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3 ways to make sure the Tax Man gets as little as possible…

Life Insurance is Tax Free

It has been said that there are two certainties in the world “Death and Taxes”. This is true, but did you know that even after you die you still have to pay taxes!
Not a very comforting thought to most people, and who is going to argue with the tax man when you are no longer here to speak for yourself?

If planned properly though while you are alive, you can do many things to save on Income Taxes, maximize the value of estate, and leave more behind for your family or loved ones, as opposed to the Tax Man. You have paid all throughout your life, and if your affairs are not in order, you will more than likely pay too much when you pass away as well.

Here we will look at 3ways to minimize, and even eliminate some of the taxes your family and heirs will experience after you are gone.

1. Purchase Life Insurance…
Did you know that the proceeds of a life insurance policy are given to the beneficiaries completely tax free! There are few ways to receive a lump sum of money Tax Free here in Canada, and Life Insurance is one of them. By using Life Insurance to cover final needs and expenses, you can enjoy more of today’s dollars, knowing your beneficiaries will have adequate cash on hand from the Insurance proceeds. Insurance companies have also been introducing great products for people who are in their Senior Years to cover off this need. Whether you are in perfect health, or have had challenges with your health, there are a number of Guaranteed Issue Life Insurance policies now available, all the way up to age 80!

2. Give your RRIF away when you die…
Your RRIF is going to be one of the greatest tax obligations you will owe when you pass away. Throughout your life, when you were investing in an RRSP, Revenue Canada has been deferring your tax obligation. As most people notice in retirement, when they make a withdrawal from their RRIF, they have to start paying those taxes back. And when you die, all of the money that is left in your RRIF will first be taxed by Revenue Canada, and then the residual will go to your beneficiaries. But if you gift the balance of your RRIF to your favorite cause or charity, then the Tax Man gets nothing! Wouldn’t you be happier giving whatever you don’t use in your lifetime to the Church, Legion or Navy Club, the Salvation Army or your favorite charitable cause? You can even have split beneficiaries, so your family can get some, and also your favorite cause.

3. Invest in Segregated Funds…
Most people enjoy the value that Mutual Funds deliver, maybe a little less so over the past 4 years, but they have made a lot of sense for many investors over the long term. By investing in a “Fund” you can diversify your risk and share costs with many other investors. But have you ever investigated the differences between Mutual Funds and Segregated Funds? Both Investments function in the same form and fashion, but Segregated Funds are exempt from Probate, a 2-1/2% “Death Tax” here in Ontario (the highest in the country). Segregated funds also pass to your heirs or the charity as listed above within days, and not months such as Mutual Funds. This means that those, whom are left behind, have access to the money without having to wait months for the Probate process to be completed. And Segregated Funds have a death benefit guarantee too, which means that no matter how the markets are performing, you will always get at least your principle back in full, even if the markets are in a downward spin!

All three of these ideas take only a minimal amount of effort to implement on your part, but could save you thousands, and tens of thousands of dollars when arranged properly. It only takes a call to see how easy it is to achieve all the above benefits, so why wouldn’t you at least take the time to have a conversation. If you don’t take care of things today, there are more than enough people to take advantage of you when you are no longer here to speak for yourself. If you love your family or charity just a smidge more than the government, then give us a call today, and we will show you how easy it is to make the few small changes necessary to achieve all of this and more…

Call our office today for a complimentary review of Your particular situation. Whether you have Ten Thousand or a Million or anywhere in between, we can show you how to maximize the efficiency and effectiveness of your money.

Steffen deGraaf

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2014-09-22 16:20