January 1, 2019
It is important to plan the most efficient manner of leaving hard-earned assets to heirs. Try to attend to these concepts to maximize your legacy.
- Keep your testamentary trust (your will) updated. Without an updated will, deceased heirs may be named, or monies in trust may conflict with your current situation.
- If there is no will your estate may be deemed intestate, and your provincial government can appoint trustees who may then divide the estate according to legislation, not your wishes. This can incur probate fees.
- Young children need a guardian directive. It is very important that a directive in the will establishes who will be the children’s prearranged guardian.
- Specify what assets will be left for your heirs. This assures that a dominant executor won’t determine the distribution of the heirlooms that you’d prefer specific heirs to receive.
- Proper beneficiaries have not been named. Update your beneficiaries on your various life insurance policies and investment accounts (such as segregated funds) to allow passing these assets directly to named beneficiaries. Tax-free proceeds from life insurance can be divided proportionately to coincide with your wishes.
- Consider equalizing your estate. Where one child inherits the family cottage or business, consider leaving equivalent cash assets to other siblings. Life insurance can be purchased to create new tax-free money to divide up among siblings not inheriting a significant family asset or to provide retirement funds for a surviving partner. Life insurance benefits can be assigned to beneficiaries outside of the will.
- An estate plan can direct payment of your tax bills limiting tax erosion of wealth.
- RRSPs and estate taxation Where there is a surviving spouse, RRSPs/RRIFs can roll over free of taxation. If not, registered money will be taxed as income in the final tax return of your estate.
- Capital gains taxation Taxation on capital gains can erode bequeathed assets such as a cottage, home, or business shares left to adult children. Such assets are deemed to be disposed of at death where there is no spouse or dependent, in most cases creating taxable capital gains on the difference of the current asset value minus the purchase price. Life insurance can help pay capital gains taxes, for example, to keep a cottage or business in the family.
Note: Talk to your advisor about tax exemption changes to investment components of life insurance.
Publisher's Copyright & Legal Use Disclaimer Replication is prohibited beyond the use of this website. The publisher does not guarantee the accuracy and will not be held liable in any way for any error, or omission, or any financial decision or purchase or use of a financial product, including investment or insurance products, and suggest that a professional advisor's counsel is sought, especially with regard to Mutual Funds and Segregated Funds and Investment Funds which have investment risks as noted in the Mutual Fund Disclaimer. All rights reserved by Adviceon®
Disclaimer The particulars contained herein were obtained from sources which we believe are reliable, but are not guaranteed by us and may be incomplete. This website is not deemed to be used as a solicitation in a jurisdiction where this representative is not registered. This content is not intended to provide specific personalized advice, including, without limitation, investment, insurance, financial, legal, accounting or tax advice; and any reference to facts and data provided are from various sources believed to be reliable, but we cannot guarantee they are complete or accurate; and it is intended primarily for Canadian residents only, and the information contained herein is subject to change without notice. References in this Web site to third party goods or services should not be regarded as an endorsement, offer or solicitation of these or any goods or services. Always consult an appropriate professional regarding your particular circumstances before making any financial decision.
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investment funds, including segregated fund investments. Please read the fund summary information folder prospectus before investing. Mutual Funds and/or Segregated Funds may not be guaranteed, their market value changes daily and past performance is not indicative of future results. The publisher does not guarantee the accuracy and will not be held liable in any way for any error, or omission, or any financial decision. Talk to your advisor before making any financial decision. A description of the key features of the applicable individual variable annuity contract or segregated fund is contained in the Information Folder. Any amount that is allocated to a segregated fund is invested at the risk of the contract holder and may increase or decrease in value. Product features are subject to change.