Love, Marriage and Life Insurance

Love, Marriage and Life Insurance

Marriage is the perfect time to start shopping for life insurance. Why? Because it’s when you start sharing your life – and your debt – with the one you love.

Here’s why life insurance for married couples should go hand in hand with saying, “I do.”

A shared life means shared responsibilities

While it’s quite unromantic to think about all the legal and financial changes that come with signing a marriage license, I firmly believe in talking about it.

The reality is that marriage comes with a joint responsibility of sharing life together, which includes debt.

Even if you have no outstanding debt at the time of your wedding, you will undoubtedly be sharing some financial obligations with your spouse down the road, whether that’s a car, a house, graduate school or credit card debt.

With this financial future ahead of you, now’s the time for you and your spouse to review your insurance coverage. Having the right type and right amount of insurance will help ensure that your finances are protected from any accidents or lawsuits down the road.

You can lock in a good rate now

In general, life insurance premiums increase with age, so the earlier you lock in a rate, the more affordable it can be.

Some plans even let you cancel later, so it’s possible to get out of a policy if at some point you decide you don’t want it anymore. The one thing you can’t do is go back in time and purchase a new policy 10 years down the road at the lower rate that you’d be able to get at this age.

If you’re starting married life with fewer financial burdens – e.g. no house, no kids – taking on a small monthly premium won’t be a significant burden on your bank account now, but it will set you up with more affordable premiums for the future when you may face more financial stress.

Purchasing life insurance when you’re healthy also makes a lot of sense as it guarantees you’ll be covered no matter what happens to your health in the future.

When it’s not always happily ever after

When you’re preparing for your wedding day, it’s natural to think your love will last forever. Unfortunately, divorce becomes a reality for some couples, and not all of them are prepared for the financial fallout.

report from the BMO Wealth Institute found that 70% of surveyed Canadians are financially unprepared when going through a divorce. What’s more, divorce can impact women particularly hard: 43% experienced a substantial decrease in household income after their marriage ended.

We hope you never have to go through a divorce. If you do, however, it’s critical to examine your current life insurance policies and any spousal coverage benefits to which you may be entitled. Your beneficiaries – the people you’re leaving money to – should also be re-examined.

Building a shared future together

Marriage is about building a life together with someone you love. And while it may not sound romantic, that includes a financial life.

Chances are you will need to buy life insurance at some point as part of your shared future – particularly if plan to have kids one day. So, as you start building your new married life together, keep in mind that this might also be a good time to apply for life insurance so you can take full advantage of your youthfulness and good health.

For a conversation about how to set your young family on the right financial path, contact us at info@www.rubachwealth.com or at 647.349.7070.

 

Tax Strategies for Challenging Times

Tax Strategies for Challenging Times

While various government programs have helped the country through these challenging times, this support has been incredibly expensive. Sooner or later, the government will need to take proactive steps to tackle an enormous deficit.

Unfortunately, this means tax increases may be on the horizon.

If you are concerned about the prospects of a rising tax bill and want to stay ahead of the curve, we highlight some tax strategies that may help.

Strategies for optimizing your taxes

Effective tax planning is highly dependent on your personal situation, so there is no one-size-fits-all solution. However, here are 4 strategies that may be useful in optimizing your tax situation:

  1. Estate freeze.
    An estate freeze can be used to defer the realization of taxable capital gains in the value of a family business. After a properly structured freeze, any further growth in the company’s value will accrue not to the owner, but rather to their successors or to a discretionary trust set up as part of the freeze.

    Estate freezes have many potential benefits, including locking in probate tax liabilities, locking in a purchase price for a business, providing retirement income and strengthening creditor protection.

  2. Capital losses.
    Stock markets around the world have plunged during the pandemic, and despite some strong rebounds, many investors have stock portfolios with unrealized losses. It some situations, it can be beneficial from a tax perspective to sell holdings and trigger capital losses to offset capital gains.

    Capital losses can be applied retroactively up to three years and carried forward indefinitely. However, there are restrictions on how such losses can be applied, so any decisions should be made with advice from a tax professional.

 

  1. Prescribed rate loan.
    A prescribed rate loan allows individuals with high marginal tax rates to transfer investment income to family members with low marginal tax rates.

    Under this strategy, the high-income earner makes a loan to a family member or a family trust, which invests the money and earns investment income. The high-income earner receives interest payments at a rate prescribed by CRA (currently 1%) while the remaining investment income can be distributed to the family member(s) and will be taxed at their lower tax rate.

