Protecting your Investments for Estate Purposes

Jon Glougie

July 3, 2019

When we invest our money, we have a reasonable expectation that our initial investment will appreciate over time. As we get older, we tend to want to take less investment risk, especially if there is a goal to pass on some of our investments to our beneficiaries. Often seniors feel trapped into investing in GIC’s because they don’t want to take on any investment risk. What most people don’t know is that we can protect some of your investments, for estate purposes, by using Guaranteed Investment Funds or GIFs.  What are Guaranteed Investment Funds (GIFs)?  Guaranteed Investment Funds are a type of investment product offered by insurance companies that allows clients to invest in an equity, bond and/or index fund that can guarantee 100% of your initial investment passes to your beneficiaries while still offering the potential for investment/market growth and guaranteed lifetime income. Any money in a non-registered GIF can pass confidentially directly to beneficiaries, avoiding potential estate friction. This money will also bypass the estate and thus it will avoid probate tax. Because this wealth transfer is confidential it can provide an excellent option if you are gifting money, passing funds unequally between children or grandchildren, and do not want everyone to know where your money is going. All these features do come at a cost, and that cost comes in the form of a higher Management Expense Ratio (MER) than a traditional Mutual Fund.

When should you invest in GIFs? In our opinion, the best time to consider investing in GIFs is if you are between the ages 75-90, if you are a GIC investor or if you believe your life expectancy is 10 years or less. Please contact Jon Glougie or Ryan Smillie if you would like to learn more.