In Quebec*, the value of naming a beneficiary can be significant. By naming a beneficiary an insurance company is obligated, under the Insurance Act, to pay any death benefit proceeds to the named beneficiary on record. Because the death benefit proceeds do not pass through the estate, they not only avoid the delays of settling the estate but could also reduce legal, accounting and other estate administration fees. These fees could be five per cent or more depending on the complexity of the estate.
The value of bypassing probate – Based on $200,000 example in Quebec
Use Manulife segregated fund contracts and Guaranteed Interest Contracts (GICs) to bypass the estate and save money.
Manulife segregated fund contracts and GICs go one step further – DSC and surrender charges waived
In addition to the general advantages of reducing estate administration fees, potential protection from creditors and the timely payment of a death benefit, Manulife Segregated Fund Contracts and GICs also waive all redemption (back end) charges when the death benefit is paid. Although many fund companies, including Manulife Investments, may also waive the redemption charges on the death of the owner, mutual fund assets would still flow through the estate.
When you name a beneficiary with Manulife segregated fund contracts and GICs you can keep more of your money in your family.
Assets not subject to the deceased’s creditors
When assets flow through an estate (which generally occurs when non-registered assets are paid by financial institutions other than insurance companies), they may become vulnerable to the deceased’s creditors. For beneficiaries, this could mean a substantially smaller inheritance.
1 Refers to segregated fund contract and Manulife Investments Guaranteed Interest Contract. 2 Many fund companies, including Manulife Investments, may waive the DSC or low-load sales charge on the death of the owner. 3 DSC is calculated based on original cost. Other estate fees are based on the value of the contract less DSC charged on the redemption.
* In Quebec, whenever a person leaves a notarial will, a simple search of the Will Register allows the executor to begin the settlement of the Estate. A notarial will is prepared by a duly appointed notary, member of La Chambre des notaires du Quebec, and is signed before the notary and a witness. The Quebec Civil Code allows other types of wills: holograph wills (hand written and signed by the testator) and wills made in the presence of witnesses (signed by the testator before two witnesses). When one of these non-notarial wills is used, a process called verification takes place. This involves making a petition before the Quebec Superior Court or a duly appointed notary and can result in delays of up to six months, as well as incurring legal and court fees. These legal and court costs are not related to the size and value of the estate but rather represent fees incurred. Settlement of the estate can only begin once the petition is granted.
The commentary in this publication is for general information only and should not be considered investment or tax advice to any party. Individuals should seek the advice of professionals to ensure that any action taken with respect to this information is appropriate to their specific situation. Any amount that is allocated to a segregated fund is invested at the risk of the contractholder and may increase or decrease in value. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the fund facts as well as the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Manulife Funds are managed by Manulife Investments, a division of Manulife Asset Management Limited. The Manufacturers Life Insurance Company is the issuer of the Manulife Investments Guaranteed Interest Contract (GIC). The Manufacturers Life Insurance Company is the issuer of insurance contracts containing Manulife Segregated Funds and the guarantor of any guarantee provisions therein. Manulife, the Block Design, the Four Cube Design, and Strong Reliable Trustworthy Forward-thinking are trademarks of The Manufacturers Life Insurance Company and are used by it, and by its affiliates under license.