(s) of the Estate.
- Probate is the court process that gives the executor or executrix the authority to act on behalf of the deceased. The probate process can take up to 3-4 months or longer to obtain the court’s approval for the executor to act.
- Assets subject to probate cannot be accessed, sold, disbursed or used to pay debts until the Court approves the will to be valid and an executor to act on behalf of the deceased.
Probate fees are determined provincially – in Ontario the fee is 1.5% of the value of the Estate. Legal fees to prepare and file the application, serving notice to potential beneficiaries, costs of preparing consents and any cost of securing any bonds or sureties if required can all be charged to the Estate as part of the expenses related to the probate process.
The Life Insurance Company GIC or Investment has the wondrous ability to avoid the Probate process. Generally the death claim can be processed by a claimant’s statement signed by each beneficiary and a proof of death (Funeral Directors Statement or Coroners Death Certificate) is usually all that is required. Periodically, a copy of the deceased’s will is also needed. The Advisor and the Life Insurance Company DO NOT charge a fee to process the death claim! Beneficiaries usually receive their share of the investment by cheque or electronic fund transfer to their own bank accounts within a few weeks.
Be conscious of the benefits of Life insurance Company GIC’s, segregated or Investment Funds versus those investment products offered by banks and other financial institutions. Life Insurance company investment products offer primary beneficiary designations (i.e. spouse/partners) as well as a secondary or contingent beneficiary designations (i.e. adult children or minor children in trust) your estate planning can be simplified by using Life Insurance Company Investment products. Speak to a qualified Financial Advisor about the opportunities a Life Insurance Company GIC or Investment product provides for you and your family.