For many Canadians the majority of their wealth is held in personally owned real estate. For most this will be limited to their principal residence, however, investment in recreational and real estate investment property also forms a substantial part of some estates. Due to the nature of real estate, it is important to utilize estate planning to realize optimum gain and minimize tax implications.
Key Considerations for Real Estate Investment
- Real estate is not a qualifying investment for the purposes of the Lifetime Capital Gains Exemption.
- Leaving taxable property to a spouse through a spousal rollover in the will defers the tax until the spouse sells the property or dies.
- Apart from the principal residence, real estate often creates a need for liquidity due to capital gains, estate equalization, mortgage repayment or other considerations.
- Professional advice is often required to select the most advantageous ownership structure (i.e. personal, trust, holding company).
Avoid Disinheriting Your Children
In today’s family it is not unusual for spouses to enter the marriage with children from previous relationships. Parents work hard at getting these children to functionally blend together to create a happy family environment. Often overlooked is what happens on the death of one of the parents. In most cases special consideration for estate planning is needed to avoid relationship loss and possibly legal action.
Typically spouses leave everything to each other and when the surviving spouse dies, the remainder is divided amongst the children. The problem? Even with the best of intentions, there is no guarantee that the surviving spouse will not remarry and inadvertently disinherit the deceased’s children. Read more
Growing your estate without undue market risk and taxes
Often we see older investors shift gears near retirement and beyond. Many become risk adverse and move their assets into fixed income type investments. Unfortunately this often results in the assets being exposed to higher rates of income tax and lower rates of return – never a good combination.
Or maybe the older investor cannot fully enjoy their retirement years for fear of spending their children’s inheritance.
The Estate Bond financial planning strategy presents a solution to both of these problems. Read more
Has it been awhile since you last looked at your insurance portfolio?
Are you a little sketchy in your recollection of all the coverage you have and why you have it?
Are you uncertain as to whether or not your portfolio reflects your current situation?
Just like going to the dentist for regular checkups is a necessary evil, reviewing your financial plan and products on a regular basis is also recommended. Circumstances can change over time and making sure your protection is keeping pace is a worthwhile exercise. Read more