CDIC Insurance Coverage | General financial discussion | Discussion forum

Bill said
Yes.  

And 'Yes' . . .

➡ https://www.cdic.ca/your-coverage/protecting-your-deposit/

Dean

Yes, with the following caveats:

1. The interest owing to you will not be covered because the total will be over 100K.

2. Although most FIs will cooperate, some may not permit an account with 3 account holders. So you should check first. (Some have been reluctant to open up even 2-person joint accounts.)

3. Be aware that if one account holder dies, the account passes to the remaining one. So, if it's a parent and child, when the parent dies, the account will pass to the child, not to the surviving spouse. I don't know if it is possible to set up an account that doesn't work this way, but this is the norm.
Similarly, all account holders have the right to all the money in the account at any time. I don't know if there are restrictions around children who are not of legal age.

I am assuming that the monies belong to the parent and the purpose is to have all monies covered by CDIC, with all interest growing the parent assets.

Another consideration
If
P1 is a parent
P2 and P3 adult children
Then the interest on the account for P2 and P3 would be attributable to P2 or P3 for tax purposes.

If P2 and P3 (adult children) are in higher tax brackets than P1 (parent) it would diminish the return

T5 for interest income will show SIN of primary account holder, so if it's one person's money you might want to make sure they're the primary account holder so CRA sees what it expects on the tax returns. However, if interest income needs to be attributed to more than one contributor just make sure, again, primary account holder is one of the contributors, to help keep CRA happy.

Norman's research and AltaRed's comments notwithstanding, it seems very strange that JTWROS (Joint with Right of Survivorship) does not necessarily mean what it says. What's a poor lay person to do?

In any event, these issues can be circumvented with a clearly written will, I think.

Bill said
Norman1, the link you provided indicates RBC Dominion Securities has options re joint tenancy vs tenants in common joint accounts, etc, they offer variations, but do you know if there are the same, or indeed any, options when you just open your standard vanilla joint savings accounts at a bank? And would it be the same at the online banks vs the big banks, i.e. do all banks offer variations on the standard joint savings account to accommodate the various ownership options customers might want?

One needs to examine the account opening documents to determine which kind of joint account one has. There should be some mention of joint tenants, tenants in common, or joint with gift of survivorship.

I think people are thinking about the joint tenants kind when they think of a joint account.

Not all the banks offer all the variations allowed under provincial property laws. I have not seen that "Joint – Gift of Beneficial Right of Survivorship (JGBRS)" kind of joint account before.

For land titles anyway, it means the following:

joint tenants: the title automatically transfer to the surviving tenant,
tenant in common: the title goes to the heirs of the passed tenant

Loonie, it is correct that with JTWROS accounts, the remaining account owners jointly own the account BUT they may not have beneficial ownership. As Norman1 says, it is situational and there are a number of links that can be googled that explain this concept, and as determined by the Supreme Court. It depends on what the intent of adding person(s) to the account was, just like one would do for CRA tax purposes in terms of attribution of income.

If the parent made all the deposits to a JTWROS account, that parent would have to report all the income from that account. A survivorship situation is technically no different. The assets of the account would revert to the Estate in terms of distribution according to the beneficiary designations in the Will, albeit it wouldn't go through probate. The intent here is that the remaining co-owners do not unfairly benefit simply because of being co-owners of an account for matters of convenience, e.g. POA, transactional assistance for an elderly parent, CDIC insurance, etc.

The beneficiaries of the Estate can and should contest the Will if there is a substantial money grab by the remaining co-owners who are not proportionately aligned with the beneficiaries of the Estate. A forensic accountant would be able to track who made the deposits to the account to ascertain beneficial ownership.

A separate issue but has relevance to provide additional clarity to JTWROS accounts. Some provincial land titles offices now insist on knowing beneficial ownership of the title when a title transaction occurs. That helps prevent money laundering and beneficial owners hiding behind a shell company with different shareholders. This has been a problem in BC for a long time with money coming out of Asia. Canada, and BC in particular, (from the Panama Papers) is well known to be an easy place to launder money. The 21 yr old daughter has no means to have title (and beneficial ownership) of a $5M property in Vancouver. Beneficial ownership actually was from money provided (but not gifted) by Daddy back in China and should be disclosed by law.