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Joint with right of survivorship
October 21, 2023
11:06 pm
HermanH
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When a GIC is purchased jointly with right of survivorship, are banks obligated to cash them out at the request of the survivor upon death of one party?
Are they obligated to pay interest up to the date of the death, the notification, or is it up to the actual date the GIC is redeemed?

October 21, 2023
11:49 pm
Norman1
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No and no.

There is no early redemption should one of the joint tenants die.

Under provincial property laws, GIC issuer is obligated to delete the name of the deceased from the ownership on proof of death and consent of the surviving owner(s).

October 22, 2023
11:08 am
HermanH
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Thanks.

October 22, 2023
10:43 pm
HermanH
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Norman1 said
No and no.

There is no early redemption should one of the joint tenants die.

Under provincial property laws, GIC issuer is obligated to delete the name of the deceased from the ownership on proof of death and consent of the surviving owner(s).  

Once proof of death is presented, if consent of the survivor is not given, is there any way a bank can remove it unilaterally?

Could they simply cash out the GIC (without paying any accrued interest) and simply return the principal, in any way? My expectation would be that, if the bank allows early redemption, they would pay out any accrued interest. I would agree to early redemption only if they also paid out the accrued interest.

Is this optional or specific to an individual institution or are all governed by the same restrictions?

October 23, 2023
12:08 am
Norman1
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Bank would become suspicious if person attempting to remove the deceased joint tenant's name cannot supply a signed statement from the survivor or survivor's power of attorney supporting the change.

GIC issuer and survivor can always come to a new agreement beyond the terms of the GIC once the GIC is soley in the survivor's name to break the GIC agreement. It is not usual for the GIC issuer to break a non-redeemable GIC early with no penalty while there is still a surviving joint tenant.

October 23, 2023
12:30 am
HermanH
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1) Deceased has TFSA (GIC) at WealthOne bank
2) She also has Joint GICs

Executor must inform bank of demise in order to have the TFSA cashed out to the estate.

Unless the accrued interest is also paid on the joint GIC, there is no advantage to the survivor, because keeping the GIC in joint status gives additional CDIC coverage. Reverting the GIC to the survivor before knowing the status of any accrued interest runs the risk of the bank refusing to redeem the GIC early AND the loss of the additional CDIC coverage, at the same time. Dealing with WealthOne Bank, so it is important not to exceed CDIC coverage.

Therefore, it would be more advantageous to the survivor to deny removal of the name from the joint GIC, until it is known whether or not the GIC can be redeemed early. It sounds like the bank will not likely allow early redemption, since they are paying a lower interest rate than current offers. However, it does not hurt to ask. They can only say 'no'. Therefore, it is important to know beforehand whether or not a GIC will be redeemed and if accrued interest will be paid.

October 23, 2023
9:17 am
Bill
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".......because keeping the GIC in joint status gives additional CDIC coverage......."

Is it legally an option to keep joint owners when one owner no longer exists? Seems surprising to me. Unless you change deceased owner's name to "estate of X", is that what you mean?

October 23, 2023
9:48 am
HermanH
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Bill said
".......because keeping the GIC in joint status gives additional CDIC coverage......."

Is it legally an option to keep joint owners when one owner no longer exists? Seems surprising to me. Unless you change deceased owner's name to "estate of X", is that what you mean?  

Norman1 said
Under provincial property laws, GIC issuer is obligated to delete the name of the deceased from the ownership on proof of death and consent of the surviving owner(s).

I am wondering what happens if the surviving owners refuse to grant consent for removal of the decedent's name.

October 23, 2023
11:43 am
Norman1
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Nothing. The legal ownership registration of GIC remains unchanged if one cannot provide the required proof of death and consent.

Same with real estate. Can't remove deceased joint tenant owner from property title when a survivor doesn't have legal capacity to execute an affidavit supporting the change and there is an issue with the survivor's power of attorney.

Can't change "Bob" to "estate of Bob" with joint tenants with right to survivorship registration. Bob's entitlements to the GIC evapourates on death.

October 23, 2023
12:15 pm
AltaRed
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I agree with Norman's post #9. It continues to exist in joint names until the last surviving owner dies. Then it is a bloody mess when the Executor of the 'last to die' owner has to discharge/liquidate the assets.

There is a legal process to resolve such cases but I do not recall what it is. I read some time ago of a case in which a principal residence fell into this category. The only detail I remember is the 'last to die' survivor had also been the Executor of the estate of her previously deceased husband. There was no Executor left to discharge his ownership and the Executor of her estate had to deal with that mess.

For the purposes of this thread, the JTWROS GIC would continue to remain in effect until it either matured, or the appropriate evidence (death certificate) was presented to take the deceased off title. Non-redeemable GICs cannot be 'early redeemed' unless* and until 'the last to die' owner passes and the Executor presents death certificate, Will and Letters (Grant) of Probate to 'mature' the GIC and request disbursement of proceeds to the beneficiaries.

* I am not aware of any FI that would not 'early mature' a non-redeemable GIC upon the death of the 'last to die' owner of the GIC. It pays out accrued interest to the date of death. It is exactly what I, as Executor, did for my mother's estate.

October 23, 2023
2:29 pm
Norman1
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Executor of longest-surviving joint owner's estate can consent on behalf of the last surivivor to the deletion of the predeceased joint owners from the legal registration.

With proof of the deaths and the grant of probate for the last survivor's estate, legal ownership is transferred to the executor for the estate of the last survivor.

I helped with the paperwork in such a case and can confirm this firsthand.

