It’s all about Taxes…and more.

While most investors are focused on returns, financial advice and financial planning should go beyond that. Returns are important but depend on many different things, some of them out of anyone’s control. Markets have periods that are far off their average returns and the last 5 years have shown that clearly. While equity markets have outperformed so far in 2023, it is important to remember that there are other things besides returns, that will affect your bottom line just as much and even more. Many of these things you can control, and a great tool for that is Estate Planning. A big misconception about Estate Planning is that it’s only for wealthy old people. The word Estate makes us think of people with large land holdings and big yachts, but proper Estate Planning can ease the burden for any asset to pass along and often includes liabilities as well.

The earlier you have an Estate Plan or at least a strategy, the more powerful it can be, and the less money will go to the government. So, what is estate planning? It’s simply a methodology to transfer assets in the most tax efficient way to the next generation according to your goals. Another misconception is that a Will is sufficient to take care of all that. A Will is important and should absolutely be part of an Estate Plan, but a Will is a limited document that still needs to go through the judicial process called probate after death. It lacks the flexibility and possible strategies that Estate Planning can add beyond a Will.  

Estate Planning is for everyone and should be part of most peoples overall financial approach early on. There are many cases out there with people in their 70’s or 80’s sitting on highly taxable assets like RSP’s, Cottages and other Properties with no strategies in place to ease the tax burden on death, and that can be costly and disturb family dynamics.

Estate Planning can touch on many subjects including making a will, setting up trusts, making charitable donations to limit estate taxes and passing on the family cottage the best way possible. Various strategies can be used to limit taxes on an estate, creating trusts, making charitable donations, using RSP meltdown strategies, life insurance strategies and many other things.

In the next few weeks, I will touch on many of these, including the different types of trusts and who should have one. It is also important to know what assets will go through probate and which don’t, what assets should be passed on before death and how to do that.

It all starts next week with RSP’s and how to avoid losing half of their value when passing them to the next generation.