Simple Estate Planning[1]

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  • 1. Simple Estate Planning “ No Lawyer Required” Stephen Cox, Certified Financial Planner CFP ® , CERTIFIED FINANCIAL PLANNER ® and CFP (with flame logo) ® are trademarks owned outside the U.S. by Financial Planning Standards Board Ltd. Financial Planners Standards Council is the marks licensing authority for the CFP Marks in Canada, through agreement with FPSB. Copyright © 2009 Financial Planners Standards Council. All rights reserved. ® Registered trademark owned by Desjardins Financial Security
  • 2. Disclaimer
    • The information in this presentation is not intended to replace independent legal advice nor is it intended to replace the advice of your tax specialist or accountant.
    • Having a current valid will is always advisable.
  • 3. What is Estate Planning
    • The goal of estate planning is to arrange your financial affairs in a way so that your assets can be passed to your heirs as quickly and as completely as possible.
  • 4. Why Bother?
    • You have worked hard your entire life to build your assets.
    • Do you want them to be “bitten into” by probate fees and taxes?
  • 5. Asset Accumulation
    • Many Canadians have been very successful in building their asset portfolio through investments, business, real estate & RRSP's
  • 6.
    • BUT…with this "success" comes a potential
    • Deferred Tax Liability and/or Capital Gains Tax Liability
  • 7. WHERE WILL YOUR ESTATE GO?
    • Distributed as per your wishes to your family, or do you want your “surprise beneficiary” to get a large share?
    • “ Surprise!” your largest single beneficiary may be CRA (Canada Revenue Agency)
  • 8. WILL PLANNING
    • If surviving spouse, assets can be transferred tax free and deferred until surviving spouse's death.
    • If no surviving spouse, or assets left to non-spouse beneficiary, tax liability arises at testator's death.
    • If no will, Intestacy laws usually lead to non-spouse distribution and tax.
  • 9. CAPITAL GAINS TAXATION
    • Assets such as a stock portfolio, mutual funds, shares of a private corporation or non-principal residence real estate.
    • Taxed on sale of asset during lifetime or when asset passes to non-spouse beneficiary (e.g. children) at death.
  • 10. RRSP or RRIF TAXATION
    • Taxed as income during lifetime.
    • Taxed on balance of RRSP or RRIF when assest passes to non-spouse beneficiary at death.
  • 11. Don’t forget the Probate Fees!
    • In Nova Scotia
    • Estate Value Tax Rate
    • <$10,000 $78.54
    • $10,000 to $25,000 $197.48
    • $25,001 to $50,000 $328.65
    • $50,001 to $100,000 $920.07
    • Over $100,000 $920.07+$15.53 for every thousand or fraction thereof in excess of $100,000.
    • Source McInnes Cooper Tax Solutions Team
  • 12. What Property is EXCLUDED from Probate Fees?
    • Generally:
    • Jointly owned assets (may be control issues)
    • Real Estate
    • Life insurance proceeds with named beneficiary
    • RRSP/RRIF with a named beneficiary
    • TFSA with a named beneficiary
  • 13. The Aim of This Exercise
    • Remove as many assets as possible out of your estate while you are alive and you maintain full control!
  • 14. How is this done?
    • Through the effective use of Insurance Company Investment and Insurance products with a named beneficiary.
  • 15. The result
    • Your assets can pass to the next generation (children, grandchildren) quickly and easily.
    • Since the assets are not part of your will, they are not a matter of public record.
    • Assets generally paid to the beneficiaries within 10 to 14 business days after proof of death is received.
  • 16. Why Consider a Segregated Fund
    • Features that fit any financial strategy:
      • Principal protection
      • Lock in investment gains
      • Estate planning benefits(Named Beneficiary Probate Avoidance)
      • Potential creditor protection
      • Guaranteed Income for Life
  • 17. The results are less taxing!
    • The tax on Capital gains, RRSP/RRIF proceeds cannot be stopped, they can be more effectively paid through life insurance.
    • Consider leaving assets to a registered charity when both spouses are deceased. (Charity receipt can greatly reduce final tax bill)
    • The probate taxes can be greatly reduced and possibly eliminated!
  • 18. I want to minimize my fees on Death, so I can leave more (Source: Desjardins Financial Security)
  • 19. Simple estate planning “to do’s”
    • Hold accounts as “Joint with rights of survivorship” (watch for control issues)
    • Use segregated funds with a named beneficiary to guarantee lifetime income and bypass your estate
    • Use life insurance to “fund” the tax liability
  • 20. Simple estate planning “to do’s”
    • Use Long Term Care Insurance and Critical Illness Insurance to protect your assets
    • Use insurance and annuities to “pass along” assets to your children/grandchildren tax free
    • Leave assets to a registered charity to reduce final taxes
  • 21. Contact me with questions…
    • Desjardins Financial Security Investments Inc.
    • Desjardins Financial Security Independent Network
    • 7001 Mumford Road, Tower 1, Suite 312
    • Halifax, NS, B3L 4N9
    • P 902 446 4563
    • F 902 446 4565
    • 1 877 256 6435
    • C 902 209 0676
    • www.stevecox.ca
    • [email_address]
  • 22. DISCLAIMER
    • Desjardins Financial Security Investments Inc. (DFS Investments) & Desjardins Financial Security Independent Network (DFSIN) are not providing the financial planning service and will not be supervising this activity. You should not rely on DFS Investments or DFSIN for review of the plan. DFS Investments and DFSIN is neither charging nor being paid any fees for this service and will not be liable for any errors or omissions. This Financial Planning Service is done solely through S. Cox & Associates Wealth Management Inc.
  • 23. Disclaimer
    • Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.
  • 24. THANK YOU! Questions?