ESTATE PRESERVATION

Estate Management People spend a lifetime accumulating assets, but very little time managing and conserving those assets

Asset Preservation Strategies Once you have accumulated various assets, do you eventually want your heirs to benefit from their full value?

How can you ensure your estate goes NOT Revenue Canada (CCRA) To Your Family

Taxation at Death Two major areas of taxation will arise at time of death Tax on capital gains Tax on RRSP/RRIF

Capital Gains Tax “SUCCESS TAX” Tax on the increased value of capital assets from: Cost or V-Day Value to Actual sale or deemed disposition “SUCCESS TAX”

Types of Capital Assets Mutual or Segregated Funds Investment portfolio Non principal residence Real Estate Shares of a privately held company Farming assets

Who Bears the Tax Burden? CAPITAL GAINS TAX Who Bears the Tax Burden?

Tax on R.R.S.P. Funds or R.R.I.F.

RRSP/RRIF Tax Flow Chart $ 1st Spouse’s Death No Tax 2nd Spouse’s Death Taxed Probated Heirs $150,000 $200,000 $100,000

Lump Sum Tax Liability RRIF Registered Retirement Income Fund 11

How will your estate liabilities be paid? From your estate For your estate Tax Which would you prefer?

Options to pay tax liability From Your Estate Save Money Sell Assets Borrow For Your Estate: Estate Clearance Fund

What are the consequences of the alternatives? But ... What are the consequences of the alternatives?

Selling assets or using current estate liquidity Let’s Compare Selling assets or using current estate liquidity Using life insurance and

From Your Estate Many people will say that the estate can sell off assets to create liquidity or use current liquid assets That’s fine, but what will it cost your heirs?

Actual Cost If capital (or liquid) assets are sold or used, the actual cost is Lost capital Lost revenue Lost growth Don’t let your family’s losses become someone else’s fortune!

From Your Estate For Your Estate 10 Years 20 Years $539,731 $1,165,239 $250,000 at 8% would grow to 10 Years 20 Years $539,731 $1,165,239 For Your Estate Cost of estate clearance fund $3,332/Year $284/Month Which Makes More Sense?

“Three Figures” $250,000 $539,731 $284/month Current Tax liability Projected loss over 10 years Current Solution

Success Taxes Desjardins Financial Security Jones Mutual Company Pay $284/month Estate receives $250,000 to pay taxes Jones Mutual Premiums deferred Pay $250,000 from estate assets Company While Alive At Death of Survivor

Instead of letting your best assets be sold (or sacrificed) to meet your estate liabilities, why not let your best assets create the required fund to pay off the liabilities?