Retirement Mistake No.36: Not Being Prepared
Posted In: Retirement Planning for Entrepreneurs

What if you died today? Thinking about it seems odd, but we all want to have peace of  mind about the answer to that question. When answering from a financial perspective, it’s natural to want to do the best you can with the finances you have.

Dean’s Estate Planning

In the last few years, it has been challenging to get people to spend their money if  they are truly savers. Recently I sat down with Dean, a single senior who wanted estate planning advice. He is in his 70s and living in Qualicum. If he doesn’t spend all his money, he wants to leave it to his two children. His home, his RRIFs, and his investments are worth about $400,000. Dean has named his children as beneficiaries of  his RRIF.

I encouraged him get control of the money by taking more of it out of  the RRIF. Therefore, he can spend and enjoy it and pay tax as he goes instead of losing almost half  when he dies. He can invest the money outside his RRSPs in segregated funds. The estate advantage is that he can invest in dividend income funds and generate dividends and capital gains. These funds might pay him more but will not tax him more. 100% of his capital will be guaranteed to his children if he dies regardless of market conditions. This strategy also bypasses probate, so the payout is immediate.

Dean asked if he should add his children’s names as joint owners of his home. I mentioned that they would be responsible for capital gains when the house is sold, since it is not their principal residence. We switched back to his name a GIC that had been jointly held with his boys and invested it into an insurance-company GIC with the boys as beneficiaries. Finally, he will need to set up a will and power of attorney outlining his wishes if becomes ill or incapable of making financial decisions. We referred him to a lawyer or notary public to get the proper legal advice. Dean left that day with the peace of  mind knowing the answer to the question, “What happens when I die?”

Success seems to be connected to action. Successful people keep moving. They make mistakes, but they don’t quit. – Conrad Hilton

If  you doubt you can accomplish something, then you can’t accomplish it. You have to have confidence in your ability, and then be tough enough to follow through. – Rosalyn Carter


Published with permission from Grant Hicks

The information provided on this site/blog page is solely for general and educational purposes and is based on the perspectives and opinions of the owners and writers. It is provided with the understanding that it may not be relied upon as, nor considered to be, the rendering of tax, legal, accounting, or professional advice. Please consult an appropriate professional regarding your particular circumstances. This site/blog page may also contain links to other sites which are not maintained or controlled by us. Access to or use of sites to which links are provided are subject to the terms and conditions of such sites. References to third party goods or services should not be regarded as an endorsement of those goods or services. All information provided is believed to be accurate and reliable, however, we cannot guarantee its accuracy. It may also include forward looking statements concerning anticipated results, circumstances, and expectations regarding future events. Forward-looking statements require assumptions to be made and are, therefore, subject to inherent risks and uncertainties. There is significant risk that predictions and other forward looking statements will not prove to be accurate. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus and/or the fund facts before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

Let's Chat