  2. Spreading corporate losses.
    Owners with multiple businesses are not allowed to directly consolidate their profits and losses across their corporate group to minimize their overall tax bill. However, there are permissible tax strategies that can be used to spread at least some corporate losses and achieve similar outcomes.

    Management fees are one example, although there are restrictions on how this strategy can be applied.

Being proactive ahead of potential tax increases

Nothing is certain about how the government will navigate these challenging times, but one thing is clear: tax increases are a real possibility as the government determines how to pay for its extensive pandemic relief programs.

Whatever happens in one month or one year, there are steps you can take now to proactively optimize your tax exposure and extract any corporate surpluses in a tax-efficient manner.

To discuss how tax strategies can help to strengthen your financial situation, contact us at info@www.rubachwealth.com to schedule a call with a Rubach Wealth advisor.

 

 

 

 

Estate Planning in an Uncertain World

Estate Planning in an Uncertain World

There is a common misconception that only wealthy individuals need to worry about estate planning. In reality, nearly everyone can benefit from having an estate plan.

By planning for tomorrow today, you can retain more of your assets, protect your estate and leave a lasting legacy for your family.

The COVID-19 pandemic has highlighted the need for everyone to have an estate plan in place and the importance of taking action now. In an uncertain world, estate planning is more critical and urgent than ever.

8 steps for smart estate planning

If you have any assets at all, you need an estate plan to ensure these assets are managed in line with your wishes in the event that you’re unable to do so yourself – whether that’s during your lifetime or following your death.

Here are 8 steps you can put in place now to help you ensure you have an effective estate plan in place:

  1. Speak with the experts.
    You don’t have to go it alone, and it’s better if you don’t. Instead, get your financial advisor, lawyer and accountant involved to make a plan that is optimized from both legal and tax perspectives.

    Many of these professionals are currently available to assist you remotely during COVID times with telephone and online virtual meetings. Ask your advisor for help to get all the experts around the same table to develop a cohesive, coordinated plan.

  2. Understand your cashflow needs.
    Get a clear snapshot of your financial situation by documenting all your assets and liabilities.

    A detailed overview is an important starting point for understanding your cashflow requirements and ensuring that your needs are being comprehensively addressed.

  3. Get life insurance.
    Life insurance is a powerful and versatile financial tool. It can protect your family, minimize taxes and serve as an efficient investment vehicle, playing a crucial role in your overall estate plan.

    The pandemic has reinforced the importance of life insurance. Now is a good time to review your existing policies and ensure they are meeting your needs.

  4. Have a will and power of attorney.
    Your power of attorney is about your wishes and decision-making while you are alive. Your will addresses what you want to happen after you die.

    Both are important to ensure you have a voice in your care, your estate and your legacy.

  5. Seek tax efficiencies.
    When you die, the federal government regards all your capital assets as disposed of for tax purposes. This can lead to your estate being hit with a considerable tax bill upon your death.

    With an estate plan in place, you can transfer ownership of your assets and minimize the taxes incurred following your death.

  6. Get organized.
    Make a list of your key personal information, advisors, important documents (and their locations), accounts, other financial assets and computer passwords, and then place this list in a safe place.

    Be sure to inform the person to whom you assign power of attorney where to find this list.

  7. Review and update your plan.
    Your life is not static, so it’s important to regularly review and update your estate plan.

    Any time there is a major event in your life or within your family – for example, a birth, death, marriage, divorce, etc. – it’s good practice to go through your estate plan and update it as needed.

  8. Inform your family.
    Openness and communication are an important part of estate planning. Letting your family know what you’re planning can prevent unpleasant surprises and minimize future disputes.

    Ensure that your executor and power of attorney assignee know where to find all your important documents.

Navigating uncertainty with empathy and expertise

Uncertainty is a fact of life, but planning can help to mitigate risks and unknowns. In today’s uncertain world, estate planning is more important than ever to ensure that your wishes will guide the future handling of your wealth and your legacy.

To review your existing estate plan or put in place a new one, contact us at info@www.rubachwealth.com or at 647.349.7070.

A well planned and executed estate plan starts with a conversation.

6 Steps to Boost Your Financial Fitness

6 Steps to Boost Your Financial Fitness

With the sun shining and temperatures rising, there’s a lot of incentive to head outdoors, be active and boost your fitness. As we gradually emerge from the challenges of the past several months, this is also a great time to get financially fit.

