Prepare for the unexpected using tax planning and insurance strategies. Do you know how to protect your family’s assets and income from unforeseen circumstances?
Are you concerned with any of the following?
- What are your and your family’s goals?
- What is the best way to protect your assets in the event of death or incapacity?
- Do you have a plan for the future of your wealth?
- Are insurance products a good way to protect your wealth?
- Are you educated enough about the various products and options available around tax planning and insurance?
Insurance
You have worked hard to build a solid financial footing for you and your family, so you want to be sure that everything is protected. You need strategies to protect your assets and income and you require protection from unforeseen liabilities, market downturn as well as from creditors. Your assets are just one side of the coin. The flip side, which many families are prone to ignore, are the high expenses, tax liabilities, outstanding debts, and the dreaded financial market risks.
Some business families can use corporate-funded insurance (either universal life or whole life policies) to insure the lives of the owners of the corporation. It’s a tax-efficient way to pass on wealth to heirs when compared with leaving that money in regular investment portfolios. You also need the ability to replace your income in the event of disability, critical illness, or long-term care situation.
A life insurance policy can be a good strategy as an intergenerational asset transfer plan. Be informed about insurance products. You may not know what you don’t know. Fill the knowledge gap.
Tax Planning Strategies
Each family will have its own unique situation. Every Canadian has access to a few different tax-sheltered accounts to help them legally minimize their taxes. Many families focus on utilizing tax strategies to ensure their wealth is efficiently passed on to family members.
Tax-sheltered accounts are extremely useful because they help you maximize tax benefits. Reducing taxes is an important component of any financial plan. Unfortunately, most Canadians don’t maximize their tax-sheltered accounts.
Diversification is the hallmark of good investing. It's also a key strategy for managing income tax efficiently. As well, just like investing, an early start is a good start. A tax strategist brings the lawyer together with the accountant on how to best design a structure to address these types of issues.
Steps for how you can protect yourself:
- Undertake an in-depth discovery discussion to ensure that your goals, aspirations and objectives are clearly identified.
- Identify protection strategies - life insurance, corporations, gifts, etc. Each will have its own tax implications.
- Determine objectives of each of your strategies. For example, are you using insurance to replace income, for healthcare costs, or to better prepare for estate taxes.
- Take inventory of the protection strategies you might already have for each of your risk areas.
- Determine areas where you still need protection and what kind of protection you need.
- Determine who will be the beneficiaries of your insurance policies and inform them of the same (along with Trustees if applicable).
- Speak with family and advisors to guide and implement your strategy paying special attention to tax burden on future generation with the transfer of wealth.
If you want to learn more, here are some useful links: