3 esteemed speakers on a range of topics that will help your business and family wealth navigate through this unprecedented time, and into the future. Mr. Greg Toner CPA, CA discusses tax planning around shares of a business. Mr. Trevor Parry brings his expertise to look at a unique strategy leveraging the bank’s capital. Dr. Tom Deans speaks on the topic of family governance and estate planning
Here’s the problem business owners and their families face
While everyone helps you plan for how to save, very few firms help you plan to use those assets when it’s time. The bigger problem is that your tax rates can be dramatically higher than they should be, and you end up using retirement assets to fund the country, rather than fund your lifestyle.
Here’s how to approach it
The starting point is to evaluate your assets. Every asset should be measured in the following ways:
- Growth rates and the tax implications
- How it is turned into income and the tax implications
- How it is transferred and the tax implications
By assessing them this way, you get to plan on which assets you’ll draw on and in what order, to allow you to have the best use of each of your assets. For example, in most cases registered assets and non-registered investment accounts should be spent over a specific 15-20-year period, depending on income needs and marginal tax rates. The idea is to spend your registered portfolio while you are alive to eliminate a 53.53% tax hit on your final tax return. You can defer taxable income, but deferral is not always the best scenario when you take into account the final estate tax hit.
If you’ve been thinking about using funds out of your corporation for retirement income, you’re going to want to be doubly careful. While current tax legislation on accessing corporate funds is already excessive, there is a double tax scenario on future corporate wealth – you and your family will face two layers of tax. The first tax is a capital gain on the shares of the corporation you own. The second tax is the dividend tax that beneficiaries will pay to access these funds.
Planning how you’ll generate income during retirement is critical. Without it, you risk two things: having less to fund your retirement and having wasted years of effort to fund retirement poorly.
Here’s what’s important
A tax efficient investment growth plan, followed by a tax efficient retirement spending plan, followed by a tax efficient estate plan is the only way to get the full value of a lifetime of effort.
Retirement income planning can help you do just that.
I’m sure you have thought about your family’s wealth during this unprecedented time. Quite possibly you have considered the importance of protecting your assets.
It’s not something that gets everyone fired up, but it is something that’s core to building wealth for now and for the future. That’s why business owners spend time looking at how they are protected and yours is more complex because you’re taking care of business protection and personal protection.
Here are a few things to consider.
For your business, when is the last time you reviewed the ownership, payor and beneficiary of your corporation’s insurance policy(ies)? Have there been changes lately or are you anticipating changes to the business? Transferring an insurance policy may also be beneficial before any tax rules are changed further.
On the personal front, have there been changes lately to any family circumstances which maybe cause for review?
From an estate prospective when was the last time you had a review to make sure your affairs are in order, set up tax efficiently and arranged to benefit your family.
Hope you’re having a good summer,
Pete, Darroll and Jeff
I have had some interesting and rewarding conversations recently.
There is a great deal that has been written about behavioral finance, and although we aren’t an investment firm per se, stewarding our clients’ wealth is central to our work.
“This is a time to think very carefully”Read more
At Strategic Coach®, our business is
helping successful entrepreneurs increase
their sense of direction, confidence, and
capability in all areas of their personal and
business lives. We originally created the
piece below by request from our clients
in response to the climate of fear, anxiety,
and uncertainty that followed 9/11. Since
then, we receive requests for it whenever
times become more uncertain. These ten
strategies keep the focus on opportunities
for growth, progress, and achievement
that arise when the world around us gets
more turbulent. We hope they support your
creative thinking, communications, and
actions as you navigate the months ahead.
Please feel free to share widely.
1. Forget about yourself; focus on others.
Uncertainty can drive people into themselves,
making them feel isolated and helpless. The best
strategy here is to go in the opposite direction,
expanding your connection with others and
focusing on helping them transform their negatives
into positives. The more you contribute in this
fashion, the less you’ll need to worry about
your own situation. You’ll become a source of
confidence for everyone else.
2. Forget about your commodity; focus
on your relationships.
