Working with us to create your financial plan helps you identify your long and short term life goals. When you have a plan, it’s easier to make decisions that align with your goals. We outline 8 key areas of financial planning:
- Income: learn to manage your income effectively through planning
- Cash Flow: monitoring your cash flow, will help you keep more of your cash
- Understanding: understanding provides you an effective way to make financial decisions that align with your goals
- Family Security: having proper coverage will provide peace of mind for your family
- Investment: proper planning guides you in choosing the investments that fit your goals
- Assets: learn the true value of your assets. (Assets – Liabilities)
- Savings: life happens, it’s important to have access to an emergency fund
- Review: reviewing on a regular basis is important to make sure your plan continues to meet your goal
Writing an estate plan is important if you own personal assets but is all the more crucial if you also own your own business. This is due to the additional business complexities that need to be addressed, including tax issues, business succession and how to handle bigger and more complex estates. Seeking professional help from an accountant, lawyer or financial advisor is an effective way of dealing with such complexities. As a starting point, ask yourself these seven key questions and, if you answer “no” to any of them, it may highlight an area that you need to take remedial action towards.
- Have you made a contingency plan for what will happen to your business if you are incapacitated or die unexpectedly?
- Have you and any co-owners of your business made a buy-sell agreement?
- If so, is the buy-sell agreement funded by life insurance?
- If you have decided that a family member will inherit your business when you die, have you provided other family members with assets of an equal value?
- Have you appointed a successor to your business?
- Are you making the most of the lifetime capital gains exemption ($835,714 in 2017) on your shares of the business, if you are a qualified small business?
- Are you taking care to minimize any possible tax liability that may be payable by your estate in the event of your death?
The process of freezing the value of your business at a particular date is an increasingly common way of protecting your estate from a large capital gains tax bill if your business increases in value. To achieve this, usually the shares in the business that have the highest growth potential are redistributed to others, often your children, meaning that they will be liable for the tax on any increase in their value in the future. In exchange, you will receive new shares allowing you to maintain control of the business with a key difference – the value of the shares is frozen so that your tax liability is lower and that of your estate when you die will also be reduced.
As our lives grow and change with variable circumstances, new additions, and job transitions, our needs for insurance will also evolve. Additionally, economic fluctuations and external circumstances that influence your insurance policy will need frequent re-evaluation to ensure that you are making the most appropriate and financially favorable decisions. Perhaps you aren’t sure whether you should conduct an insurance audit or not. The following scenarios are usually a good indication that you should thoroughly assess and review your current policy contract:
- Bringing new life into your family? A new baby may not only prompt you to adjust your beneficiary information, but it is likely to change or influence your coverage needs.
- Changing jobs? Probationary periods may not provide the same level of disability or accident insurance.
- Is your policy nearing the end of its term? Be sure to compare prices for new policies as they can sometimes be more affordable as compared to renewing the current plan.
- Has your marital status changed? Your insurance policy will likely need updating to reflect such.
The specific type of insurance policy you carry as well as personal details certainly influence coverage and premium prices, so if any of the following factors apply to you, be sure to update your policy accordingly. You might be eligible for a rate reduction.
- Changes to your overall risk assessment like smoking cessation, dangerous hobbies, high risk profession etc.
- If you have experienced improvements to a previously diagnosed health condition.
- Do your policy’s investment options still fall in line with current market conditions?
- Have you used your insurance policy as collateral for a loan? Once that loan is paid off, collateral status should be taken off the policy.
Insurance policies generated for business purposes should also be regularly reviewed to make sure the policy still offers adequate coverage to meet the needs of the company and includes the appropriate beneficiary information. With life happening so quickly, it can be easy to forget about keeping insurance policies up to date, however, major changes can have a profound impact on coverage and premiums. Be sure to conduct insurance audits often to ensure your policies are still meeting your needs.
Contact us to see how we can help.
- Personal Tax Planning Tips – End of 2020 Tax YearDecember 2, 2020 - 2:07 pm
- Applications for the new Canada Emergency Rent Subsidy starts today!November 23, 2020 - 2:01 pm
- 6 Steps to Retirement SuccessNovember 1, 2020 - 7:00 am
- Applications for Canada Recovery Benefit now open!October 13, 2020 - 2:54 pm
The main focus of FAISI’s business is to provide clients with an array of life insurance solutions to reduce risk and improve tax efficiency, whether it be for personal or corporate use. Another branch of business is the Group Benefits sector where your current plan would be analyzed and shopped in the market to offer provide you with the best and affordable plan for your organization. Personal Health Spending Accounts, Health Insurance (Critical Illness, Disability Insurance), Travel and Personal Health Insurance Plans, and Private Wealth Management are also areas where FAISI can help to bring you peace of mind, safety, and security.