October 23, 2023
3:38 pm
AltaRed
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Thank you. I could not recall the details,

October 24, 2023
1:50 am
HermanH
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I called up various banks and asked for their policy. Most would simply remove the deceased party from the joint GIC, but refused to give the survivor any option of early redemption. Those that allowed early redemption would only do so with the sacrifice of all accrued interest.

They included: Hubert, Motive, Habib Canada Bank, and DUCA

However, there was one notable exception. Peoples Trust (and probably Peoples Bank) were willing to remove the deceased party AND pay out interest accrued up to the date of notification.

October 24, 2023
7:38 am
AltaRed
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Why early redemption due to the loss of one of the owners would be considered (with or without accrued interest) in most* cases defies logic to me. It is not like the GIC has become 'ownerless' with surviving owner(s). Goodwill perhaps.

* An example of where that would logically be considered is if the surviving owner(s) did not actually have a beneficial interest in the GIC, i.e. it was in joint name for operating convenience only, and the assets really belonged to the estate for distribution to other parties (as established by the courts or otherwise).

October 24, 2023
3:24 pm
Loonie
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If the survivor already had their own accounts at same FI and were at or near maximum insured limits, then adding more money that used to be joint would put them over the limit, so FI might cooperate.
This situation appears to apply to many forum members who have various joint accounts in order to maximize insurance coverage and avoid probate tax.

October 24, 2023
4:29 pm
Bill
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I still have no idea how a joint GIC can remain joint when one holder dies, who is it still joint with? Nobody.

Here's an excerpt from TD Bank GIC Terms form: "If you are opening a joint GIC or Term Deposit, you understand
that it has a right of survivorship. It is your intention that, upon
your death, the joint GIC or Term Deposit automatically
becomes the property of the surviving joint holders of the GIC
or Term Deposit."

So it "automatically" becomes property of survivor(s), no dead people allowed.

October 24, 2023
6:49 pm
HermanH
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Bill said
So it "automatically" becomes property of survivor(s), no dead people allowed.  

If that is the law and automatic, then why demand consent of the survivor, as Norman1 suggests? Why demand death notification?

Loonie said
This situation appears to apply to many forum members who have various joint accounts in order to maximize insurance coverage and avoid probate tax.

Exactly the situation here; extended CDIC limits.

Also, if sole ownership automatically reverts to the survivor and the additional CDIC coverage for joint status is lost, then nothing changes. The survivor will still be over CDIC limits and does not have to suffer the rigamarole of notification and consent.

October 24, 2023
11:49 pm
Norman1
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Bill said

So it "automatically" becomes property of survivor(s), no dead people allowed.

No, it is not automatic.

Survivor is automatically entitled to the property. But, entitled to ownership is not the same as having ownership. BC lawyers Taylor & Taylor illustrates the nuance in Dealing With Real Estate In BC After Death using the joint ownership of a property:

In a joint tenancy, when one joint tenant dies, the surviving joint tenant is automatically entitled to the deceased’s share of the property. Although the right is automatic, it is necessary to file paperwork with the BC Land Title and Survey Authority (LTSA) to make the transmission effective. Generally speaking, this includes filing the original death certificate and accompanying LTSA filing form (typically, a Form 17 Fee Simple) with the Land Title office, along with payment of a processing fee.

After the LTSA processes the application for transmission to surviving joint tenant (this process may take a few weeks or more), the deceased owner’s name will be removed from title, leaving the surviving joint tenant as the sole owner.

If no-one takes the steps to delete deceased joint tenant owners from the ownership of a house or a GIC, then the deceased remain owners.

October 25, 2023
10:08 am
Bill
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Guess we disagree, with regard to TD GICs their document clearly says "automatically BECOMES the property of", it does not say "automatically entitled" to or anything else.

Besides dead people no longer exist, I disagree that "deceased remain owners", something non-existent can't be party to a contract, if anything it would be the estate which retains joint ownership as your estate comes into existence at the moment of death. Same as income tax, you are deemed to have disposed of everything at that moment.

A B.C. law firm talking about real estate, where there is a provincial registry system and other elements like people liable to continue paying property tax, mortgage payments, etc, would naturally have procedures in place to change registered ownership, etc, but it would not have the definitive word on a TD GIC, I'd take TD's document on that.

If anyone wants to read the TD document here it is, note it also indicates they need to receive a death certificate asap.

https://www.tdcanadatrust.com/document/PDF/accounts/802228.pdf

October 28, 2023
12:36 pm
Norman1
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The deceased wasn't dead when he or she put money into the GIC or bought the piece of land. So, the deceased can certainly continue to be named a joint tenant owner of a GIC or a piece of land.

The TD document does not say removal of the deceased name is automatic. The document says that it is the joint tenant's intention for the removal to be automatic and that the joint tenant acknowledges any automatic removal:

Right of survivorship means it is your intention that, upon your death, the joint GIC or Term Deposit automatically becomes the property of the surviving joint GIC or Term Deposit holders. By choosing a joint GIC or Term Deposit, you acknowledge that, after any GIC or Term Deposit holder's death, the GIC or Term Deposit automatically becomes the surviving holders' property. …

RBC Royal Bank has more explicit text that the removal is "automatic". But, the removal of the deceased joint tenant is not actually automatic.

Once the RBC branch is contacted about the death, a request is sent to an RBC department that handles death and estate matters. That department will send a package of instructions and paperwork to apply for the removal of the deceased's name from the joint accounts.

Along with proof of death, a form signed by the surviving joint account holders needs to be returned. The form declares the survivors' support for the application to delete the deceased's name from the joint accounts.

The "automatic" in those documents just means that no involvment by the deceased or the deceased's executor is needed to remove the deceased's name from the ownership of the joint tenant accounts. "Automatic" doesn't mean someone can just show up with a death certificate without the written support of the surviving joint tenants and request the change.

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