LEAVING A TAX-FREE LEGACY

Nothing is certain, except death and taxes – or so the saying goes.

And in fact, the two are so inextricably linked that even when we die, we (or, at least, our estates) are taxed.

It can be immensely frustrating for next-generation beneficiaries to learn, too late, that what their loved one intended for them to receive is not exactly what they will get. The estate must pay tax on the rental property, the cottage, the investments, before they can receive what was meant to be theirs.

In other words: a large chunk (often times) of their hard-earned money goes into the hands of the government, not their children.  Beneficiaries are left with a whole lot less and by then, there’s nothing they can do about it.

The government always has their hands in the proverbial cookie jar, taking bites out of the cookies you worked hard your entire life to bake.

And if you decide to gift a good part of your legacy while you are still alive to avoid the extra taxes… you won’t.  The government will always get their due.

However, there are (legal!) ways to ensure that more of your legacy ends up with those you choose it to go to. There is no need to bury cash in the backyard or open an offshore account.

There are tools available to help ensure that your legacy remains intact; that your cookie jar is still full even after the dessert-hungry taxman has a good binge.

One of the best and most underused tools is life insurance.

In fact, whole life insurance is how Walt Disney founded Disneyland.

Most of the richest people in the world have it.

So what is whole life insurance?

Whole life insurance is a form of permanent life insurance with a built-in investment that you can either use in your lifetime or pass on to a beneficiary when you die.

·         Every year, the investment buys more life insurance, so your insurance grows with your estate.

·         Your investment growth is vested, which means it cannot be taken away or reduced.

·         The investment is hyper stable, typically fluctuating only a fraction of a percent. In fact, it is half the risk of a GIC.

How does it work?

It is actually quite simple: you pay a premium every month, a portion goes to life insurance and a portion goes to the investment, and it grows over time.

No matter how much your investment grows, you continue to pay the same premium.

There are very few investments that grow tax-deferred (like the RRSP), and this is one of them.

You can pull from that investment in your own lifetime if you want or need to.

If you don’t pull from that investment, when you die, 100% of that investment will be transferred to your beneficiary, tax-free.

In other words, your beneficiary will get to enjoy each and every last ooey gooey bite of the cookies you saved for them.

Book a call to learn how life insurance can be a powerful part of your estate planning, ensuring more of your legacy goes to your beneficiaries instead of the government.