16 examples of I want to - Situational Financial Planning, Legal & ID Shield, Halifax, Nova Scotia, Canada

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16 examples of I want to

Financial Plan
16 examples of I want to

1.  I want to invest in equities. Is there a way to guarantee my initial investment at maturity?

Guaranteed Investment Funds (Segregated funds)
are similar to mutual funds
, but since they are issued by insurance companies they offer maturity guarantees. The guarantees are typically 75% or 100% and are specified in the Information Folder provided by the issuing company.

2.  My income and most of my wealth is dependent on my company. Want can I do to protect myself?

There are several planning strategies that can be used, often together. One basic strategy is to ensure you have “creditor protected” investments outside the company.

In certain circumstances, you can protect your Guaranteed Interest Annuity (GIA), Segregated Fund and Life Insurance policies from unforeseen bankruptcy or legal proceedings by designating a preferred class beneficiary. Creditor protection rules are dependent on legislation and vary by province. Since there are some circumstances where creditor protection may not apply, it is recommended that you consult a legal advisor for your specific situation.

3.  I am concerned about the ups and downs of the market. How do I lock in my gains?

Some Guaranteed Investment Funds (GIFs) offer guarantee resets to “lock in market gains”. This means if the market goes down, up to 100% of your investment or higher reset Guarantee Maturity Amount is protected. Not all plans offer resets and there are design differences. .

4.  I want to invest in equities for potential growth, but I want to guaranteed my investment for my heirs?

Guaranteed Investment Funds offer death benefit guarantees The guarantees are typically 75% or 100%. There are design differences between companies.

5.  Knowing that my probated will is a matter of public record is disturbing. How can I ensure privacy? Is there a way to have my investment transferred quickly at my death and avoid any probate fees.

Guaranteed Investment Funds (GIFs), guaranteed investment annuities (GIAs) and life insurance do not flow into your estate if you have a designated beneficiary on your contract. This means they can bypass the probate process and the money goes directly to beneficiaries avoiding costly fees and delays.
Your beneficiaries receive the money quickly. There are no probate fees taken from the value of the estate. Privacy, by avoiding probate

6.  I am concerned about how my loved ones will spend their inheritance.

Make your legacy go a long way.  If you’re concerned with how your loved ones will spend their inheritance, there is a solution to help. The Gradual Inheritance Concept gives you the flexibility to control how your investment is paid to your beneficiaries (see blended family example below)

7.  We have a blended family. How can I ensure what I want to happen, happens?

Mini-case study example:

The facts:

Robert (age 71)
Second marriage to Marie (age 65)
Robert has two children from first marriage, Marie has one child
Robert has assets of $800,000 in a RRIF mutual fund. In his will, Marie is designated as a beneficiary of the RRIF.
Marie has very limited resources

Desired outcome:

Robert wants Marie to have some lifelong income
He wants to prevent her from withdrawing all of the RRIF assets so that, upon her death, some RRIF assets are left available to be shared between the children.
Possible guarantees

Proposed solution

Transfer assets to a segregated fund contract
100% death benefit guarantee available
Designate Marie as successor annuitant (receives the income at Robert's death)
Designate the children as irrevocable beneficiaries.
The irrevocable beneficiary designation will survive Robert's death.
Provide specific guidelines regarding designation.
Specify maximum amount to be withdrawn by Marie without the consent of the children.

8.  Market volatility increases uncertainty adversely affects market returns. How can I smooth out my investment return?

One approach is to include a volatility control, a systematic asset allocation strategy, which smoothes out each fund's investment return volatility - automatically.

9.  How can I have access to funds for emergencies smooth out or supplement retirement income and avoid future loan applications?

Establish a Lifestyle Line of Credit, it can be part of an all in one account or a separate mortgage. It essentially operates like a line of credit. Accessing home equity in this way is a flexible alternative to a reverse mortgage and is often more cost effective. Not for everyone, but worth exploring. If you are interested in more information ask me for a referral to a banking or mortgage professional.

Note: Although you can apply for an all-in-one account or a collateral mortgage before, or after, retirement, before retirement is often better.

10.  How can I ensure that I receive the full amount of my RRIF maturity guarantee?

Some Benefit Guarantees are designed to ensure that you receive the full amount of your segregated fund maturity guarantee as income. You can make sure that your guarantee is reduced by only the amount of the withdrawal with dollar-for-dollar reductions. Proportional reductions, on the other hand, can be greater than withdrawal in down markets. Dollar-for-dollar preserves guarantees so income lasts longer.

