Estate Planning Archives - Page 3 of 3

When naming a beneficiary for each of your financial assets, the obvious choice may not always be the best choice. You should consider tax and estate planning implications, among other things. We have listed important items you should consider when naming beneficiaries for major financial assets:

Tax-Free Savings Accounts

With a Tax-Free Savings Account (TFSA), you can name a beneficiary, a successor holder, or both. Only your spouse can be named as the successor holder. This means your surviving spouse can take ownership of the assets in your TFSA without affecting their own contribution room. A beneficiary can get your TFSA assets tax-free and can apply them to their contribution room if they have enough space. It’s important to note that any increase in the value of the TFSA between your death and the date of the transfer will, unfortunately, be taxable to the beneficiary

Registered Retirement Plans (RRSPs and RRIFs)

When you name your dependent child or your spouse as the beneficiary of your RRSP or RRIF, the plan assets roll over on a tax-deferred basis. The same is not true if you name an adult child or anyone else as the beneficiary. When transferring your retirement funds to someone other than a dependent child or spouse, the tax liability for the transfer will go to your estate. This will reduce the amount of money you have to give through your other non-registered assets.

Segregated Funds and Life Insurance Policies

In some situations, you may want to consider using a testamentary trust instead of naming a spouse or child as a beneficiary of life insurance or segregated funds. When you name a minor as a beneficiary, the proceeds of the policy or investments must be paid into a trust in their name. If you name your own testamentary trust, you can control where your trust will be held and who will be managing your funds. This is especially a good idea in blended families. You can guarantee each child and spouse gets exactly what you desire, even if they are a minor.

The implications and rules of naming a beneficiary are complex and can very daunting to work out on your own. An estate planning expert at The Beacon Group of Assante Financial Management Ltd. can help you review your personal estate planning goals in order to name an appropriate beneficiary or successor holder for your registered and non-registered accounts.

Minimizing Financial Conflict with Siblings

September 26, 2016

by Estate Planning Financial Planning Inheritance

It’s the sad reality of the world we live in, but conflict surrounding money within families is all too common. There are no set rules or guidelines when it comes to siblings and money. We have listed three typical situations that you may find yourself in that involve your family and money, and some strategies to help get through them while keeping everyone happy.

Inheritance

It is common practice for a parent to name one of their children as executor or estate trustee of a will. Unfortunately, this may cause some discord between siblings. A sibling that is not the executor may feel that key decisions should be made together, which could cause some conflict. The money involved in inheritance can also be a point of contention. One sibling might feel like the assets are being split up unevenly. These matters aren’t usually resolved overnight and can lead to delays and family conflicts lasting years. The best way to prevent this problem is by making your will as fair as possible. You should consider naming someone other than one of your children as executor as well. Speak with your financial advisor at The Beacon Group of Assante Financial Management Ltd. about your estate planning options.

Lending money

What do you do if one of your siblings comes to you and asks for a loan? It’s easy enough to give a loved one some help in their time of need, but you need to consider what the money is going to be used for. If your sibling is living a troubled life, giving them more money will enable them to continue. You aren’t likely to get this money back in this scenario either. If your sibling is looking for help to send their child to university, you will be helping them immensely and you are likely to get your money paid back. It is okay to put the loan and the repayment terms in writing. This will help legitimize the lending and help protect your relationship. You are allowed to say “no” to your family too. Either way, you should only loan money out if you can afford to lose it if it’s not repaid. There are so many choices when it comes to lending cash to siblings, but at the end of the day, you need to do what feels right to you.

Caring for a disabled sibling

If you have a sibling with special needs that requires lifetime support, what happens to them when your parents pass away? Is another sibling going to pick up the slack? Caring for your sibling could require bringing them in to live with you or organizing and handling the finances involved in caring for them. This is something you need to discuss with your parents long before they have reached the end of their life.

The financial advisors at The Beacon Group of Assante Financial Management Ltd. can help you with any financial matters concerning your family.

How to Choose the Right Estate Executor

September 22, 2016

by Estate Planning Inheritance

Everyone knows that it’s a smart and responsible choice to have a will, but not everyone understands the importance of selecting the right estate executor to help manage their affairs and distribute their assets upon death. Picking the right executor will mean that your loved ones will receive their rightful inheritance in a timely manner. Picking the wrong executor could lead to a load of problems including tax issues and late payments. Read further for information on choosing the right executor and what that will mean for you and your family:

The role of an executor

An estate executor is the person named in your will that will be your personal representative after your death. This person is legally responsible for carrying out your wishes outlined in the will. An executor can be one of your children or your spouse, a family friend, a professional advisor, or a trust company. You will need to weigh the pros and cons of each option to find the right person or company for the job.