In uncertain times, people become frightened about
the viability of their “commodities”—the things
they sell and the jobs they hold. A more strategic
response here is to disregard your own commodity
and focus on deepening the power and possibility of all your relationships—with family, friends,
team members, suppliers, clients, customers, and
prospects. Every time you strengthen a relationship,
the viability of your commodity will increase.
3. Forget about the sale; focus on
Most people don’t like being sold to at the best of
times. When times are uncertain or scary, they turn
off, hang up, and slam shut. But what people want
at all times is value creation—that is, solutions that
help them eliminate their dangers, capture their
opportunities, and reinforce their strengths. When
you focus on providing these three solutions, the
sales will naturally follow.
4. Forget about your losses; focus on
Things you had and may have taken for granted
sometimes disappear. Some people never get over
this. They keep trying to replay their old games. A
better strategy is to start an entirely new game—
using new ideas, new energies, new tools, and new
resources. As the world changes, opportunities
suddenly become available to achieve far more
than you ever did in the past.
5. Forget about your difficulties; focus on
Things may not be as easy as they once were.
New difficulties can either defeat you or reveal new
strengths. Your body’s muscles always get stronger
from working against resistance. The same is true
for the “muscles” in your mind, your spirit, and your
character. Treat this whole period of challenge as a
time when you can make your greatest progress as
a human being.
6. Forget about the “future”; focus on
The “future” is an abstraction. It doesn’t exist
except as an idea. The only future that has any
reality is the one you continually create for yourself
through each day’s contributions, achievements,
and results. This is an excellent time to ignore
all those experts who never saw the present
circumstances coming. Focus on what you can do
over the course of each 24 hours, and you’ll be the
only expert on the future you’ll ever need.
7. Forget about who you were; focus on
who you can be.
Many people define themselves by external
circumstances. When these abruptly or unexpectedly
change, they don’t know who they are, so they keep
trying to be who they used to be. From now on,
take your cues from the inside—from your dreams,
ideals, values, and operating principles. These need
never change, regardless of the circumstances. Take
advantage of external confusion to become self directed,
self-managed, and self-motivated.
8. Forget about events; focus on your
When things are going well, many people think
they’re actually in control of events. That’s why
they feel so defeated and depressed when things
turn bad. They think they’ve lost some fundamental
ability. The most consistently successful people
in the world know they can’t control events—but
continually work toward greater control over their
creative responses to events. Anytime there is
fear, uncertainty, or discomfort, it’s an excellent
time to focus your attention and energies on being
creatively responsive to all the unpredictable
events that lie ahead.
9. Forget about what’s missing; focus on
When things change for the worse, many desirable
resources are inevitably missing, including
information, knowledge, tools, systems, personnel,
and capabilities. These deficiencies can paralyze
many people, who believe they can’t make
decisions and take action. A strategic response
is to take advantage of every resource that is
immediately available in order to achieve as many
small results and make as much daily progress as
possible. Work with every resource and opportunity
at hand, and your confidence will continually grow.
10. Forget about your complaints; focus
on your gratitude.
When times get tough, everyone has to make
a fundamental decision: to complain or to be
grateful. In an environment where negative
sentiment is rampant, the consequences of this
decision are much greater. Complaining only
attracts negative thoughts and people. Gratitude,
on the other hand, creates the opportunity
for the best thinking, actions, and results to
emerge. Focus on everything you’re grateful for,
communicate this, and open yourself each day to
the best possible consequences.
The “Scary Times” Success Manual
The Strategic Coach® Program offers
successful entrepreneurs a place to
regularly reconnect with these attitudes
and with their own goals and ideals,
regardless of what’s happening in their
businesses, their lives, or the world
around them. For more information, call
416.531.7399 or 1.800.387.3206.
Many people can’t see how much income or savings they’ll need to make ends meet in retirement, but if someone can point them in the right direction, they might just hit the target.
One of Frances Stroh’s earliest lessons about wealth involved a game she
played as a 6-year-old with her father: how to not be kidnapped.
Recently BNN produced an informative three part interview series covering a range of important topics on the subject of estate planning. We have linked them below. Please take a listen and we hope you enjoy it.
As always, if a question arises or topic of interest presents itself please give us a call.