Efficiently Managing The Estate

The Keystones of Estate Planning:

The estate planning process can often be a very detailed, time-consuming, and exhausting process.  Despite the extensive process, there are some crucial points to consider, if there is any doubt of importance in planning ahead for these issues:


Establish the Estate:


Protect the Estate:

First, the estate is created to determine certain aspects like the heirs of the estate.  This should be resolved early enough to ensure the plan process is effective moving forward.  Careful selection of the individual’s beneficiaries, in order to guarantee the estate is turning over to the desired parties.  

The next is estate conservation, preservation of capital and, in effect, minimizing taxation at death.  Individuals should always consider retirement and disability: planning the estate owner’s future, while is living, is just as important as looking after family members after death

Avoid Liquidating:


Equity and Equality:

Lack of liquidity is a major issue for most estate plans.  Having many assets is great; however, not having enough cash on hand is potentially a problem.  

Consideration of death and equity, as there are difficult decisions to overcome and many questions with most that plan the estate ahead of time.  Questions may involve who the estate will go to upon death, and if the family is well taken care of financially.  Equitable denominations might be a concern.  Proper execution of the estate is significant.


Key Fact:

Planning financially is an ongoing function.  For an individual or a family to achieve maximum efficiency out of a long-term plan, the plan should be consistently reviewed and updated with their planner.

Insurance Planning

We have no control over tragic events that occur in life.  Many times, unpleasant situations arise unexpectedly; the fact is that nothing can prepare us for the repercussions.  When looking at the possibility of managing the risk associated with such disasters as illness, disability or simply death, it would be detrimental to ignore the option to prepare for such events.

The costs associated with illness or disability are not foreseeable, and therefore, not quantifiable.  However, your income and expenses are able to be calculated, it would be crucial to protect against any shortfalls for the reasons of illness or injury.

Furthermore, protection against death has the same attributes, taking care of loved ones afterward may be crucial in ensuring family will be left with the financial resources  fulfill basic life needs and to maintain the current lifestyle.

Investment Planning

Government plans such as CPP and OAS constitute two of the three pillars of Canadian retirement income sources.

Canadians should strongly consider the third pillar, tax-assisted voluntary and private plans, including pensions and registered accounts.

It is becoming evident that privately-owned plans will be the main source of retirement in the future of Canadians.  Much of the income need for retirement years is on the shoulders of voluntary and company pension plans & accounts.

The introduction of Tax-Free Savings Accounts in 2009 has given Canadians another incentive to consider voluntary investing for the future.  Initiating your own investment planning and contributing to private plans are a substantial piece to the retirement income puzzle.  Contact us to learn more about investment & retirement planning.

Life Insurance

Some of the issues life insurance may assist in achieving or guarding against are:

  • Final expenses/funeral costs:  many do not account for the final expenses involved at death.  These expenses can be quite costly, and are increasing with time.
  • Dependents: leaving a family with large debt and little or no income would be detrimental.  The loss of a loved one can hurt in many ways, emotionally as well as financially.
  • Debts sustained:  Life insurance could be a way of obtaining mortgage insurance, or protecting against another short or long-term debt such as a line of credit.  In some instances, the assets may be used to pay off debts prior to being released to family members or loved ones, although it may not be intended that way.
  • Leaving a legacy:  A useful tool to achieving equalization among beneficiaries.  Unlike other assets, such as real estate, where it is difficult to forecast what the value may be at the time of distribution, life insurance is a simplified way to ensuring an exact amount is received to named beneficiaries.

Disability Insurance

Salary continuation/Income replacement:  whether it be a disability and some form of income is needed to supplement living expenses or treatment of the health issue, or at death where the income replacement is needed to maintain the family’s standard of living and pay the expenses. Who will pay for medical bills?  What if there are treatments needed and medical procedures that might be costly?  While the medical need for money is increasing, there are other living expenses that continue when you are not working.  Debts to be paid, mortgage payments, monthly family expenses, and so on.  Who will pay your financial obligations in the event you are unable to work?  Contact us to learn more about disability coverage.


Insurance Taxation:  One of the most attractive features of life insurance death benefit payout (under most circumstances) is the tax-free mortality gain.  As per the Federal Income Tax Act, tax-free dollars will be paid out to the beneficiary of the life insurance policy in the amount of the policy death benefit.

Deductions/Credits:  Proper use of deductions, maximizing what is available as well as the amount allowed by the government.  Similarly, credits are also an effective way of receiving back from the government.  If you have further inquiries on any credits and deductions that may apply to you, consult your accountant for more detailed information.

Lifetime exemption (for businesses):  The government allows a lifetime capital gains exemption for certain situations, up to a lifetime maximum, provided it was not previously applied to other amounts.

CDA accounts:  This notional account is available to private corporations; this allows the opportunity of funds to flow form the corporation to the shareholder tax-free, under certain circumstances.

Minimizing tax burdens:  An important part of minimizing the tax burden is the use of tax credits and deductions.  Where necessary, tax splitting strategies may be useful with your spouse.

Family income splitting:  Splitting certain tax burdens with your spouse may be an efficient way of minimizing taxes within a family operated business.  Consult an accountant on this topic.

Dividends vs. Salary:  Many small business corporations have principal shareholders that are also active employees.   Business owners must decide whether to take compensation as dividends or salary.  An accountant should advise which method best suits your specific business and income structure.

**Speak to an accountant or tax specialist about these tax topics.

 Cash-Flow Planning

The process of cash-flow planning is similar to that of a business.  It is a very simple concept:  A monthly cash-flow plan the objective is to have a positive cash position.  In creating a plan, the idea is to illustrate the lifestyle of current, in respect to income vs. expenses & debts.  The concept may be simple, however, implementing an action plan may be challenging.  Tracking expenses is seldom an enjoyable task.  There may be expenses that are cumbersome and difficult to manage, whether necessary or not.  The premise of cash-flow planning is to visually demonstrate if you are living within the means, or if adjustments need to be put into action.

Travel Insurance

Whether vacationing within Canada or abroad, it is imperative to have travel coverage.  The coverage itself is usually inexpensive and may cover many disastrous events that may occur while out of town.  Emergency medical, drug coverage, hospital care, and even issues such as loss of luggage can be covered.

Many individuals have a misconception regarding this coverage, causing oversight of the importance in obtaining this insurance.  For every time you travel, leaving yourself exposed to unforeseen events can lead to issues and expenses that may be avoided with purchasing this inexpensive coverage.

Critical Illness Insurance

A relatively new type of coverage in Canada, similar to disability coverages and wage loss replacement plans it is considered a living benefit.  The main difference with this type of living benefit is the lump sum payout (similar to life insurance face amounts).  Living benefits definitely bring a different dynamic to protecting yourself against risk, simply because you are the beneficiary of the plan.  Contrary to life insurance (which pays a coverage amount upon death), critical illness coverage pays you as you are still alive, despite the illness suffered.  Contact us to learn more about critical illness coverage.

Long-Term Care

An aging population in Canada has brought about new challenges, one being the increasing need for long-term care.  There is a lack of concern for long-term care coverage for your parents or coverage for you in the future.  The anticipation of family members taking care of elderly parents is less common.  Where does the funding come for private care?  Or costs to reside in a nursing home, or a long-term care home?  Chances are when talking of this issue; most would say "I haven't thought about it".  Now is the time to start thinking about long-term care, the costs & implications, and the importance of having the discussion with your family.  Contact us to learn more about long-term care coverage.