Choosing an executor

An estate executor must be willing to take on that role. Nobody can be forced to do it. Your executor should be trustworthy, organized, and have the time and availability to act if called upon. You can name more than one executor in your will but in these cases, it’s best to include a decision-making mechanism in your will. You should also consider naming an alternate executor in case your primary one is unable to act. If there is no alternate, the court will decide who will be your executor. It is important to get the approval of the individual(s) you plan to name executor in your will before putting them in your will. Doing so will help with the administration of your will when the time comes.

Executor compensation

Acting as an estate executor is not a charitable act. Every executor is entitled to fair compensation for the responsibility and time spent acting on your behalf. The compensation can be based upon the size of the estate, the time spent administering the estate, among other factors. Spouses and close family members tend to charge the least while trust companies will charge the most. The skills and expertise provided by an advisor or trust company can be well worth the extra cost, though.

If you have any questions about your will, estate planning, or naming an executor, contact a financial advisor at The Beacon Group of Assante Financial Management Ltd. today.

Why Naming a Power of Attorney is Important

September 5, 2016

by Estate Planning Financial Planning

It’s hard to ever envision anything bad happening to us, but it’s important to look beyond our own fears so that we can look out for ourselves in the future. Whether it’s renewing insurance, dealing with your investments or any other important decision, it’s imperative that we all take some time to consider the possibility of not being able to make our own decisions. This is where planning ahead and naming a power of attorney is so important. Here are the two main reasons why.

Your Finances

You’ve worked your whole life to achieve what you have – whether it’s your home, a company, investments or anything of financial matter. It’s important that if you ever suffer from some unforeseen health or medical condition, and are unable to make the decisions yourself, someone you know and trust can make them for you. This is why planning for the future is so important.

Power of attorney means you get to select someone who may act on your behalf. This not only ensures that your needs and desires are properly taken care of, but also that they are done promptly and accurately. Without this, it would require an individual to apply to become your representative, which may not be someone you desire to oversee your decisions in the first place.

Your Healthcare

There’s nothing more important than health and the people who can makes those tough decisions for you when you no longer can. Whether it’s treatment, or even housing, the person you select to be your appointed representative can offer you the comfort of knowing how you wish to be treated. This also incudes any preferences for life support or resuscitation. Additionally, you can also select what restrictions your power of attorney has.

Having a person appointed to deal with your desires and needs at a time when you may be suffering can offer you that sense of comfort and peace knowing that things will be taken care of.

When it comes to long-term planning, we must never exclude the possibility that we may not always be able to make our own decisions. It’s imperative to see beyond our fear and look towards the peace and comfort of having someone we can trust to make those hard decisions for us. We can’t predict how life may change. We can only do our best to plan for it, which is why naming a power of attorney is so important.

Consult The Beacon Group of Assante Financial Management Ltd. for expert advice on estate planning, tax planning, retirement planning, or investment advice.

Withdrawing from Your RRIF

August 25, 2016

by Aging Estate Planning

When you are retired, you will have the choice of drawing from a number of different registered and non-registered accounts. You may choose to withdraw from your Registered Retirement Income Fund (RRIF), Tax-Free Savings Account (TFSA) or your non-registered accounts. Choosing which account to withdraw from first may seem like an easy decision, but there are a number of things you need to consider.

Which should you choose?

Conventional wisdom would dictate that you should draw from the TFSA first, followed by your non-registered accounts since they are the least-taxed sources. If you followed this practice, you would be living on these funds while only making the minimum withdrawal from your RRIF every tax year. This does make sense from a tax perspective (and will help you save money in the short-term) but there are also some tax implications to consider for your estate.

Estate Considerations

After you pass away, your Registered Retirement Income Fund assets will be taxable as income on your final tax return. If you have sizeable RRIF assets remaining, your money will be subject to the highest tax rate, which can range between 40 to 55 percent depending on where you live. Subjecting your assets to the highest tax rate can be avoided though. If your RRIF assets are received by your surviving spouse, they won’t be taxable on your final return. You can also avoid these taxes by taking a different approach to your retirement withdrawals.

