Monthly Archives

March 2019

Liquidity Management & Planning: What Is Your Liquidity Ratio?

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What is the importance of liquidity planning in my investment portfolio?

Let’s talk about how you calculate your liquidity ratio.

Liquidity management is a concept, a lot of people don’t understand. The definition of investment liquidity means the availability of converting or having an asset class that is convertible to cash or to cash like instruments that you can spend and use in your day to day life.

Think of an investor, an individual who’s got all his assets in one single investment. It’s a high rise in a remote city somewhere in Canada and it’s a really tough area to sell.

That would be a very illiquid asset.

The only way he can get his cash, is he needs to sell that entire asset to one specific buyer. The other end of that spectrum would be actual cash sitting in a bank account. That is a fully liquid portfolio. In between that, you have all sorts of different portfolios or net worth statements.

What are your liquidity needs?

Let’s chat about individuals who don’t have enough in liquid assets.

It could either be that all your assets are in an RRSP, a registered account or a locked in retirement account. Essentially, an account that you’re not able to pull the money out means the funds in that specific account are not liquid.

Let’s go through a scenario where all of your assets are in an RRSP, you have no tax-free savings account, you maybe have some registered education savings plan money and then all of your other net worth is in either homes, cottages, real estate and other illiquid assets.

You’d be a very illiquid investor and that could be a concern for you.

Full Blog article on the Top 3 Ways To Buy Real Estate Investment Property In Your Investment Portfolio:


When we sit down to do our investment planning with clients and chat about investment liquidity, we want to make sure that you have some of your assets in an account that is liquid.

A tax-free savings account (TFSA) is an example of a liquid account.

Having a non-registered account holding assets that are liquid is another alternative to liquidity management.

The Importance Of Liquidity Management & Liquidity Ratio

What kind of assets are liquid and can be included in my investment portfolio?

Stocks are extremely liquid for the most part and with bonds, there’s historically been a little less liquidity.

Preferred shares and debentures are not as liquid as the former mentioned above.

You should definitely consider having a portion that is liquid. The most liquid stocks are the most highly traded stocks.

Think of your Canadian and US large cap companies. These are highly traded.

There’s a ton of volume every day on the market for these large cap companies. Essentially, that means they get traded a ton which leads to their respective stocks being highly liquid.

Sometimes you get to a situation where you have a stock, a preferred share, a debenture or a penny stock that has no bid and that has very little liquidity. You could not even sell your share if you wanted to. That’s the opposite of liquidity.

Generally, as a company gets more mature, as it appreciates over time and as it has a stronger balance sheet, it commonly graduates from one exchange to another.

If all goes well, eventually it gets on the TSX and then it starts to be trading volume. Once there’s trading volume, that means there’s liquidity and we’ll generally see what’s called a liquidity bump on the value of the stock.

We believe in building very custom and tailored investment portfolios with a balanced calculated liquidity ratio. We want to be assured the client has their liquidity needs looked after.

I think it’s extremely important and I believe people should have exceptional liquidity management not only in their accounts but also in their net worth, on their balance sheet and in their personal net worth statement.

At the end of the day, when you’re looking at that and you’ve got a bit of everything and if you’re not sure of your current liquidity ratio, obviously you want to consult your tax professional or your portfolio manager.

It’s a really important concept and if you get caught on the wrong side of liquidity, you can really get crushed and devastated through having to sell an asset at a depreciated value.

You want to be able to control when you sell your assets.

Full Blog article on How Much Do I Need To Retire Comfortably:


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Can I take money out of a LIRA?

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Today we’re answering the age-old question, can I take money out of my LIRA or my LIF?

First off, what do these acronyms mean?

A LIRA is a Locked-in Retirement Account and a LIF is a Life Income Fund.

Think of a LIRA the same idea as a RRSP (Registered Retirement Savings Plan) but it has additional restrictions under the applicable pension legislation.

Full Blog article on How Much Money Do I Need To Retire Comfortably: 


These two types of accounts are generated after you retire from work or you left your employer, they will generally offer your pension in a lump sum of dollars.

You would then transfer that money out and it will become a LIRA and remain tax sheltered.

Hypothetically, let’s say you’re a 35-year-old and you just left employment after 10 years, and you had accumulated pension of $50,000.

As those are pension dollars, they would need to be transferred to a LIRA and remain untouched until retirement. Eventually you will get to a point where you want to unlock those funds and access them for retirement income, thus leading your LIRA to get converted to a LIF.

Now once you have your funds in a Life Income Fund, it functions similar to a RRIF (Registered Retirement Income Fund) that has a minimal annual payment.

However this type of account also has a maximum amount that can be withdrawn annually.

After all, the government wants your pension money to last for your lifetime.

Essentially the income stream provides you with “Pension Withdrawals” to supplement your lifestyle needs. Every pension legislation is slightly different in what they allow or don’t allow in accessing the funds, so this varies by province and if the pension is a federal LIRA.

Metal Deposit Boxes RetirementNow there are a few exceptions for when you can take money out.

One such exception which applies on some pensions is the “Financial Hardship Unlocking” privilege.

If you’re able to prove to the government that you’re undergoing a rather tough patch in your life, you will be able to unlock your LIF for that reason (subject to specific qualifications).

Another exception to the rules is the “Small Balance Unlocking”.

Hypothetically again, let’s say there’s a small amount in your LIRA or LIF and If it meets the specified calculation, then you can move it out of there (LIRA Unlocking) and into an RRSP account.

One of the last exceptions is as a non-resident, you’re no longer living in Canada and you’ve been away for more than two years.

You can then apply for “Unlocking a LIRA in Canada”, to get that money unlocked or move to an equivalent account out of country and you can generally get it unlocked that way.

One fantastic exception is a one-time only exception, “50% Unlocking”, where you can transfer up to half of your locked-in dollars to what’s called the Prescribed RRIF (P-RRIF).

This P-RRIF allows you to access the unlocked 50% of your pension, with no maximum restrictions on withdrawals.

The other half would remain in a LIF, under the normal restrictions.

You of course could start drawing it down and access as much as you want. It gives you a ton of additional flexibility in your retirement income. Now just be aware that the more you take out, the more income that is taxable.

At the Tetrault Wealth Advisory Group, we have a dedicated Wealth & Estate Planning Specialist, who works with you to determine the best way to draw down your retirement funds and control the amount of taxes you pay.

Full Blog article on How To Prepare A Sound Retirement & Estate Planning Strategy:


We will work with you to navigate the world of LIRAs, LIFS and the various potential pension legislations they may fall under, and ensure we recommend the best strategies for your needs!

Retirement Payout Calculator Link:


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How Much Money Do I Need To Retire Comfortably?

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It’s a question that we get asked daily.

I remember growing up, people used to say, you need $1,000,000. Reach this amount and you have enough to retire.

Well, the reality is things have changed; and as you may know, there’s a lot of different types of pensions that exist.

⭐ Full Blog article on What’s an IPP (Individual Pension Plan):


Some retirees require additional money for extensive travelling, snow birding to the USA/Mexico or just to spend funds on kids or grandchildren.

Another important factor is that people are living a lot longer than in the past.

With such a variety of factors that impact a person’s need, we strongly believe at the Tetrault Wealth Advisory Group, there is no “one size fits all” approach.

Let’s analyze a simple retirement math strategy for you folks with some basic assumptions.

Let’s start with the individual who has no pension, who’s been living their life as an adult and earning a $100,000 per year.

This said person is living on $100,000 per year and now decides to retire.

One very general concept we can use is the assumption that this person will require 70% of their pre-retirement income. Now they need to get about $70,000 per year in retirement.

If we use  what I refer to as the “Back of the napkin math” and take an assumed 5% annual withdrawal rate, this would mean they require $1.4 million accumulated by the time they’re 65 in order to retire.

Of course, your portfolio will hopefully generate additional dividends, income and growth as well.

If you have a good portfolio manager you can draw down at that rate.

If you are fortunate enough to have a “defined benefit pension”, you will likely have a large portion of your cash flow needing looked after, however there may be additional funds still required.

Let’s do some quick math. (*Financial Calculators)

For someone who’s getting $40,000 a year in future pension income, you’re simply contrasting the number you need at retirement with the pension and you’re funding the difference, with your registered or your non-registered assets.

In this case, an additional savings of $600,000 to fund the $30,000 difference at the same 5% withdrawal rate.

