Do RRSP portfolio values prior to marriage constitute a matrimonial asset?

[hubby]

During equalization process, RRSP differences are normally split between spouses.

Two questions ....

1. Can the RRSP value PRIOR to marriage be subtracted from the current portfolio value?

2. Is the subtracted amount based on past value or projected current value? IE - Past value at so and so date lets say is 10000. Today, that same amount is recalculated to be 20000. Which amount is subtracted from the current RRSP portfolio value, if its allowable?

Hubby

[logicalvelocity]

Hubby,

I think the original value of the RSP prior to marriage would be excluded. However the increase in value would be part of equalization and subject for division as the increase was created during the time of the relationship.

[FPI]

I am just going through the same think. The RSP value at time of marriage is excluded. However, to figure out the net value of the RSP they deduct roughly 25 to 35%. For example if you had $10,000.00 prior to marriage, it would be that less the tax. This would be the net value. If you want to use your RSP as equalization payment, they can be rolled over to your spouse.

[hubby]

What forms are used to roll em over? How is it done?

Thanks for the info FPI!

Hubby

[logicalvelocity]

Hubby,

If the RSP funds are held at a major bank, I would think the bank would have the necessary forms and paperwork for withdrawals and transfers.

Additionally, when you withdrawal anything or transfer anything more than $ 4999.00 dollars in a single withdrawal, the bank will withhold full income tax payable.

If $4999.00 amount is withdrawn, one day, another $4999.00 is withdrawn a second day, $4999.00 is withdrawn a third day and so forth, the bank will only withhold 10% of each withdrawal for tax purposes. The remainder itax liability will not due until April 30, 2007 over a full year away. You would be better off investing the money. CCRA will not pay you interest.

LV

off topic but worthwhile to mention

Another RSP strategy is to open or deposit money into an RSP on or about February 28, no later than March 1 and withdrawal the equivalent amount the following week.

You get the tax credit for the previous taxation year and if you follow the 4999 rule of thumb taxes for the withdrawal will not be due for 13 months or so


These strategies are fully within CCRA directives.