Canadian CANNAINVESTOR Magazine May / June 2018 | Page 194

By Jason A. DeJean, CFO, PFP, EPC, CPCA

Your Estate and How to Avoid leaving a Tax Bill!

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In this scenario what could be done to avoid some of the probate costs and income tax at death??

1. Consider planning strategies where you use your registered money (RRSP’s, RRIF, LIRA’s LIF’s) first. Drawing them out at a lower tax bracket earlier in retirement may reduce the tax bill to the estate. Remember

you can take money from it and invest it doesn’t have to be spent. In some scenarios you can also look at leaving RRSP/RRIF money to a dependent child or grandchild.

2. Gifting while alive. There is nothing wrong with giving while you're alive and in fact it can be very rewarding! If you know that you have enough assets to look after yourself and any future needs that may arise then I encourage it. Keep in mind the only real way to know this is to have a detailed financial plan that considers all the future planning scenarios.

3. Utilizing life insurance; many people will use life insurance to help cover the tax bill at death. Life insurance in the amount of $526,000 would have protected the estate in our example from erosion. Depending on the cost this can be a useful planning strategy.

4. Trusts; using an Alter Ego trust or a living trust is a way for your assets to live on. You move assets into it while you're alive and a time when you decide. This helps you control the taxes and defer future tax and probate beyond your death.

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