Naming a beneficiary is a valuable feature of life insurance and segregated funds policies so it is important to carefully choose your beneficiaries.
You have spent your life working hard and accumulating wealth for you and your family to enjoy. While you are living you pay taxes annually on both your earned and investment income. But did you know that your assets may also result in a tax liability upon your death or the death of your spouse? In Canada, a taxpayer is deemed to dispose of all of his or her assets at death. If the value of these assets exceeds their cost, then, without proper planning, taxes could be payable.
But the good news is, it might be possible to reduce or at least delay the payment of this tax by organizing or re-allocating certain assets that would result in a tax liability at your death. There is also a way to cost-effectively accumulate tax-free funds to pay all or part of any taxes that may become due upon your death.
Of course, every situation is different, so you should consult with a financial advisor before making any big decisions. Below is a simple guide that will help you structure your estate in the most tax-advantageous method.
Digital assets are essentially anything that has inherent worth that is also in digital form. What establishes their status as an asset is the fact that they come with a “right to use” (e.g. a password). Without a right to use, they are just considered data. Digital assets could include family photos, air miles, hotel rewards, grocery store points, and especially cryptocurrency.
Many farmers find it difficult to get any interest from their children in continuing to run the farm business – which can cause some complications when developing the best estate plan for farmers looking to retire.
In general, farmers are in an interesting position: they are asset rich due to the increased value of their land but struggle with the increasing costs related to their farming activities.
However, if the farm holds significant value but the children are not interested in working the land, what is a farmer to do?
A year ago, the projected deficit for 2020 was estimated to be $20 billion. Shockingly, as a result of Covid-19, this projection has risen to over $380 billion by the end of the year. So, what does that mean for tax rates and how will this affect your estate plan?
It is important to have a valid Will to avoid the challenges of intestacy – dying without a Will. Indeed, eventually, everyone ends up with a Will of one sort or other, either the deceased gets to decide how assets are distributed by writing one before death or the provincial authorities get to decide based on intestacy rules. So, it’s always best to get a Will written in advance.
The question is, do you need more than one? Getting one Will is trouble enough, so why would anyone want to have two?
Uncertain about where to invest during Covid-19? It may be time to diversify through a Participating Whole Life policy
If you think your heirs are not quite old enough or prepared enough to discuss the wealth they will inherit on your death, you’re not alone. Unfortunately, this way of thinking can leave your beneficiaries in a decision-making vacuum: an unnecessary predicament which can be avoided by facing your own mortality and creating a plan.
Avoiding the subject of your own mortality can also be an extremely costly to those you leave behind.
Life insurance is used for two general purposes in a private corporation – managing risk and creating opportunities. The risk management function is satisfied as life insurance provides the corporation with a tax-free payment in the event of the death of an owner or someone vital to the success of the business. As life insurance also allows for the tax-sheltered build up of cash value additional planning opportunities are additionally created.
Growing your estate without undue market risk and taxes
Often we see older investors shift gears near retirement and beyond. Many become risk-averse and move their assets into fixed income type investments. Unfortunately, this often results in the assets being exposed to higher rates of income tax and lower rates of return – never a good combination.
Or maybe the older investor cannot fully enjoy their retirement years for fear of spending their children’s inheritance.
The Estate Bond financial planning strategy presents a solution to both of these problems.
The foundation of any financial plan is recognizing that every person, individual or business owner is unique. Stan’s goal is to provide personalized solutions to each of his clients that reflect their needs, their situation and budget, and review these periodically to ensure their plans continue to measure up to their stated goals and objectives for the future.