Estate Planning and Tax Changes

Estate Planning and Tax Changes

 

The birth of your baby is the ideal time to review your Will and Power of Attorney and how your tax situation will change. It is now even more important to ensure your loved ones are well looked after if anything should happen to you. Here are a few topics to consider helping you prepare for some of the unexpected events that can happen in life.

 

Update your Wills and Power of Attorney

It is always important to keep your Will and Power of Attorney up-to-date with changes in your life – especially the birth of a new baby. When you have a legal Will, you control who receives your assets and money. Without a Will, the government decides who gets what. It’s also important to name a guardian for your child in your Will. When choosing a guardian consider these issues:

        • Will they be comfortable with the emotional and financial responsibilities of raising your children?

        • What are their attitudes on how to bring up children - and are they very different from yours?

        • How do they get along with the rest of your family, who will likely want to remain involved with your children and continue spending time with them?

        • If you are thinking of a married couple, how old are they? If something happens to them, who will be the backup guardians for your children? What will happen if they divorce? It may be better to appoint one as the primary guardian.

 

For a more extensive list of things to consider before making your Will, refer to this Will Planning Checklist. Use this Personal Record Keeper to gather important information that you can share with your loved ones including your executor or executrix.

 

Filing your Tax Return

According to a recent study, having kids in Canada doesn’t save you much money in taxes. In 2004 couples with family incomes of $40,000 and two kids, saved 9% in taxes because of tax implications of supporting children. However, if your income was over $80,000 the difference was only 1% and if your family income was over $120,000 there is no tax break for having a child. However, there are some ways that your tax returns will change. Be sure to ask us which tax breaks you can benefit from.

Child Care Expenses

If both partners work outside the home, the lower-income spouse can deduct a certain amount of child care expenses. For every child who is under the age of seven at the end of the year, you can claim up to $7,000 for daycare expenses. For every child over seven but under 17, you can claim up to $4,000 for daycare expenses. Talk to your advisor about the rules and how this deduction can benefit your family.

Universal Child Care Benefit (UCCB)

This provides a $100 benefit per month per child under six years old. The money is taxed in the hands of the lower-income spouse. You will have to apply for this benefit. Please speak us!

Child Fitness Credit

You probably won’t claim this for an infant but as your child ages you can claim a credit of up to $500 a year for eligible programs that enhance the child’s fitness.We can provide you with additional information on the various tax and insurance issues.

 

 

Please contact us to find out more!

Barbara Reid's Wealth Management Team

Your personal Wealth Advisor in Hamilton, Ontario