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  • Eric Watchorn

Insurance & Risk Management

We are very happy to announce that we have partnered with willful (www.willful.co).

Willful has made strides in helping Canadians get proper affordable wills done online. They also just finished a successful episode on the Dragons Den. If you go to our website, www.wrwmcorp.com, you can follow the willful link and enjoy a 20% discount on a will, power of attorney, or both. Plans can be individual or for the whole family.


Generally speaking, any corporate estate plans need to be set up with a lawyer, yet a simple family plan can easily be accomplished with willful.


Also, in most cases, it is highly recommended that you do not list your life insurance within your will as you would want the proceeds to bypass probate and not be taxed and also be delivered quickly.


When it comes to Estate planning, many may not realize that for most of us, the biggest tax bill we will ever pay in our lives is at death. Unfortunately, planning how to reduce that bill right before that inevitable day is often too late. But with effective estate planning tactics in place, you can give yourself the peace of mind your family won’t have an additional financial burden upon your death.


Here are 6 Estate Planning Tips – which are just that – an effective plan requires individual consultation:


1. Have a named executor of your will


The most important thing to consider is ensuring you have a will and a named executor of the will. In British Columbia, if you die without a will, your property will be divided according to British Columbia law. Your family will have to apply for a grant of administration, which is not only time-consuming but also increases the cost of administering your estate.


2. Consolidate your investment accounts in one place


Consolidating your investment accounts in one place helps to lessen the work of an executor. It’s easier for an executor to reach out to one advisor versus tracking down all your accounts in various investment firms.


Throughout the estate planning process, you might have asked yourself if it makes more sense to diversify your investments amongst different advisors. But the truth is all advisors should have access to the same products. If you’re pitting your advisors against each other to see who can get you the greatest returns, that should be enough to tell you that none of them is the right fit for you.


We highly recommend working with a single advisor whom you like and trust to oversee all your investment accounts. Your family will thank you for it when you’re gone.


3. Add your spouse as a joint owner on your investment accounts


Are you married and want to prevent your spouse from having to deal with unnecessary taxes?


Ensure you’re both set up as joint owners on your investment accounts. Unfortunately, at the second death between you and your spouse, there will be taxes on all those non-registered accounts and properties (aside from your principal residence).

Make it clear in your will who you would like these assets to pass on to when you are estate planning.


4. Add beneficiaries to all your registered accounts


If you’re married and your spouse is a beneficiary of your RRSP and TFSA, these accounts will roll over completely tax-free.


If your spouse is not the beneficiary on your TFSA, it can pass on to a beneficiary of your choice. However, any future growth after death may be taxable. As for your RRSP, unless your RRSP passes on to your spouse or dependent child, the RRSP’s value at the time of death is included in the taxable income of the deceased for that year of death.

It’s important to note, as long as funds remain in the RRSP, they’re tax-exempt but, you generally have to pay taxes when you take money out.


A TFSA or Tax-Free Savings Account is a way for an adult with a valid social insurance number to set aside tax-free money throughout their lifetime.


With the TFSA, any amount contributed or earned (for example, investment income and capital gains) in the account is tax-free, even when withdrawn.


In addition, any fees or interest on money borrowed to contribute to a TFSA is not tax-deductible.


5. Spend your RRSPs while you are alive


Many advisors tell their clients to push off drawing from their RRSPs for as long as possible to avoid taxes.


This strategy is flawed. Why? Because paying those taxes is inevitable!

If you die without a spouse or beneficiary and have a large RRSP balance, half of that will be given to the CRA. Instead, the solution we see is to start drawing early from your RRSPs and pay those taxes equally over a longer period.


If you don’t plan on retiring but have a large RRSP balance, consider not paying yourself from your corporation. Instead, start drawing from your RRSPs. There are simple strategies to help draw the funds from the corporation tax-free while minimizing the corporate tax bill upon death.


6. Utilize your life insurance effectively


Life insurance pays out tax-free directly to the beneficiaries of your choice. We recommend owning life insurance inside your corporation and naming your corporation as the beneficiary. When you die, the proceeds can be drawn out of your corporation through a notional account known as the capital dividend account. It can be paid to whomever you have named as the beneficiary.


Life insurance is a great product to minimize taxes. It also helps cover debts, even out your estate between your beneficiaries, and much more.

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