One of the major keys to a successful retirement is “Retirement Financial Planning”, and the earlier you can start the better.

Those scenarios are certainly a way to simplify something that is not always simple. Everyone has different needs, different lifestyles and different goals.

You may ask, “How much money do you need to retire at age 55?”


Perhaps you want to fund additional expenses, leave a legacy, or even charitable giving.

Retired Couple Holding Hands - Retirement Planning

We want to ensure all your unique goals and objectives get built into your financial plan, because there is no cookie cutter answer to how much you need.

If you do have legacy needs, want to leave a specified amount to your beneficiaries or charity, where will this money come from and will you have the additional capital needed to accomplish this?

Let’s look at another scenario we come across often.

You have a husband, wife, who have been living their entire life on two significant salaries. This hypothesis assumes they are each making $250,000 for a $500,000 pretax income.

Occasionally, we get this high-income earning couple saying, “Oh we can live off $50,000 in retirement…”, but previously they were living on a $500,000/year lifestyle.

That is a drastic change!

We take a long, hard look at their budget and though this step is far from exciting, it’s important to know the income would be enough for their expenses.

Other factors can arise:

  • Is the mortgage paid off?
  • Do they own multiple properties?
  • Are there any other major expense changes in retirement?

It’s crucial to look at your true cashflow needs because what is retirement actually?

It’s where you are drawing a cashflow from your pot of assets to replace your salary/income you previously had while working.

Now you’re going to be drawing down an income from the pot of assets that you’ve accumulated that needs to be done in the most tax efficient way possible. This needs to be done in a way where you want to enjoy and spend money, but also gives you the peace of mind that you will not outlive your financial resources.

At the end of the day, retirement planning is truly a cashflow projection.

⭐ Full Blog article on How To Prepare A Sound Retirement & Estate Planning Strategy:


Retired Couple Walking On Beach

If you’re not sure where to start, you can start using a 5% number based on the cash you’ll need at retirement and multiply this figure by 20.


If you need $100,000 to live at retirement, you can multiply that by 20 = $2,000,000.  That’s using a 5% rate, no taxes factored in.

Of course, this is not an all-inclusive example.

At the Tetrault Wealth Advisory Group, we have a dedicated Wealth & Estate Planning Specialist, who will work with you to address all these concerns and work with you to plan for your retirement income that meets your unique goals in the most tax efficient manner.

Retirement Payout Calculator Link:


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Transcript: Valeant BNN prediction video

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Rob: I’ve stayed away from Valeant for a while. A lot of volatility lately, a lot of ups a lot of downs and this whole Walgreens Deal, honestly, the market doesn’t like the fact that Mr Pearson’s out.

Speaker 2: How risky is this company financially?

Rob: It’s too risky for me. There are too any unknowns and I want answers before myself and my clients are going to get into the stock. 

Top Three Ways to Buy Real Estate Investment Property in your Investment Portfolio!

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Today we’re talking about real estate investments. There are many ways to own it, but what is the best way and how do you hold it in your portfolios? Many people out there believe the best way to invest in the real estate market, is to purchase blocks such as duplexes, townhouses or even entire apartment blocks. By directly owning physical real estate, you now must interview potential tenants, collect the rent, pay down the mortgage, pay down the insurance, account for potential vacancy and hopefully you are cash flow positive. That’s certainly one strategy that works for many successful investors and how many investor’s start dabbling in the market. The downside of course, is that this requires a large amount of capital and a low liquidity to access your capital. For me, for my life and most of my clients who are busy, it really doesn’t work. So, what I like to do, a simple yet effective way to invest in real estate is through your portfolio.

Is real estate a good investment and how does it fit into your portfolio?

Real Estate Investment Trusts (REITs)

One great option you can add to your portfolio is a publicly traded real estate investment trust (REIT). These can be a fantastic source for additional yield. Since they are publicly traded, they are also liquid, allowing you to move in and out of the positions as you wish. Now, the downside is increased volatility in this market space. Even though do pay tax efficient income, they may or may not be suitable for your portfolio’s risk tolerance. The tax efficient income generated is in the form of, return of capital (RoC). The great thing about RoC, it aims to defer the taxation by reducing the adjusted cost base (ACB), so the taxation is a capital gain when you sell your position. If it’s a corporate account or a non-registered investment account, you get the benefit of deferring the income and controlling when you pay the tax on it. RoC is a fantastic way to earn tax efficient income, especially if you’re in a high tax bracket or if this in a corporate account. A potentially better way to own real estate and what we really like to focus on for our clients at the Tétrault Wealth Advisory Group, is either a private REIT that’s not publicly traded or even the limited partnership investment.

