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On November 30, 2020, Canadian Deputy Prime Minister and Finance Minister, Chrystia Freeland, delivered the government’s Fall Economic Statement titled, Supporting Canadians and Fighting COVID-19. Here's what you need to know.
The federal government has enacted several measures aimed at stabilizing the economy as a result of COVID-19. Below is a summary of Canada’s COVID-19 Economic Response Plan, reflecting key measures announced as of October 5, 2020.
While RRSPs are generally fully taxable on death, it is possible for spouses (including common-law partners) to leave RRSP assets to one another on death in a way that defers taxes. However, leaving RRSP assets to a surviving spouse is not as straightforward as some might think.
Here is an overview of how this tax-deferred transfer might be achieved, using as an example the situation of two Canadian residents: Pat, who recently died, leaving a spouse, Terry.
While a Registered Retirement Income Fund (RRIF) is generally fully taxable on death, it is possible for spouses (including common-law partners) to leave RRIF assets to one another on death in a way that defers taxes.
Here is an overview of how this tax-deferred transfer might be achieved, using as an example the situation of two Canadian residents: Lee, who recently died, leaving a spouse, Casey.
It’s always helpful to have a retirement date in mind and imagine how you want to spend your retirement years. But there can be turns in the road. Situations may arise that cause you to change your plans in order to achieve your retirement goals.
Here’s a variety of fictional scenarios reflecting real-life situations that lead to changes in retirement plans.
When you think of income splitting, what first comes to mind is likely moving taxable income to a lower-income spouse. But several income splitting opportunities with children are available and worth exploring. The more income you can transfer to others in a lower tax bracket, the more tax you save as a family.
VALUE OF ADVICE
Financial planning is an ongoing process, providing direction for achieving your goals through proper management of your financial situation. It takes a holistic view of your lifestyle, your needs and your priorities. A financial plan is a tool to analyze your financial situation and provide projections that can assist you in understanding your true situation and whether you can achieve your goals.
Life happens and circumstances change. If your marital status has changed, or is in the process of changing, there are many planning issues to consider. For example, you may want to ensure that life insurance proceeds will reach your intended beneficiaries.
During income-earning years, a Tax-Free Savings Account (TFSA) can be used to fund numerous expenses – a child’s education, family trips, a wedding, just about anything. Once you retire, you’ll discover that a TFSA is just as versatile, helping you to meet a variety of needs unique to retirement.
The opportunity to deduct home office expenses on personal tax returns has become a popular topic as more and more employees are working from home as a result of COVID-19. Whether you may claim home office expenses depends on a variety of factors.
Couples receiving pension income have two possible options to adjust their taxable incomes and reduce their total taxes.
If you have set up and contributed to a Registered Education Savings Plan (RESP) for one or more of your children or grandchildren, you’ve done some valuable planning for their future education.
But your planning could unravel if you do not also address what is to happen with the RESP when you die.
As Canadian parents and guardians are responsible for the support and education of their children, it may come as a surprise that in most Canadian jurisdictions, parents and guardians are not automatically entitled to control their minor children’s property.
It’s a curious fact that we Canadians, depending on where we live, call a vacation home by different names – a cottage, chalet, country house, camp or cabin. But what they all have in common is that so many owners call their vacation property a source of cherished family time and lifelong memories.
Thankfully, the Canada Revenue Agency (CRA) has made it easy for employees to claim home office expenses if you spent more than half of your working hours at home for at least four consecutive weeks in 2020 due to COVID-19. Here are the options available to claim a deduction.
SAVING AND SPENDING
Just over 12 months ago, provinces and territories responded to the COVID-19 pandemic by declaring states of emergency. Restrictions and lockdowns have affected Canadians in different ways, and one of the starkest differences involves savings. Some people needed to tap into their savings, while others saw their savings accumulate.
Say that a couple is struggling with a decision about whether to help their child purchase a home. The couple wonders, and worries, if the cash outlay will interfere with their retirement.
“If I Had a Million Dollars” was a song released by the Barenaked Ladies in 1992. At that time, most of my friends had been married for few years, started to have kids, and perhaps started saving for retirement.
It’s easy to think you can put off changes to an estate plan – the plan doesn’t even take effect during your lifetime. But it’s important to react in good time because many changes call for strategies best implemented sooner rather than later. Also, you make estate planning changes now for the same reason you made a will and purchased life insurance: to benefit your loved ones if you pass away prematurely.