11.  I want to take advantage of the growth potential of the market, is there another way to keep my capital secure?

Market volatility makes you nervous, yet you would like to take advantage of the growth potential of the market. Segregated funds are investment funds issued by insurance companies and as such have maturity and death guarantees of 75% or 100%. Utilizing the built-in guarantees of a segregated fund and a Guaranteed Interest Annuity (GIA), you can position your portfolio to provide growth opportunities while keeping your capital secure. In addition there maybe pension splitting opportunities with the GIA.

12.  I have guaranteed interest investments, generating income. Is there a way to increase my after tax income and preserve my capital for my heirs?

A Personal Insured Annuity is an alternative low risk investment offering high after tax yield.

  • Increased Income - can provide as much as 90% more income over a traditional GIC or equivalent.
  • Estate protection -  an amount equal to your initial investment is paid to your beneficiaries or estate when you die - no estate or probate fees.
  • Lower taxable income - your reportable income is decreased when using a prescribed life annuity. This means you will pay less tax on your annuity income providing the opportunity to maximize government benefits.

13.  I do not have a pension plan and I am missing out on the pension tax credit. Want can I do?

A non-refundable credit is associated with the first $2,000 of eligible pension income. If you are over age 65, interest from a non-registered GIA, (Guaranteed Interest Annuity) qualifies. Interest from a GIC (Guaranteed Investment Certificate does not qualify.

Income received can sometimes be apportioned between spouses so that some of the income is moved to a spouse who pays tax at a rate lower than the other one, reducing the family tax bill.

14.  How will taxes affect the legacy I leave to my family?

You may not need all of your Net Worth during your lifetime. Does it make sense to keep paying income tax each year on the growth of your non-registered investments?

The strategy

Use non-registered assets you won’t need during your lifetime
  • Buy an exempt permanent life insurance policy
  • Structure the policy to:
–Enable tax-efficient distribution of your assets to future generations
–Give you control and access while living

Benefits for you
  • Taxes
Reduce your annual income tax

  • Control
–Keep control of your assets
–Can change beneficiary and coverage amount (subject to underwriting requirements)
–Can access the cash value in the policy if necessary

  • Legacy
–Generate estate value, not taxable income
–Preserve your legacy for your children and grandchildren

15.  How do I manage the effects of reverse-dollar-cost-averaging?

For many years, dollar cost averaging has been used to move money into markets that are volatile. This discipline fights against the natural tendency to buy when the markets are high and sell when the markets are low.

When you start removing level income each month, it is counterproductive because you end up taking out a greater percentage of your assets when values are reduced and less when the values are improved.
What you really want to accomplish, is to remove more value when the markets are up and less value when the markets are down. A mechanism to accomplish this could be referred to as “asset value averaging”. By using a constant percentage of assets, the dollars removed from the investment fund when markets are up will be much larger than the amount removed when markets are down.

This asset value averaging approach sounds great theoretically, but most people don’t like to live with a fluctuating income. A “reservoir fund” can be established to receive these fluctuating income amounts and invest them on a more conservative basis using money market or income funds. Then, a constant dollar amount can be extracted from this much less volatile “reservoir” fund.

16.  How can I guarantee income for life and transfer market risk?

The closer you get to retirement the harder it is to recover any market losses. In addition market downturns in early retirement mean an increased probability of running out of money.
This is similar to buying property insurance where you pay a premium to cover the risks to your home and the cost is transferred to the insurance company.

  • Predictable guaranteed income for life
  • Flexibility to change investments
  • Growth potential
  • Potential for increasing income.

  • The fees can be much higher for the guarantee
  • Generally lower guaranteed income level than a life annuity
  • Excess withdrawals can significantly affect the lifetime income amount. An excess withdrawal is a withdrawal that exceeds the annual guaranteed income amount.

Corporate Planning Opportunities

If you own a corporation, you may qualify for additional planning opportunities.
If you are interested in a discussion, to determine if you are missing out, my contact information is below.

Note: There is no one "cookie cutter" plan or product solution. The process involves understanding your overall objectives, determining your needs and then based on your individual situation, deciding how your resources should be allocated. Please note that product features differ between companies, so if your financial or retirement planner cannot access them for you, checking around would be prudent.

Paul is a Certified Financial Planner (CFP) licensed by the Financial Planners Standards Council; Financial and Estate Plans are provided under that license.

The information contained in this website is intended to provide general guidelines only. The application and impact of the law can vary widely from case to case based on the specific or unique facts involved. Accordingly, the information in this article is not intended to serve as legal, accounting or tax advice. Users are encouraged to consult with their professional advisers for advice concerning specific matters before making a decision.

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J. Paul Wilson, CFP®, ChFC®
Certified Financial Planner
27 Blue Thistle Road Halifax, Nova Scotia, B3S 1M3
Office (902) 405-8665 Email  paul@jpw.ca
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