| In this Issue: |
|
|
A
Message From Terry |
 |
Main
Article |
|
Financial
Planning TIP |
|
About
Us |
|
This newsletter is courtesy of Terry Fay and RetirementByDesign.ca. Please remember that while strategies outlined within this newsletter may be appropriate for some investors, you should always consult a financial advisor to determine if they are appropriate for you.
Sincerely,
Terry
Hello:
Recently I was meeting with a client and we began discussing her parent. Her mom is in her 80’s and suffering from dementia and how some days are good and others are bad.
The decision to put mom in a care home was difficult and with it came guilt. She felt, somehow, that she was running from her responsibility and yet, relieved, knowing that her mom was going to be under better care and attention. What struck me was I went through a similar situation with my parents. With further discussions I found many of my friends, clients and colleagues were all facing similar challenges.
Retirement planning, when first considered, is about saving, investing and paying off debt. But retirement planning isn’t just about the money, it’s about planning your way through the various stages of life. Retirement is the beginning of a new phase in your life. Retirement planning is making provisions to do all the things you love to do.
But there is more. At some point in each of our lives, we all will have to make decisions regarding illness, or being able to care for ourselves or a loved one, whether that be a spouse, parent or worse, a child.
There is so much unchartered water we all face and stumble through. We are planning four seminars starting in June, for you, your friends and family. Topics will include aging, retirement, care giving and health. Please watch for upcoming dates for these educational events. I plan to bring in experts in the field of care giving, chronic illness, and funeral planning. Please let me know if there other topics you would be interested in learning more about.
Thinking
about Putting Off Death?
by
Terry Fay
Thinking about death and putting off planning your estate — one is difficult and the other is very easy. Together, if they remain ignored, the two can combine to create a sticky situation for you and your beneficiaries.
Without careful planning, your estate may be tied up in the courts for months or even years. The government could end up collecting more taxes than is necessary. And, most importantly, how your legacy is disbursed may be decided for you, not by you.
Every Canadian adult — regardless of your financial situation — should have an up-to-date estate plan that outlines the following:
Consider income splitting with your family to lower your family’s tax.
Tax planning as a family is far better then as an individual.
Using loans within your family is an effective way to pay less tax. Intra family investment loans commonly involve a loan between spouses, common-law or married. They can also include and be effective with minor children.
How to make it work.
Consider Bill and Margaret. They are looking for ways to lower their family tax bill. Both work but are in different tax brackets. Bill works full time and is in a 45% marginal tax bracket, while Margaret is employed casually and in a 25% tax bracket.
Bill lends Margaret $100,000 at the current rate of 3% or $3000. Margaret invests the money and earns 8% or $8,000. Margaret pays Bill the interest of $3,000 and deducts the loan interest. Margaret pays tax on the net $5,000 gain of $1250 while Bill pays tax on his interest $1350.
No
Loan |
Spousal
Loan |
||
Bill |
Marg |
||
Principal
Loan |
$100,000
|
-$100,000
|
+$100,000 |
8%
investment return |
$8,000 |
---- |
$8,000 |
3%
investment return |
----- |
+$3,000 |
-
$3,000 |
Net
income from loan |
$
8,000 |
$3,000 |
$5,000 |
Tax
payable per person |
$3,600
|
$1,350 |
$1,250 |
Total
family tax |
$3,600 |
$2,600 |
|
You are suited for this strategy if you:
- have
a pool of non-registered capital and are willing to invest it
- have a spouse or minor child in a lower marginal tax bracket
To ensure income attribution rules do not apply, two conditions must be met:
-
The loan must carry interest at a rate at least equal to the prescribed rate set by CRA at the time of the loan.
-
The annual interest on the loan must be paid to the lender within 30 days after the end of each particular year.
All you really need to know is that we are committed to helping our clients achieve financial security and peace of mind.
Our Mission: Enhancing peoples lives by creating a positive life vision and the money to support it through our unique approach to financial planning.
 |
 |
Insurance products provided through Dundee Insurance Agency Ltd.
Mutual Fund Products Offered Through Dundee Securities Corporation.
Click here to subscribe/unsubscribe.
AOL subscribers, please add us to your 'whitelist'. Thanks.