The pandemic has provided an important reminder of the need to prepare for the unexpected.

This list of 6 steps to boost your financial fitness can help you strengthen your position for whatever lies ahead – whether that’s more storm clouds or glorious summer sunshine.

Making financial fitness a priority

Just like physical fitness, financial fitness doesn’t happen by accident. You need to be proactive and make it a priority.

These steps can get you started:

  1. Trim your expenditures – The lockdown period has forced us to change our spending patterns. Without our normal routines, it has become easier to identify expenditures that now seem excessive or frivolous, whether that’s expensive weekday lunches or rarely used gym memberships. If you’ve been spending less in recent months, look for ways to make some of these reductions permanent.

 

  1. Leverage your registered accounts – Many Canadians have lost their jobs or seen their incomes squeezed in the past several months, providing an important reminder that we should get the most out of every dollar we earn. Registered accounts such as RRSPs, TFSAs and RESPs are powerful tools for tax-efficient saving and investment. Take this time to ensure you’re putting these accounts to optimal use.

 

  1. Reassess your life insurance – The pandemic has made it abundantly clear that life is both precious and unpredictable. Now is a good time to take a fresh look at your life insurance and ensure it will meet your family’s financial needs upon your death. Also ensure you are taking full advantage of your life insurance as a tool for growing assets on a tax-advantaged basis.

 

  1. Protect against uncertainty – Protecting yourself and your loved ones is always a top priority, and critical illness insurance and disability insurance have important roles to play in this. Ensure you have sufficient coverage to replace your income and cover your expenses in the event of an accident or major illness. Keep in mind that group benefits through your employer may be insufficient.

 

  1. Update your will – You never know when your time will come, so it’s important to have your affairs in order. Keeping your will up to date will ensure that your wishes are met and your wealth is distributed according to your preferences. Updating your will is especially important after any major life events, such as a marriage, divorce or death in the family.

 

  1. Prioritize philanthropy – The pandemic has cast a spotlight on examples of inequality and suffering in our country and around the world. The good news is that you can make a difference through philanthropy. Maximize your impact with a strategic approach to philanthropy aimed at driving meaningful, long-term improvement in the lives of others.

Growing stronger with a plan

Tackling your finances on a piecemeal basis can lead to small improvements but getting financially fit is much easier when you have a cohesive plan.

At Rubach Wealth, we guide our clients through these 6 steps and address other relevant areas as part of a strategic financial plan tailored to their needs and situation. To discuss your financial goals, contact us at info@www.rubachwealth.com

It starts with a conversation.

 

Achieving Financial Confidence During Retirement

Achieving Financial Confidence During Retirement

Everyone has their own vision of an ideal retirement. For some, it means escaping winter for warm climates and playing as much golf as possible. For others, it’s all about time with grandchildren, volunteer work or pursuing favourite hobbies.

One thing that no one wants in retirement is financial stress, yet that has been one of the by-products of the pandemic. The recent financial turmoil has been particularly worrisome for retired Canadians, as many of them depend on their investments to finance their retirement.

Going back to basics can help lift this cloud of uncertainty.

Meet Alice

At 67, Alice is loving retirement. She stopped working a few years ago following a successful career in media. Although she sometimes misses her former colleagues, she is thrilled overall to have more time for visiting family, playing tennis and travelling. The pandemic has put a damper on all three of these activities, but she’s optimistic about things gradually returning to normal.

That’s not to say that Alice is stress free. She knows the pandemic has wreaked havoc on stock markets, and she’s worried about how this will impact her financial situation. She wants to be sure that her money will not run out, which would bring a swift end to her golden years.

At the same time, Alice hopes to have the financial resources to support her children and grandchildren in the years ahead – and after she’s gone. Ultimately, what she would like is personalized support from someone she can trust to ensure her financial needs are met.

Overcoming uncertainty with financial planning

Alice enjoys her active retired life, but she has little interest in spending time and energy managing her finances. She’s more than happy to entrust this responsibility to someone else as long as she’s confident they have her best interests at heart.

If you see similarities between Alice’s situation and your own, here are three things that may help you achieve peace of mind regarding your personal finances during retirement:

  1. Discuss your concerns. One of the first steps in tackling the stress that comes from financial uncertainty is to talk about it. Rather than sweeping your concerns under the carpet, bring them out into the open. Gaining confidence in your financial situation begins with asking questions and seeking advice.

