SMART ESTATE PLANNING

$5 on each $1,000 for the first $50,000 and $15 per thousand thereafter. Minimizing Probate: The following items are excluded in determining the value of the estate for purposes of probate:

• assets held in joint tenancy with right of survival (when one person dies, the asset is automatically owned by the surviving joint tenants).
• assets with named beneficiaries such as life insurance policies or RRSPs.
• Thus, probate fees can be minimized if registered assets (including vehicles) are held in joint names with right of survival, and if insurance policies and RRSPs are left to named beneficiaries, not to the estate.

It is necessary to use caution when naming beneficiaries to your RRSPs, because income tax will be payable by the estate on the market value of the RRSP at the time of death, unless the beneficiary is the spouse or common-law partner, financially dependent child or grandchild under 18 years of age, or financially dependent mentally or physically infirm child or grandchild of any age.

Any assets that are held in joint names with right of survival are usually not affected by any instructions in the will. Normally, if the will has instructions to divide estate assets equally between two or more beneficiaries, but an asset such as a savings account is held in joint names with only one of the beneficiaries, then the other beneficiaries will not receive any part of the savings account. The remaining assets which are not in joint names with right of survival will be divided among all the beneficiaries.

Please ask Smart Advice for Life about how we can assist you in minimizing your Probate fees.

At Smart Advice for Life, we have helped clients from various companies, to invest their pension buyouts & assist with benefit transfers.The following are some things to take into consideration and research when deciding to take a buyout:

• What quality of retirement do you want? Will you have enough set aside to live a comfortable retirement?
• How much is CPP and OAS? When are you entitled to receive it?
• Should you roll all of your pension money into a Registered Retirement Savings Plan? What are the tax implications if you do not?
• How will rolling this money into an RRSP affect your marginal tax rate when you retire?
• What happens if you do not have enough RRSP contribution room to roll all of your buyout money into your RRSP?
• What are the tax implications?
• Will you have adequate health and dental benefits and life insurance coverage once you leave your job?
• What strategies can be applied to your situation to reduce your tax situation?

(Please note that if you receive a full pension, have RRSP income and CPP income, you may have your OAS clawed back partially or completely, depending on your tax bracket at retirement).

It is absolutely imperative that you talk with an experienced financial advisor before you take a buyout to ensure you’ve got all of your bases covered.

Income Tax Rates

Retirement Planning At Smart Advice for Life, we believe in a taking a holistic approach to financial planning. One of the biggest aspects of your financial plan is planning for retirement. The following table indicates the current Canada Pension Plan (CPP) Payments available to Canadians.

Please note – Pensioners with an individual net income above $63,511 must repay part or the entire maximum Old Age Security pension amount. The repayment amounts are normally deducted from their monthly payments before they are issued. The full OAS pension is eliminated when a pensioner’s net income is $102,865 or above.

What are the advantages of having a will?

• You will be the one to choose the guardian of your children.
• You will choose how your assets are distributed. However, your will can be challenged in certain circumstances.
• You will choose your executor.
• Your estate will be settled more easily, quickly and cheaply than if you die intestate (without a will).

How are RRSPs and RRIFs taxed at death?

The general rule for an RRSP or RRIF is that the value of the RRSP or RRIF at the date of death is included in the income of the deceased for the tax return for the year of death. However, income tax may be deferred if the beneficiary of the RRSP, RRIF, or estate is:

• the spouse or common-law partner
• a financially dependent child or grandchild under 18 years of age, or
• financially dependent mentally or physically infirm child or grandchild of any age.

In order for the tax to be deferred, the RRSP or RRIF must be transferred to the RRSP, RRIF, or eligible annuity of the beneficiary before December 31st of the year following the year of death. Other conditions also apply.