Private REITs

Private REITS or Limited Partnership Investments, are two separate things that are a really, really great way to invest. Our clients who are invested in such a strategy, get much better returns with decreased volatility on their statements. One such Private REIT that we like, is based the US, and we’ve generated about 15 percent returns consistently in this investment. The income is generated as tax efficient return of capital. It’s a one-year minimum hold, but there’s full liquidity 30 days after and they’ve averaged 15 percent, so that’s a fantastic way to add quality defensive positions to a portfolio.

⭐Link to Alternative Asset Classes video: https://www.youtube.com/watch?v=E7MdSu-q8_k

Limited Partnerships

Limited partnership is another strategy that works for some clients. It is a structured group of investors, like-minded individuals that want to own real estate. We will go out, we’ll work with the developer, we’ll work with the builder, we will structure this and then we will borrow generally about 70 or 75 percent, 20 to 25 percent will be the equity. So that’s capital we’re putting in. You borrow for the rest and you end up either building or buying townhouses or apartment blocks and you borrow for a ton of it. And the cool thing about that is that you get, you know, 10, 15, 20, 30 partners in, usually on the high net worth side and there you can generate some significant returns. We’re always wanting to generate at least 12 or 13 percent return on investment (RoI) when we are doing these types of investment strategies.

Conclusion – Buying Investment Property

So to recap, you can go out, you can buy a townhouse, you can buy a rental, a Condo, you can take care of the renting it out by yourself, you can change the locks, you can kick the tenant out, you can deal with rent control, you can try to do that yourself. However, if you are like most clients, you’re busy and don’t have time for all of this, you could let the best professionals work with you to create the best real estate investment strategy for you. That is what we do every day for our clients at the Tetrault Wealth Advisory Group! We review, analyze and find the best teams to manage these properties, find the best possible area in the best possible investment structure. In addition to having a well-diversified portfolio of stocks or bonds, we add quality defensive position in real estate.  This is an actual piece of property that you can touch, you can feel it, you can drive by it. This is what I own, it is in some of our client’s portfolios, and it can be in yours too. One of the highlights of the real estate portion of a portfolio is that it is uncorrelated to your market-based stock or bond portfolio. Unfortunately, most large investment firms or big banks in Canada do not offer this as a strategy for their clients, which is why the Tetrault Wealth Advisory Group can provide you with the best overall options for your investment portfolio. We truly think adding a position in Real Estate is a fantastic alternative for our clients to own in their portfolio.

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Federal Budget Highlights

Federal Budget Highlights

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Below you will find some of the notable highlights from the 2019 Federal Budget released on March 19, 2019. For more details on any of the proposals listed below, please refer to the full release of the federal budget by following the link at the end.