Withdraw more than the Minimum

During your retirement, you should consider withdrawing more than the minimum from your RRIF, even if you don’t plan on spending it all. These withdrawals will be taxable, along with being subject to withholding tax, but the rate will most likely be lower than the final rate on your last tax return. You can then contribute some of the withdrawals to your or your spouse’s TFSA (if you have contribution room) so that all future income generated will be tax-free. You could also add them to one of your or your spouse’s non-registered accounts.

If you need help getting a handle on your retirement planning, the retirement planning advisors at The Beacon Group of Assante Financial Management Ltd. are here to help. They will guide you towards a prosperous retirement by helping you with the decisions that will benefit you both today and tomorrow.

Adjusting Your Estate Planning Strategies

August 22, 2016

by Estate Planning

Estate planning is not easy. It is important to go over your estate plan many years before it will be administered, but a lot can change during the years between. How do you properly develop an estate plan when your future plans may change? You may end up remarrying, or taking on a dependant unexpectedly. Luckily, in many of these kinds of situations, life insurance can help you.

Permanent life insurance

Purchasing permanent life insurance can help you and your estate deal with a variety of situations that may arise during the course of your life. The proceeds from a payout are payable when needed and also tax-free. There is a guaranteed amount that you will know up front as well. These are some of the common unexpected estate planning needs that permanent life insurance can meet:

Making things equal

You can use your life insurance to provide one child a guaranteed inheritance amount when you plan to give another child ownership of an indivisible asset, like a vacation property for example.

Remarrying

If you go through a divorce with your first spouse and then remarry, permanent life insurance can give you the means to give an inheritance to your children from the first marriage while also providing for your current spouse.

Final expenses

The cost of your funeral and your debts could be covered under permanent life insurance. Some people purchase a life insurance policy for this reason alone, so other assets will not need to be liquidated in order to cover the costs.

A tax-free inheritance

If you leave a life insurance pay-out to your beneficiaries, you are gifting them funds that are free from tax that won’t be delayed by estate administration. They would also be free from any costly probate fees.

Taking care of a dependant

If you have a dependant like a child or grandchildren with special needs, you can use your life insurance proceeds to go towards their day-to-day care.

Permanent life insurance is an important tool that shouldn’t be overlooked when planning your estate. Your unique needs may change over the course of your life, so it’s good to have a tax-free vehicle like life insurance available for you to use for a variety of potential scenarios. Talk to an estate planning advisor at The Beacon Group of Assante Financial Management Ltd. to learn more about how permanent life insurance can help your estate.

Why a Testamentary Trust Still Matters

August 4, 2016

by Estate Planning Financial Planning Inheritance

Testamentary trusts have taken a hit recently and have had their tax savings advantages restricted. This doesn’t mean they are going away though – it’s quite the contrary. Testamentary trusts are still a very effective way to maintain control of the money you will be leaving to your beneficiaries. Read on to learn more about what has changed for testamentary trusts and how they can still be useful when planning your estate.

Recent changes

As of the first of January 2016, testamentary trusts will be taxed at the highest marginal taxation rate, with two exceptions. A testamentary trust will qualify for graduated rates for the first 36 months after the date of passing and if the beneficiary of the trust qualifies for the disability tax credit.

Why you should still consider a trust

A trust is still a valuable estate planning tool. There are number of examples where they can be extremely useful:

Managing your children’s funds

If you are leaving a sizeable inheritance to a beneficiary that is a child, grandchild or other young relative, you may wish to control how these funds are received and used. If they happen to be a minor, the funds must be held in trust until they reach the age of majority. If they have a disability, you can still create a trust that benefits from graduated rates that will be able to help take care of them for their whole life.

Taking care of your spouse

If you believe that your spouse would be best served by having a financial expert manage their wealth, then you can use a trust and assign a professional to manage it. This is especially helpful when they are dealing with a disability or an illness.

Managing a second marriage

Speaking of spouses, you can provide your current spouse with a lifetime benefit that will benefit others down the road. If you want to support your wife from your current marriage, but have children from your first, you can set up the trust so the rest of the money will go to them once your current spouse passes on.

There are many ways that a testamentary trust can help you with your estate, even with the recent changes. If you are planning your estate, you should contact an estate planning advisor at The Beacon Group of Assante Financial Management Ltd. Our experts can help you make the best choices for your unique situation.