Today, to change a retirement plan often means postponing the date, not moving it up. After all, we’re living longer, and early retirement adds even more years to fund. But there are special circumstances when retiring earlier than planned becomes an option to consider.
For many couples, retiring at the same time just makes sense, plain and simple.
You share the pleasure of starting this new chapter of your life together, and you enjoy more time together in retirement. A synchronized retirement can be idyllic.
We’re going on a journey through the time period from your 50s and early 60s — a journey with a difference.
The current COVID-19 pandemic has resulted in many pausing to reflect on their estate and incapacity planning. The barrage of news headlines about the health crisis and forced time at home have understandably led individuals to more thoughtfully consider the plans they have in place or plans they would like to implement. Legal professionals throughout Canada have noticed an increased interest in estate planning in recent weeks.
VALUE OF ADVICE
When fears over COVID-19 sent markets plummeting in March, investors felt the initial shock. But markets rallied in the following weeks, turning shock to a sense of hope. The trouble is, however, no one knows how long the rebound will take – and it’s been marked by volatility. As an investor, how can you have peace of mind while you’re waiting for your portfolio to recover?
When deciding on your executor, or liquidator in Quebec, it’s quite common to name a child to administer the estate. But if you have more than one child, it’s a decision to make with caution.
A common question people ask about retirement income planning is how much do they need to live on. While some say the rule of thumb is 70% of your pre-retirement income, we want to know “is this enough?”
Today’s youth may prefer to pick up information online, but when it comes to learning about financial life, parents still have some influence. Here are a few teaching moments.
If your will planning involves a testamentary trust for one or more of your beneficiaries, you will need to select appropriate trustees.
When you raise a child who has special needs or look after another family member with a disabling medical condition, you spend a lot of extra time providing care. If you also take on the extra financial matters that are involved, it can just be too much. We encourage you to ask for our assistance, so we can make things smoother for you and help improve your family member’s quality of life.
Ever wonder if you’ll be affected by Old Age Security (OAS) clawback? To give you an idea, OAS benefits are reduced for the July 2020 to June 2021 period when net income for 2019 exceeds $77,580.
To minimize OAS clawback, you need to reduce net income. During retirement, an effective strategy is splitting pension income. But several strategies, including the following, can be initiated before retirement arrives.
Recently, Fred told his friends George and Jane that his mother was no longer capable of managing her financial affairs. Since she had no power of attorney, Fred had to apply to court to be appointed to look after her affairs, a costly and time-consuming process that was hard on the family. Fred also complained that he would have to report back to the court, potentially every year, to demonstrate that he is handling his mother’s affairs properly.
So much can change between the time your estate plan and related documents are prepared and when they take effect. That’s why it’s important for your estate plan to include back-up plans.
When your investment program was established, you answered questions that helped determine how much risk you were able to tolerate. You had to imagine how you would react to a significant loss in portfolio value.
It’s never been easy discussing financial matters with family members, whether talking to your parents or adult children. But quite often, there’s one important reason to gather your courage and have the money talk. If you don’t address the issue when it’s on your mind, you may allow problems to develop down the road.
When your children enter their teens, life changes in many ways — including your financial life. Here’s a look at some of the major financial planning themes that arise as you navigate their teenage years.
Many long-term investors wonder if they should take action when markets suffer a downturn or become volatile. Should you sell equities and turn to the safety of cash? Should you stop making regular investments? Such thoughts are understandable, but these actions can decrease portfolio value over the long term
In matters of financial affairs, the day may come — if it hasn’t arrived already — when you’ll be parenting your parents.
When retirement arrives, investment planning changes from creating wealth to stretching your dollars.
Unless you prepare properly, your executor might end up feeling more like a detective. See what important steps you can take now to make sure the process goes smoothly.
Think of the inheritance you plan on leaving to your children. If you have an asset that can’t be easily divided, you’ll want to read this.
Closing your eyes and envisioning where you’ll retire might seem like a flight of fancy. Find out why it’s actually a constructive retirement planning exercise.
It’s okay that one spouse plans vacations and the other keeps track of relatives’ birthdays. But when it comes to financial matters, we’ve got several reasons why both spouses should participate.
If you’re wondering whether to open the Bank of Mom and Dad to help a child buy a home, you face a difficult decision. We’ve got a pros-and-cons analysis to make it a little easier.
We have advisors across Canada to help you reach your goals.
Let us help you be well advised
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