One of the tax breaks the government gives to couples takes place when the first spouse passes away. That person’s Registered Retirement Income Fund (RRIF) can be taken over by the surviving spouse without taxes being payable at the time. So those funds continue to grow on a tax-deferred basis.

But what happens if the surviving spouse only takes the minimum required RRIF withdrawals throughout retirement? When this individual passes away, they could be left with a large RRIF, perhaps worth hundreds of thousands of dollars. At the highest marginal rate, the estate would owe tax equal to about half the value of RRIF assets. That leaves a lot less for heirs.


A joint-last-to-die life insurance policy, often called “JLTD,” is designed for couples and only pays out the insurance proceeds upon the passing of the second spouse. A JLTD policy is typically used to help offset taxes payable by an estate. The timing of the payout meets the tax need, and it’s more economical than two individual policies.

A couple would purchase a JLTD policy when they recognize their estate will face a sizable tax liability. They choose an insurance amount that offsets the estimated tax so heirs can receive the estate’s full value.


This strategy is just one solution for one situation. Several methods are available to manage and use a large RRIF, and there are various ways to minimize the effect of taxation on estate assets. We always work with you to determine which strategy best suits your situation.

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