Good Afternoon and welcome to my first blog! I will be putting out a blog on a monthly basis on a variety of market and financial planning topics as well as some updates on current events and timely planning ideas. 

 

The first topic that I wanted to discuss is a problem that we encounter on a regular basis while we are performing our comprehensive financial plans and estate planning reviews for clients. It is the issue of looking at taxes on death and making sure that your leave a lasting legacy for your family. One of the best solutions that can leave a legacy, lessen the burden on love ones and also potentially give to charity is the idea of asset protection insurance.

 

You have worked hard all your life and made sacrifices to build your wealth. Like most of us, you probably want to ensure that once your retirement has been secured, you adequately plan for the wealth you leave behind to your loved ones. This extends beyond your investments and includes your home, family cottage or other important assets.

 

Life insurance is most commonly used to provide financial security to your family and other beneficiaries in the event of your death. However, life insurance can also be used to protect the full value of your estate from taxes. At death, your assets often trigger significant tax obligations, which are frequently met by liquidating the assets of your estate. A life insurance benefit can cover your tax obligations and leave your estate intact.

 

If you own substantial assets that you want to protect from taxes, the asset protection strategy can help to preserve the value for your beneficiaries.
This includes:
• Registered plans, such as an RRSP or RRIF
• Shares in private or publicly traded corporations
• Collectibles, such as art, jewelry and antiques
• Real estate

 

Unfortunately, without proper planning, the value of those assets could be reduced by a tax bill. Your estate may not have enough liquid assets or cash on hand to pay the tax bill and decisions may have to be made on which assets to sell to fulfill that obligation.
When you pass away (if you are not able to roll over assets to your spouse), registered assets as well as gains on non-registered investments and property (excluding your principal residence) will be included in your income in the year of death.
While the tax bill may be relatively low today it may increase over time as your assets increase in value, so your family is not only inheriting the assets but also the tax bill.

 

Protecting wealth through planning

 

The Asset Protection strategy is an effective solution to the dilemma faced by your family when the time comes to settle your final tax bill.

Once integrated into your overall financial plan, this strategy will help to protect the value of your assets and provide your heirs with the funds necessary to pay the taxes due when you pass away, all for just a fraction of the potential tax bill.
The Asset Protection strategy uses permanent life insurance, to manage the tax risk today and in the future so you must qualify for coverage in order to implement the strategy. The insurance premium relative to the benefit makes it an extremely cost-efficient method of covering your future tax liability.
Some permanent solutions may include tax-exempt life insurance, which allows you to make deposits in excess of insurance costs to grow in investment type accounts inside the policy tax-deferred. 

 

This is an ongoing struggle for Canadians when it comes to estate and tax planning. We are happy to help and explore and answer any questions with regards to planning as you have worked hard all your life for assets and proper planning needs to be in place to make sure that your estate and loved ones are looked after. These are all topics that should be discussed with a proper licensed professional to determine if this strategy is appropriate for your needs. I have also attached a quick link along with a case study that goes over how the strategy would work. 

 

Asset Protection Strategy Link and Case Study :

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