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Preparing your Heirs for Wealth

If you think your heirs are not quite old enough or prepared enough to discuss the wealth they will inherit on your death, you’re not alone. Unfortunately though, this way of thinking can leave your beneficiaries in a decision-making vacuum: an unnecessary predicament which can be avoided by facing your own mortality and making a plan.

If you have a will in place, great. A will, however, is only a fundamental first step, not a comprehensive plan, point out authors of the 2017 Wealth Transfer Report from RBC Wealth Management.

“One generation’s success at building wealth does not ensure the next generation’s ability to manage wealth responsibly, or provide effective stewardship for the future,” they write. “Knowing the value (alone) does little to prepare inheritors for managing the considerable responsibilities of wealth.” Overall, the report’s authors say the number of inheritors who’ve been prepared hovers at just one in three. Read more

The Duties of an Executor

An executor is an individual or institution that is named in a will whose duty is to distribute estate assets according to the testator’s wishes. Acting as an executor can be stressful and time consuming so it is a good idea for a testator to make his or her choice wisely, and for someone who is asked to be an executor to investigate and review exactly what the job entails.  Often the executor is the spouse of the deceased. That tends to make the role somewhat more straightforward than it would be for a family member, friend or other acquaintance. In any event, this article covers the duties and obligations of an executor.

Arranging the funeral 

In addition to arranging the burial or cremation and funeral services according to the deceased’s wishes the executor would be responsible in ensuring that family, friends and interested parties (especially employer) have been notified about the death.  Family members will most likely assist in this including the posting of the obituary. If there are sufficient funds in the bank account of the deceased the bank will usually release  funds to cover the cost of the funeral. Read more

Life Insurance and the Capital Dividend Account

Many business owners are unaware that corporate owned life insurance combined with the Capital Dividend Account (CDA) provides an opportunity to distribute corporate surplus on the death of a shareholder to the surviving shareholders or family members tax-free.

Income earned by a corporation and then distributed to a shareholder is subject to tax integration which results in the total tax paid between the two being approximately the same as if the shareholder earned the income directly. Integration also means that if a corporation is in receipt of funds which it received tax-free, then those funds should be tax free when distributed to the shareholder.

The Capital Dividend Account is a notional account which tracks these particular tax-free amounts accumulated by the corporation. It is not shown in accounting records or financial statements of the corporation.  If there is a balance in the CDA it may be shown in the notes section of the financial statements for information purposes only.

Generally, the tax-free amounts referred to, are the non-taxable portions of capital gains received by the corporation and the death benefit proceeds of life insurance policies where the corporation is the beneficiary. Read more

Why an advisor makes a difference in net returns over DIY investors

It’s a common question in recent times, especially in an age when technology and algorithms can make decisions at a fraction of the cost. Is it worth it to hire a financial advisor? Or is it better to save the fees and go for a DIY strategy?

It depends who you ask but there are many – often not so obvious – factors that could make a difference to your net returns when putting your trust in a financial advisor.

Proper financial planning goes beyond how and where you invest. Good financial planning can increase your standard of living throughout your life.

Even for a complete novice it is possible to start investing in products without the help of professionals. The problem with this option is the lack of knowledge. Knowledge is crucial when it comes to investing. Read more

What the Wealthy Know about Life Insurance

If you have ever thought that life insurance was something you wouldn’t need after you reached a certain level of financial security, you might be interested in knowing why many wealthy individuals still carry large amounts of insurance.  Consider the following:

  • A life insurance advisor in California recently placed a $201 million dollar life insurance policy on the life of a tech industry billionaire;
  • Well known music executive David Geffen was life insured for $100 million;
  • Malcolm Forbes, owner of Forbes Magazine, was insured at the time of his death in 1990 for $70 million.

While life insurance is most often looked upon as a vehicle to protect ones family or business, the question that springs to mind is why would individuals with wealth need life insurance?  Read more

Featured Articles

21
Aug

Charitable Gifting with Shared Ownership Universal Life Insurance

Many individuals have realized their charitable aspirations by donating a life insurance policy to the charity of their choice.  In situations where that donation is a Universal Life policy, the use of a Shared Ownership strategy could prove to be a viable investment for the donor.

Shared Ownership refers to an arrangement involving cash value life insurance policies such as Universal Life.  Universal Life combines life insurance with an investment fund which grows tax deferred until the cash value is withdrawn.  If the cash value is paid out at death, the growth is tax free.

Under Shared Ownership, the life insurance and the cash value would have different owners and beneficiaries and would be structured as follows: Read more »

16
Aug

How to Keep the Family Business Thriving For Generations to Come

Most corporate dynasties fail to make it to a second generation, making these Canadian firms thriving under the leadership of the founder’s grandkids (and great-grandkids!) truly remarkable

Izzy Asper never wanted his children to work at Canwest Global Communications, the now defunct media empire he founded. His drive and hunger for acquisitions turned Canwest into one of the most powerful firms in Canada and, for a time, earned the Aspers a spot on the Rich 100. He wanted his kids to succeed elsewhere, however.

“They were all practising lawyers and were doing very nicely on their own. It was they who got this dynastic glaze in their eyes—which I generally discouraged,” he told journalist Peter C. Newman. “I don’t believe in dynasties.” But his daughter, Gail, “slipped through the net” to become general counsel at Canwest, and brothers David and Leonard followed. It was under Leonard’s stewardship that Canwest filed for bankruptcy in 2009. Read more »

18
Jul

Microsoft Corp. is launching a new family caregiver benefit for all employees.

To date, the benefit has rolled out in 22 countries, including in the United States last week. The company will extend the benefit to the remaining countries where it operates, including Canada, over the coming months.

The family caregiver leave allows an employee to take up to four week of fully paid leave to care for an immediate family member with a serious health condition, wrote Kathleen Hogan, executive vice-president of human resources at Microsoft, on her LinkedIn page. Read more »