  • First-Time Home Buyer Incentive: CMHC will assist first-time buyers by offering a shared equity position up to 10% in a newly constructed home or 5% of an existing home. Families with a household income of more than $120,000 annually won’t qualify, and there will be a cap on the value of homes that are eligible. More details will be forthcoming on this.
  • Home Buyers Plan: Increasing the eligible amount for to $35,000 that can be withdrawn from RRSPs towards a qualifying first- time home buyers’ transaction. Additional enhancements will be made to extend access to the program for individuals who experience or marriage or common-law relationship breakdowns.
  • Canada Training Benefit: The Canada Training Benefit of $250/year up to a lifetime limit of $5000 which could be used to refund up to half the costs of taking a course or enrolling in a training program. Also, a new EI Training leave of up to four weeks of income support to take time away from work for training opportunities.
  • Federal Pharmacare. To make prescription drugs more affordable for Canadians, the government will create the new Canada Drug Agency that would work with the provinces to develop a plan to coordinate prescription drug purchases. They will also seek to make high-cost drugs for rare diseases more accessible.
  • Improvements in Retirement Security: Among several initiatives that have already been implemented such as CPP enhancements and changing OAS back to age 65; the budget proposes changing the annual income threshold to receive the Guaranteed Income Supplement (GIS) from $3,500 to potentially $15,000. There are two new types of annuities being introduced, which focus on addressing longevity risk and providing flexibility in receiving registered plan income. An additional automatic enrolment will be implemented for those who are eligible for CPP benefits after age 70 and have not applied for them yet, to ensure Canadians do not miss out on the benefits available to them.
  • Employee Stock Options: New tax legislation would create a $200,000 cap on employee stock grants that qualify for preferential tax treatment in the past from large, established employers (likely those publicly listed). This would result in taxation similar to what has been in place in the United States.
  • Small Business Deduction (Farmers/Fishers): Brief mention on a proposal to extend relief to multiply small business deduction limit to those who sell farming or fishing products to any arm’s length corporation.
  • Intergenerational Business Transfers: Vague commentary on their continued efforts to develop new proposals to better accommodate intergenerational transfers of businesses while protecting the integrity and fairness of the tax system.
  • Improvements to the RDSP: Change the requirement for an RDSP to be closed and grants be repaid should the beneficiary no longer qualify for the Disability Tax Credit (DTC). Add RDSPs to the list of creditor protected assets in the event of bankruptcy.
  • Zero-Emission Vehicles: Buyers of a zero-emissions vehicle under $45,000 will receive up to $5,000 in federal incentives. The government will also support the building of new recharging and refueling stations. They set a goal to 100% of zero-emission vehicles by the year 2040.
  • Helping Students: Lowering the borrowing costs for Canada Student Loans and Canada Apprentice Loans by several percentage points. Extend the grace period to 6 months after leaving school, in which the loan will not accumulate any interest costs.
  • Affordable Rental Financing: An additional $10 Billion in funding over nine years to increase the availability of affordable rental options for Canadians.
  • Digital Subscriptions: A new temporary non-refundable 15% tax credit for eligible digital news subscriptions to claim up to $500/year. This will be available from the year 2020 – 2024.
  • Individual Pension Plans: Closing of loopholes to prevent individuals from bypassing the prescribed limits when transferring the commuted values of their defined benefit pension plans.


Disclaimer: The above commentary was provided for information purposes and is not intended to provide legal or tax advice.

How To Prepare A Sound Retirement & Estate Planning Strategy

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Are you entering into retirement soon? Are you considering retirement? Will you have enough money?

Today, we’re discussing the importance of retirement and estate planning. It’s a broad subject that covers a lot of ground. Given the variety and complexity these topics can have, there is no one size fits all cookie cutter approach that can be taken. The most important thing that we’re going to review is the importance of tax planning when it comes to your retirement cash flow and how it fits into your overall retirement peace of mind.

How much do you need to retire comfortably?

Every client we have met with, has unique goals, objectives, lifestyle needs and retirement plans…so the answer is “It depends”. There is no set amount that will fit everyone’s retirement plans. Our approach is about reviewing how our client envisions their retirement? How will you spend your time? What kind of travel do you enjoy? Will you have debt in retirement? What do you spend today on your lifestyle?  People use to discuss that you needed 70% of your pre-retirement income to live comfortably, however this is certainly not a golden rule and likely may not be right for you! We prefer to incorporate your lifestyle needs into your cash flow projections to ensure you can enjoy your desired retirement lifestyle.

What is your ideal retirement age?

Ask yourself this important question “If you knew you could afford to retire and live your desired retirement lifestyle starting tomorrow, would you?” In general, there is certainly no right age to retire, but more so, do you have created a written financial plan to achieve this objective? We get client’s that love their job and want to continue to work as long as they are healthy and others who can’t wait to get out. Some clients will wait until their debt is paid off or they reach the magic age for full work pension benefits. Some clients may retire younger from their current career and start a business or take on a whole new career. It’s important to ensure you have the financial resources in place to retire at your desired age and enjoy the retirement you want.

What are your sources of retirement income?

