What is probate and how to avoid it?
Probate is a process that Provincial Governments oversee and register the assets and liabilities of a deceased's estate. Real property, real estate and other assets are subject to both the provincial protocols and their associated fees, which can be costly in both time and money. However, there are certain tools Canadians can use to avoid probate. Insurance-based life contracts, including insurance-based investments, can be exempt from probate processes and associated fees if set up correctly. In the latter's case, there can be little to no cost to establish these vehicles.
Two such plans offer no product fees and principal guarantees; Industrial Alliance has a High-Interest Savings Account (HISA) and Desjardin's Market Linked Term Investment (MLTI) Guaranteed Advantage programs.
“Let's look at the similarities and differences between using Market Linked Term Investments from DFS called Guaranteed Advantage Accounts (GAA) and High-Interest Savings Accounts from Industrial Alliance (HISAs).
Each product is a practical, and cost-effective investment option. In addition, the deposit money invested in them is fully guaranteed by the insurer and fully backed by Assuris.
Moreover, in both cases, the returns can be more attractive as compared to traditional savings and investment vehicles offered by banks and other investment firms.
Both GAAs and HISAs provide easy access to liquidity for an executor or estate trustee if the owner annuitant passes away. This quick access to cash can be and often should be, outside of regular probate reporting. Keeping your assets away from public scrutiny is another reason to use this style of account.
As for the product differences, the main differentiation is that GAAs are specific-term investments. This means you choose a fixed term for your investment (1 or 5 years, for example). The Market Linked Term Investment return parameters are known in advance and guaranteed secure at the duration of the investment period. There is typically a ceiling of total return and a floor of minimum return with each certificate you choose.
On the other hand, the return of a HISA may vary over time, depending on changes in variable interest rates. Since a HISA is more flexible in this respect, the money can be withdrawn at any time and without early redemption penalty fees.
As for the GAA, unlike other guaranteed investment options offered at some banks, funds can be withdrawn at any time. This is an interesting advantage, but there is a fee and market value adjustment if the withdrawal is made before the maturity date. So, it’s best to expect to keep the money invested for the entire term.”
Ideally, each of these investment options proves useful for achieving short-term savings goals, mid-term investment strategies or longer-term safe storage of estate funds, for both personal and corporate clientele.