Why You Need an Estate Plan

July 18, 2016

by Aging Estate Planning Inheritance

Estate planning is more than simply writing a will, although that is an extremely important part of estate planning. Planning for a time after your death might be a morbid thought process to undertake, but it is important to organize your estate in advance of death in order to make the process simpler for those ultimately involved in the administration process. It also allows the future deceased to be extremely clear where and how the assets are to be distributed upon death. Even if death is not in the foreseeable future, having a plan already laid out will mean that you have complete control over the situation.

Assess Your Assets

If the majority of your assets are in liquid form in bank accounts, simply add whomever you have as your executor as joint on all bank accounts and investments. This will help to minimize the necessity for probate and will provide immediate access to all funds. Be certain the person you have listed as joint on all accounts is someone you trust as they will have full access to all money with their name attached to it.

Have a Say in Your Funeral Process

If you have personal preferences as to how you would like your funeral to be conducted and how your body is to be treated after death, be certain to outline this clearly in your estate plan. There is no communicating once you have passed on, so make your wishes and desires abundantly clear in advance.

Guarantee Business Continuity

If you play a major role in a business and your death would change the dynamic of daily operations, it is important to outline clearly what it is you would like to have happen with your share. It is not always possible to predict your death, accidents happen all the time. If you play an integral role in your business it is the responsible thing to do to set up a contingency plan for future operations in the event of your death.

Not Just for the Wealthy

Estate planning is not a task simply for the wealthy. Everyone should plan their estate, even if by just writing a simple will and having your say on who will be in charge of handling your estate once you are gone.

Planning for death is not a desirable topic of conversation. It is, however, a very realistic and intelligent conversation to have. No one is going to live forever, so by taking some time to do diligent estate planning while you are still capable, you can help ensure the future of your loved ones. The Beacon Group of Assante Financial Management Ltd. offers estate planning and inheritance planning services to make the transition easier for your family.

4 Estate Planning Strategies Starting Now

May 4, 2016

by Estate Planning

Most people only consider planning their estate after they have retired. They write their will early on, but consider that enough planning for the time being. The truth is that there are many estate planning opportunities and tax-saving strategies available to people who implement them earlier. Some solutions are only available if you plan them during your working years. We have provided some important estate planning strategies that you should start thinking about now:

Tax-exempt life insurance

Some people take a portion of their investments that are designated for their heirs and deposit them in a tax-exempt life insurance policy. This helps them transfer their wealth effectively while avoiding probate. Heirs receive the proceeds of these funds tax-free upon your death. The earlier you start implementing this strategy, the more tax your estate saves. This is because your deposits have more time to grow and compound in the tax-free environment.

Segregated funds

Segregated funds are an important estate planning tool because of the death benefits guarantee they offer. This means, in most cases, that your beneficiaries are guaranteed to receive the total principal that you invested, which protects your estate from large stock market declines. These funds also offer you benefits you can use during your working years, like the aforementioned principal protection and the ability to periodically lock investment gains.

Power of attorney

You should not delay giving some power of attorney, even if you are relatively young and healthy. If you suffer a sudden decline in cognitive abilities, and nobody has power of attorney over your estate, it could make it very hard for your loved ones to help you. Just remember that no matter how invincible you may feel, there is no way to predict the future and accidents do happen. You need proper mental capacity to grant power of attorney, so don’t wait until it is too late.

Estate Freeze

If you are a business owner, and you plan to one day have your children take over, you should consider an estate freeze. This enables you to “freeze” the value of your business and have any future growth accrue to your kids, which minimizes the taxes due after you pass away.

Timing makes a big difference when it comes to estate planning. The sooner you plan, the better. No matter what your age is, you should talk to an estate planning specialist at The Beacon Group of Assante Financial Management, Ltd. to help you get started today.

Greg Snider provides insurance products and services through Lifetime Financial Planning Inc. in the province of Alberta. Wayne Hill provides insurance products and services through Assante Estate and Insurance Services Inc. in the province of Alberta. Cory Gagnon provides insurance products and services through Lifetime Financial Planning Inc. in the province of Alberta, and through Assante Estate and Insurance Services Inc. in the province of British Columbia. Lifetime Financial Planning Inc. is an outside business activity that may offer non-securities-related financial planning services. Any specific investment recommendations provided by Greg, Wayne, or Cory must be done through Assante Financial Management Ltd. (“Assante”), a registered mutual fund dealer. Although Assante is not responsible for any service or product supplied through Lifetime Financial Planning Inc., Assante will monitor for conflicts of interest and investigate any client complaints related to services offered by Lifetime Financial Planning Inc. A description of the key features of the applicable individual variable annuity contract 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.