An estate is “the whole of one’s possessions.” It especially refers to what is left when we die. While living, people want to protect their estate value. In retirement and senior years we can draw a strong income to support our desired lifestyle, comfort, health, as well as gifts to others. At death we want to protect the value of our estate from the taxes that can hit at that time – also legal and court fees, and the impact of possible conflicts that may cause loved ones to lose our desired bequest.
PS: also see, Cutting Costs for Life and Health Insurances. (HERE)
I’m missing Charles who became a dear friend of mine in 1997 as we built their family’s Estate Insurance. Recently Charles passed away.
Ann continues with us, and their remaining insurance will pay at her passing. If I share some of their story with you, it could help with questions you have about preserving your final estate for loved ones.
Estate Insurance is a powerful way to protect or even enlarge an estate for your loved ones. Estate insurance can be surprisingly tailored to match very unique needs …even adaptable to future needs along the way.
Charles and Ann insured their estate even though they had no children! But with a career in business, this couple felt they had paid far too many taxes in their lifetime. They wanted to burn the tax-bill and fund it from outside sources at their death. That would mean “insurance”. With joint-last estate insurance we have an insurer paying their final taxes.
If you say that was just a different way of paying taxes, then you could appreciate knowing the tax-solution is worth more than 3-times what they deposited. That’s a good use of money! Plus along the way they used the value of this insurance to profitably flip some real estate. Since their life insurance was a zero-risk asset it was valuable in securing a deal that further built their wealth and estate. Figuring it this way, their estate insurance cost them very little indeed, providing great value during life, as well as at their ultimate passing.
The estate of Charles and Ann will be near $5Million in assets, situated over a few different countries of the world. Legal planning and estate insurance will avoid the greedy clutches of big governments on this estate. Nieces and nephews will benefit greatly from this “rich uncle/aunt” scenario. Charities among several communities will also benefit. Governments won’t get to spend this money: family and community will get the undiluted riches of Charles’ and Ann’s vision and foresight.
Zoe was wife of a professional business owner and her struggle with cancer was prolonged and expensive. As they owned no health insurance to cover critical illness or long term care, her husband Tom leveraged everything they owned to assure Zoe’s comfort during her heroic struggle. The stress on this family was enormous; two children in university and one still at home. Tom risked home, business, everything to ensure his wife’s care. One day, Zoe’s struggle was over. Tom owed the banks over $1Million personally and more through his business, substantially for his wife’s care and treatments. Near bankruptcy, Tom filed the claim papers for Zoe’s life insurance which quickly repaid Tom enough to cover all personal debts and restore liquid assets needed in the business. Though money can never remove the grief of losing a loved one, it helped restore some calm and peace-of-mind for Tom, his children, and all connected with the family’s business.
What strikes me in such a story is the enormous compassion that estate insurance represents for life and loved ones!
Joseph Berljawski LLB of Main Droit Inc in Montreal contributed to my website here: (see trusts). This is a simple and concise discussion of using Trusts to control family assets beyond death, to reduce taxes, avoid family conflicts, protect spouse or children if they were unable to manage wealth on their own. Also to enjoy utmost privacy in your estate, and even benefit future generations who are as yet unborn. Your Last Will and Testament is not enough to achieve all this. Even insurance on its own cannot complete all these goals. Trusts are among the most under-utilized planning instruments …certainly I say for Canadians. And when you combine Estate Insurance with Trust planning, the multiplied advantages and peace of mind while living and for your estate are indeed dynamic and powerful.
If you or your friends own a business, you’ll clearly benefit in seeing this. The typical situation may be a couple still owning a holding-company. Or a family succession where the couple completed an estate-freeze. These lead to strategies to control assets beyond death and convey ongoing value to next generation(s) – even to help assure your philanthropic interests. Combining estate insurance with your corporate structure can lead to vast and creative results, reducing taxation and enhancing control while you live and even “beyond the grave”.
This is another under-utilized strategy of estate management. Lawyers and accountants are sometimes afraid to raise this area of planning with their clients. Investment brokers skip over this as it could reduce assets they want to manage. Insurance advisors hesitate in reducing a possible insurance sale (pity).
Truly, if you want to keep your estate for family (impossible as government taxation insists on taking its huge slice of the pie) then you’ll need a strategy to replace the taxes. Estate insurance is an easy way to do this. Charitable giving combines to reduce the tax-bite. Have you considered cutting your final tax bill through planned philanthropy? Estate insurance can refund that philanthropy back to your family. Insuring can even enlarge your estate as well as refunding your philanthropy. How powerful is that!
