Who Should I Name as the Beneficiary for my Non-Registered Investment Accounts?

We only opened our first non-registered investment brokerage account recently. So I was interested to read some advice on naming the beneficiary for non-registered investment accounts in the book “How to Eat an Elephant” by Frank Wiginton. His comment made me do some further reading about the issue of non-registered investments and beneficiaries.

Who did Frank Wiginton Recommend We Name as the Beneficiary?

In the book, he recommended you and your investment team consider naming your minor child or children the beneficiary/ies of your non-registered investments: and naming your spouse as the trustee.


This approach allows the income generated by the assets to be taxed in the children’s hands and also in the “hands” of the trust, which could reduce the overall taxes to be paid on those assets. If the spouse is the direct beneficiary, he or she will be adding the income to their possibly already higher income resulting in more tax being paid.

What Can Go Wrong If I Name My Young Child at the Beneficiary?

If you do choose to go this route, you’ll want to talk to a taxation accountant and a lawyer. It’s important to get it right!

According to Manulife Investments in Wealth Transfer Mistakes, “once a minor reaches the age of majority, he or she will be entitled to the funds, without any restrictions.”
Remember what you were like at 18? Are you sure you want to hand your child a chunk of change at that age?

Also, the funds could get tied up in court or held by a Public Trustee if you do it wrong. You’ll want to “establish a trust to receive the funds on behalf of the minor.” That trust can have conditions on how the funds should be invested and when they should be paid out.

What About Probate Fees?

While reading an article called A Matter of Trust on the Fiscal Agents website, I found an interesting line: “If investments held in-trust for a child represent amounts legally transferred from an adult to a child, they do not form part of a deceased adult’s estate, thus avoiding probate fees.”

That suggests that it might be possible to avoid probate fees but only if the non-registered account is held in trust for the minor child *before* the person dies, not after. I suppose, grim though it may sound, if someone has a life-threatening illness, they might want to consider moving assets into a trust account for the child while they are still alive.

Obviously, you’d want to investigate the details of this option with your tax accountant and lawyer before taking any steps.

Does Naming a Minor the Beneficiary Make Sense for Small Accounts?

In our case, our non-registered account is small: so we opened it as a joint account with rights of survivorship. It isn’t cost effective to set up a trust at this point. But, hey, if our shares suddenly all triple in value, maybe it will be worth consulting professionals about it.

There are costs involved in creating a formal trust. There’s an initial cost for the time spent by the lawyer and accountant. But there are also ongoing costs as “formal trusts are required to file annual tax and information returns.”

So for us, this option will go on the “to be considered later” list. We don’t need a trust at this stage but who knows what the future might bring?

Related Reading

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Have you set up a tax-minimizing strategy for your accounts if you should die while your children are still minors? Please share your views with a comment.

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