When meeting with our clients to discuss this, we look at all their potential sources of income to ensure they can meet their goals. This can include but not limited to CPP (Canada Pension Plan), OAS (Old Age Security), company defined benefit pension plans, RRSPs, RRIFS, investment proceeds, non-registered investments, rental properties and TFSAs. For most clients that worked as employees for a company, the bulk of their retirement income will come from their own RRSPS/RRIFS or a company defined benefit pension plan. This type of pension plan provides you with a consistent monthly benefit for life, thus leading to a guaranteed income stream. Some pensions will have indexing benefits attached, which increase these benefits over time to keep up with the rising costs of living. Your OAS benefits can be started at age 65 and must be applied for up to 6 months prior to your desired start date. This benefit is a set amount and based on the number of years you lived in Canada as an adult (40 years = max benefit). As for your potential CPP benefit, this varies as it is based on your contributions through your working career and when you decide to take the benefit. We recommend contacting CPP or going online to determine your eligible benefit.

When should you start your CPP?

This is very likely the most popular question we get asked and you should know, there is no right answer for everyone! You have the ability to start collecting at age 60 or deferring up till age 70. The government gives you a reduction of .60% for every month you take it prior to age 65 and a bonus of .70% for every month after age 65.

CPP Amounts based on age started
*Based on current full monthly CPP entitlements for March 2019.

Important factors to consider:

  • Do you have any health or life expectancy concerns?
  • Do you require the funds to meet your lifestyle needs or current obligations?
  • Are you still working while receiving the funds? If so, how much is just going to taxes?
  • If this is surplus cash, are you spending or saving it?

What sources do incorporated clients have for retirement?

Clients’ who have the benefit of being incorporated have the unique opportunity to retain additional cash inside their operating company or holding company. This forms their piggy bank for retirement. In retirement you are drawing on income from the company, so the Holding Company is likely paying you a regular monthly dividend and annual dividend. As the corporate tax rules and passive income rules are constantly changing, it is important to keep up to date on the rules so that your retirement goals remain on track.

What order should I draw down my retirement funds?

Now this is a great question! Often the key to retirement cash flow success is effective tax planning! You are likely drawing income from multiple sources and some of these sources are all taxed at a variety of rates. We want to focus on your after-tax income need for your lifestyle and how we can achieve that by paying the least amount of tax. Part of this is taking advantage of your tax brackets and drawing down assets in the right order. We must factor in how we’re going to do that by optimizing your cash flow. You have to be tax efficient because a drawdown from an RRSP is not the same as a drawdown from a corporation, which is definitely not the same as a draw down from a pension…so all of these have to be factored into what we do. With our team of experts, we will ensure we factor in all your unique income sources to optimize your retirement income.

Why is pension income splitting so important?

In retirement you get to split certain types of income between spouses. The goal of this is to have each spouse in a similar tax bracket to reduce your overall income taxes as a couple and increase the amount of net income you can enjoy! We have shown a few examples in the graph below, which illustrate the difference in one spouse claiming all the income vs the effects of pension income splitting at 50-50 split. The one example shows a couple splitting a $100,000 of income, this results in an estimated $7734 increase in after-tax money that they can enjoy! We recommend reviewing how to make the most of your income splitting opportunities.

Effects of Income Splitting

*Based on estimated Manitoba Tax rates using EY.com tax calculator and assuming a full 50/50 income split vs one spouse having 100% of the taxable income. OAS claw back and tax credits are not factored into calculations. Information is intended for illustration purposes and not implied tax advice.


Importance of Estate Planning?

Now, a properly documented estate plan should be multi-faceted including having your legal wills, powers of attorney, health care directives and updated beneficiaries on your insurance or registered assets. But just having those documents in place, does it truly stop there? The answer is NO! Those are crucial to ensuring your wishes are followed in the end, but what about tax planning? Yes, that is often overlooked, and you may not care, as you will not around anymore…but would you rather see your estate and wealth that you worked so hard for, go to CRA or to your beneficiaries? If you are like, every client I have worked with, you will want to minimize the amount of your final estate tax bill. Completing a full estate plan certainly helps identify this amount and provides direction as to how to best deal with it. A thorough insurance review is a huge portion of that conversation. Using a permanent life insurance solution is one of the most powerful estate tools you can access!


When it comes to Retirement and Estate Planning, there is no simple answer that works for every situation. At the end of the day, a customized plan should be created that is based on your unique financial situation, while factoring in your goals and objectives. By incorporating a detailed estate plan, your executor will have a simpler process, the estate will be easier to distribute and ideally pay the least taxes possible.

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