Re-thinking where to deposit TFSA, RSP/RIF GICs. | Tax Free Savings Accounts | Discussion forum

Loonie said
As I mentioned on another thread, I have been encountering extraordinary difficulty exercising a POA at 2 major banks recently. In particular, they are completely unwilling to allow access to TFSAs because they are "investments". Never mind that the client needs these funds to pay her bills, they won't free them up as their lawyers say "no", under any circumstances. and no matter that the person is almost 100 years old. If not now, when??. As a result, I am having to pay these bills out of my own money right now. It's a very long story.

This experience has made me think again about where to keep registered funds.

I certainly don't use the Big Banks for this purpose, but the reality is that you don't really know for sure how your duly executed POA is going to be treated by any given FI until the time comes to use it. The rules of the FI can change, their lawyers can become more difficult, the forms you filled out at the FI or even the lawyer's office can change, laws can change, etc. The point is that you don't actually know what the circumstances will be by the time your POA has to act on your behalf.

One small example, not related to my current problems. A few decades ago, I was out of the country for a significant period of time and had set up a POA at my bank, then TD. I filled out the bank forms as required and the person I had appointed was permitted to act on my behalf for several years. About 8 years later, some time after I had returned to Canada, I wanted to make some other changes, and TD said they had no record of this POA or these forms at all.
I had never cancelled the POA. They offered me new forms to sign instead, which I chose not to do as they were quite different and I didn't agree with some of their provisions.

Now, coming back to the present and thinking towards the future, I have no confidence that my Attorney will necessarily be able to access my registered funds and make investment decisions on my behalf.

It is my habit to move the GICs around to get the best deal. I would expect the Attorney to do the same if they had the insight to do it, but, if not, to do the best they could, but I do expect them to have power to do as they see fit.

I can't count on them having this power for the reasons outlined above, plus each FI will have its own rules, making it even more difficult for the Attorney.

As many of you know, I have said before that I don't like to keep registered accounts out of my province (Ontario) because of such potential issues. I prefer to only keep joint non-registered accounts outside of the province.

I am now seriously thinking of narrowing this even further.

I must now assume that it could very likely be difficult or impossible for my Attorney to move my registered funds from one FI to another and, even if successful, it could be difficult to make the subsequent switch.

So I am now thinking in terms of Ontario Fis that have tended to have superior rates over time and putting the money there (to insurable limits) as the current GICs mature. This is not necessarily getting the best available rate on a given day, but a reasonable one. Thus, whenever a registered GIC matures, the worst that could happen would be that the FI would not allow my Attorney to do anything and the GIC would roll over at a reasonable rate if not the best rate. Of course, the best FIs for rates can change over time, but I think this is my best defence, at least for RIFs, right now.

This also reinforces my thinking that I want to maximize RIF withdrawals in a tax-efficient way so as to minimize or eliminate the balance that is in them. I have been working on this for several years and now think I can complete it for spouse and me within the next 5-7 years, depending on returns, reducing the balance to zero.

I don't think this will work as well for TFSAs as I don't intend to empty them, but it might still be better than having a disempowered POA.

For the non-registered funds, I am working towards having only joint accounts with equal contributions from both of us. To this end, we are living off the assets and income of one of us until our funds are equal, at which point we will live more from the funds of the person with the higher income in order to maintain equal amounts in the investments. I estimate this process will take about 4-5 years.

If I'm lucky, we'll both live long enough to complete this process! I hope circumstances don't require me to dream up yet another plan.  

Loonie, see my post # 25 in the other thread you mentioned (which may be split off into a new thread following my and @AltaRed's suggestions). However, I'm wondering if this is actually a case where your mother (or mother-in-law?) would be better off having her deposits at a self-directed discount brokerage or a deposit broker like Desjardins Financial Security Investments, Inc. In either case, acceptance of the POA would be done by the discount broker or deposit broker. She may be giving up a bit in return on her deposits, but she's 100 years old. She may not have many years left anyway and, at this point, access to capital should be valued more than an extra 10-30 basis points.

So long as she's still of sound mind, it should be possible for you to complete the required brokerage POA form (or try submitting your legal POA), signed by the applicable number of unrelated witnesses, along with her brokerage account application form.

If the bank is refusing to allow a redemption from the GICs (perhaps that's the issue, that the GICs are not redeemable prior to maturity?), well, fine. They can't reject a T2033 transfer form duly signed by you, as the POA, provided it's been accepted. You could also have your mother (or mother-in-law) sign the T2033 transfer form for even greater certainty.

Cheers,
Doug

Correct. KISS is a good rule. I have a friend that banks with CIBC. His wife banks with Scotia. He says the brokerage accounts are the same. You said BMO is the same as Scotia. They are competitive no reason to switch.

I have a BMO IL non-registered account for a particular family legal situation that I will not expand on here. That said, the BMO IL relationship turned out to be a good one since Scotia iTrade just could not handle an Individual RESP account from a non-family subscriber (believe it or not). Regardless, each of BMO IL and Scotia iTrade has its positives and negatives and I exploit that, but for GICs. The GIC list is only slightly longer at Scotia iTrade (Concentra GICs for example) and is no reason in itself to have an account at BMO IL.

I will still have to follow up with both Scotia and BMO sometime post covid-19 regarding POAs both in their discount brokerages (registered and non-registered), and bank accounts. I certainly don't want my POA to be handicapped in any way regarding investment buy/sell decisions in the brokerage accounts and/or banking needs...albeit I don't use the two banking subsidiaries for anything other than chequing/e-transfers/pre-authorized debits.

FWIW, my parents had most of their money with Edward Jones, gave me POA at some point and easy peasy, working with their advisor, right until their estates settled. In their last few years they were totally disinterested in whether they made an extra half percent or so on a GIC, or whether an account had a $100 annual fee or not, etc, so there are other ways to make it much easier for yourself. They also added me joint to their bank accounts, easy peasy there too.

Of course if you need the best rates, and the cheapest fees, and the most convenient accounts, and virtually no negatives to whatever you choose...…..well, you'll be very busy constantly moving stuff around trying to get all those things. I think, despite their complaints, that's actually how some people like to spend their time. My parents were glad they had to spend zero time on their finances over their last few years, they had far more important things to do with their fast-diminishing time here so the little bit extra it might (might) have cost them was irrelevant.

Bill said
FWIW, my parents had most of their money with Edward Jones, gave me POA at some point and easy peasy, working with their advisor, right until their estates settled. In their last few years they were totally disinterested in whether they made an extra half percent or so on a GIC, or whether an account had a $100 annual fee or not, etc, so there are other ways to make it much easier for yourself. They also added me joint to their bank accounts, easy peasy there too.

Of course if you need the best rates, and the cheapest fees, and the most convenient accounts, and virtually no negatives to whatever you choose...…..well, you'll be very busy constantly moving stuff around trying to get all those things. I think, despite their complaints, that's actually how some people like to spend their time. My parents were glad they had to spend zero time on their finances over their last few years, they had far more important things to do with their fast-diminishing time here so the little bit extra it might (might) have cost them was irrelevant.  

Correct. They could afford to buy the necessities of life and still leave something for their children.