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Retirement Planning with Grant Hicks
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 Grant
Hicks, C.I.M., FCSI is a professional speaker, co-author and
a Retirement Planning Specialist A leader in
the financial industry, Grant has been helping Vancouver
Island residents plan and create their retirement lifestyles
since 1989. |
Estate Planning is Not About
Death
Talking about estate planning can be as exciting as watching
paint dry. But it doesn’t have to be all about when you die.
Here are four reasons why you should consider estate
planning.
1. You
want to pay less income tax today. Each time you withdraw
from your retirement plan, you pay tax. There are a couple
of ways to potentially reduce the tax bite. First, fill up
the “lower tax brackets”. If you continue to wait until you
die, it may be taxed in a higher tax bracket. This is
evident in most RRSP’s and RRIF’s in Canada. A withdrawal at
22% is better than a lump sum at 40% plus.
2. You want to be in control of your retirement money.
Therefore to have control, make sure you have the documents
that give you control. This includes a will, power of
attorney and possibly a health care directive.
3. You may want to rid yourself of "time consuming" assets.
As people grow older, most want fewer problems in life, yet
they often hang onto time consuming assets such as rental
real estate, small business or corporations. Typically,
these assets are never sold because the owners don’t want to
pay the capital gains tax. You may utilize strategies to
defer the tax while you are alive or when you pass away. The
tax has to be paid, but there are ways to defer the capital
gains tax. This area you can discuss with your financial or
tax advisor to find out how you can reduce tax.
4. You want to reduce liability. Many retirees sometimes
confuse ownership with control. You can give up ownership
yet maintain control. For example, you can transfer assets
into a trust and still have control. You can transfer assets
and invest them into an insurance company and have different
owners or annuitants and beneficiaries.
Segregated funds are
used in estate planning by naming children as successor
annuitants or beneficiaries while still controlling the
investment today. Strategies like this can work well with
second marriages amongst seniors. Notice that the payoff is
usually for mom and dad and not necessarily the children.
If you want more from your money today, then consider
learning how an estate plan benefits you and your family.
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