 

  1. Find a true partner. Meeting your unique financial needs requires help from someone who will take the time to understand them. It’s a bad sign if someone starts telling you what to do without first listening to what you want. A trusted advisor will listen carefully, advise thoughtfully and help you gain clarity.

 

  1. Keep things simple. Ensuring wealth preservation during retirement is important, but that doesn’t mean it has to be complicated. With a clear understanding of your current situation and desired outcomes, the goal should be to draw as straight a line as possible between them. Minimizing complexity will minimize doubt.

A personalized approach

Retirement should be a joyful time as you enjoy the life, family and wealth you have worked hard to build. While the pandemic has introduced uncertainty, going back to basics with personalized financial guidance can help keep your retirement on track.

If you’d like to gain clarity regarding your financial situation, Rubach Wealth can help. Contact me today at elke@www.rubachwealth.com.

Together, we got this.

This blog post is part of Rubach Wealth’s Back to Basics series highlighting how focusing on financial planning fundamentals can help you stay on course toward your long-term goals during these uncertain times.

 

Simple Steps for Gaining Financial Confidence

Simple Steps for Gaining Financial Confidence

The pandemic has changed many things, not least of which is thrusting parents – especially mothers, it seems – into the role of homeschool support teacher. This is just one more responsibility being placed on the shoulders of working women who already had plenty to worry about.

Even before the pandemic, many working women in Canada lacked confidence in their financial situation. Now with increased economic uncertainty and a precarious employment environment, it is more important than ever for women to take control of their financial future.

The best place to begin is by going back to basics.

Meet Eve

At 42, Eve is thriving professionally as a partner at a law firm. Although her career progression was slowed down by two maternity leaves, Eve’s expertise and hard work are currently opening doors to exciting new opportunities.

On the home front, however, Eve is having a rough time. Having recently emerged from a messy divorce, she is doing her best to create a stable new home life for her two children. This is no easy task as she’s also juggling a heavy workload and strained relationships.

Given the recent upheaval in her life, Eve has become increasingly stressed out regarding her finances. In particular, she is concerned about whether she is saving enough for retirement and her family’s future needs – especially in light of the recent divorce. Although she is well paid by her law firm, Eve doesn’t have a good sense of whether she’s setting aside enough for the future and whether she’s doing it in a safe yet efficient way.

In her ideal scenario, Eve would like to have a clear yet hands-off plan for managing her finances so she can focus her thoughts and energy on excelling at work while building a new, happier home life with her children.

Gaining financial confidence

For Eve, gaining clarity and confidence regarding her finances would help take a weight off her shoulders. With a career and family to balance, she wants to ensure that her money is working hard for her and putting her on track to a secure future.

If you can relate to Eve’s situation, here are three actions that could help you take charge of your financial future.

  1. Make a plan. At its core, financial planning is about identifying where you want to go (in terms of finances, lifestyle and peace of mind) and making a clear plan for how to get there. It doesn’t have to be complicated – in fact, it’s better to keep things simple. What it does require is getting organized, reflecting on your priorities, and finding a trusted advisor to listen and provide guidance.

 

  1. Safeguard your finances. One of the main causes of financial stress is all the ‘what ifs.’ What if I lose my job? What if I fall ill? What if I need to financially support my parents? Financial planning can’t eliminate all the uncertainty, but it can help you achieve safer financial footing. What this looks like will depend on your unique situation, but it could include things like building up an emergency fund or topping up your group benefits with personal insurance coverage.

 

  1. Ask questions. This is your money and your life, so you deserve clarity in order to make informed decisions. If you’re uncertain about something related to your finances, simply ask. And if the person you ask won’t listen or can’t provide a clear answer, find someone else who will and who can. Life is way too short to waste on uncertainty or self-doubt – especially when your financial future is on the line.

Moving fearlessly forward

As we slowly return to a life resembling pre-pandemic days, one thing we should aim to ditch is the financial uncertainty that many working women grapple with. By going back to basics, women can boost their confidence that they’re on track for retirement – and any surprises life may throw at them.

If you’d like to discuss your financial situation and gain insights to help you move forward fearlessly, Rubach Wealth can help.  elke@www.rubachwealth.com

Together, we got this.

This blog post is part of Rubach Wealth’s Back to Basics series highlighting how focusing on financial planning fundamentals can help you stay on course toward your long-term goals during these uncertain times.