Edna for example wants to leave $500,000 gift of insurance to the local community foundation for the arts, sports, and programs to assist vulnerable families. Her accountant says Edna’s total taxable income in the year of death could be $900,000. This means (in Ontario) Edna’s philanthropic life insurance plan will eliminate her taxes – and may even bring a refund of last year’s taxes. She insures a $1/2Million gift to charity, and her estate is now tax-free for her family. What could be better than that!
Simple Estate Insurance
At its simplest, estate insurance serves many purposes. It can replace what was spent on lifestyle, health and the rising cost of aging. It also compensates for taxes, fees and other contingencies unique in your family’s estate. Your estate insurance can create so much value for you and your family that the ultimate cost may prove to be practically nothing. The value in most countries is tax-free! This pays immediately when death pulls the trigger for tax and myriad other expenses. You can use this insurance to secure and strengthen other wealth-strategies, while living and at death.
Ultimately I want my own life insurance to help me live as large in death as I’ve done while living. My own Estate Insurance is designed for maximum impact and value for my family and wider community. If any of this fits with your own values and desires, reach me and let’s be sure to speak together now.Freely subscribe above to get free updates… For learning modules go to Home Page & Register. Amazon: “A Lifetime Of Wealth — And How Not To Lose It.” Brian Weatherdon, MA CFP CLU CPCA MDRT 905-637-3500 x 223 Brian@SovereignWealth.ca
Freely share this letter whenever it can help a neighbour or friend, and ease the concerns of someone you know. Introduce us — we love to help.
Yours in Financial Security for LIFE!
Brian Weatherdon, MA, CFP, CLU, CPCA. 905-637-3500
627 Guelph Line, Burlington, Ont. L7R 3M7. 1-877-937-3500
Author: A Lifetime Of Wealth — And How Not To Lose It (2013). Protecting Life, Loved Ones, and Future Dreams (2013). Your Business, Your Retirement: Halton Retirement Study (2015).
** This monthly letter touches on key strategies in Canadian and global investing and financial planning. This letter is not an offer to sell any kind of security, insurance, or program. Historical returns and risk measures are not a valid guide to future performance. Returns are from publicly available sources and research from a variety of firms including but not limited to GLC, RBC, CIBC, Mackenzie, Franklin Templeton. Opinions reflected in this letter belong solely to the author and no other body is responsible for the content expressed here. We value opportunity to consult alongside your legal and accounting firms to advance your financial security and unique goals. We are grateful always to receive your comments and questions.
Brian, through your storytelling you have been able to diminish some of the fear and anxiety that often comes with Estate Planning. Charitable giving is a wonderful opportunity for many who wish to contribute to a cause(s) that is significantly meaningful to them, while at the same time receiving the tax benefit in doing so. Getting started is often the most difficult step for many when learning about sound financial and estate planning strategies. But once folks make the commitment to get started, they will find it’s far easier than they first thought.
Thanks for sharing! Colleen
This link will most certainly be shared with other advisors in my office.
“This is another under-utilized strategy of estate management. Lawyers and accountants are sometimes afraid to raise this area of planning with their clients. Investment brokers skip over this as it could reduce assets they want to manage. Insurance advisors hesitate in reducing a possible insurance sale (pity).”
Financial advisors are out of the loop on how to breach the will/trust/guardian/executor questions too. We have to get comfortable about talking about the darkets of days with clients. Otherwise when it’s time to invoke strategies on those days family disharmony has many looking back on what should have been done during a cloud of despair when thoughts should nearly 100% focussed on grieving.
Thanks Brian for publishing such a tangible guide to estate planning tools.
Putting together an appropriate plan is important for everyone and as Pitt indicated, looking at the tools in a vacuum without exploring a comprehensive plan is a big mistake that many advisers make.
Your noting the tax benefits from charitable giving through a community foundation underscores an opportunity for people to both do something wonderful in their community for generations to come and, to leave more of their assets to their heirs. Hopefully, more professional advisors will see this opportunity to provide such valuable advice in support of their clients. Cheers and best wishes, Rusty Baillie
As per usual this article is very well written and your use of examples helps clarify specific reasons why this makes sense.
We need to keep getting this message out about proper Estate Planning and Charitable Giving.
Im thankful for the article post.Much thanks again. Much obliged.
A round of applause for your blog post.Much thanks again.
I like the valuable info you provide in your articles.
I came across this and I find It truly useful; it helped me out greatly.
Outstanding! I’ve just forwarded this onto a friend who has been seeking guidance on this.
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