A couple's guide to smart saving

546207_67836734(NC)—You’ve made a decision to share your life with someone – you’ve moved in together, made your first joint purchase…perhaps you’re even considering a joint bank account! As rewarding as it can be, managing your savings with a significant other can also be a challenge. Whether you keep separate accounts or have fully merged finances, it is useful to know how deposit insurance can specifically apply to couples.

The Canada Deposit Insurance Corporation (CDIC) is the federal agency that exists solely to protect the savings of Canadians in the event their bank fails or goes bankrupt. If you have an eligible account held in Canadian dollars at a CDIC member institution, you are automatically insured up to $100,000. Take a minute to review how different types of eligible deposits apply to you and your partner to ensure your savings are protected.

Joint Accounts – CDIC provides separate deposit insurance coverage for eligible deposits held in more than one name (joint accounts and financial products).  It is important to note that deposits you own jointly with someone else are insured separately from deposits you hold in your own name. CDIC ensures eligible joint deposits and financial products up to a maximum of $100,000. Keep in mind, however, that the maximum insurance coverage of $100,000 applies to the account, not the individual owners.

Trust Deposits – CDIC also provides savings protection for eligible deposits held in trust for another person. Trust deposits are insured separately from deposits held personally by the trustee or the beneficiary. This means if your partner is the beneficiary of an eligible deposit in which you are the trustee, they will be insured up to a maximum of $100,000 in addition to their eligible deposits not held in trust.

Spousal RRSPs – CDIC also ensures eligible deposits held in an RRSP separately from other eligible deposits up to a maximum of $100,000. In the case of a spousal RRSP, the contributor and the owner are different people.  Eligible contributions are added to other registered deposits in the name of the spouse or common-law partner for whom the plan is established – not with deposits in the contributor’s name.

Keep in mind that only deposits held in Canadian funds are protected. So any joint deposits or financial products you may hold in U.S. funds are not eligible for CDIC deposit insurance coverage. For full details, please visit www.cdic.ca.  Knowing the basics of how these different eligible deposits can apply to you and your partner will help ensure your savings are fully protected.

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