STYLUS estate planning information session may 2016 ppsx

STYLUS Asset Management Welcomes You To Our 2016 Information Session Tax Planning for your Estate  Richard Rizzo, Bateman MacKay  Brennan Carson, STYLUS Asset Management Agenda Financial & Investment Planning Cash Flow Optimization Tax Planning Wealth Transfer Making Plans Financial Plan Ensuring your cash flow meets your spending needs Investment Plan Ensuring your investments can meet your cash flow needs Financial Planning Current Financial Picture Snapshot Personal Balance Sheet: Assets What are your assets? (Net of Liabilities) • • • • • Cash Taxable investments Registered investments Real Estate Insurance policies Personal Balance Sheet: Asset Analysis What is their purpose: growth, income, lifestyle, estate? What is the expected appreciation of those assets? What are the tax implications of those assets: • Ownership • Cost of liquidating Personal Income Statement Expenses: Annual & Capital All Sources of Income Not all income is taxed the same! Investment Planning Investment Planning At STYLUS we incorporate two important factors into your investment plan: • • TIME HORIZON PERSONALITY Investment Planning: Investment Time Horizons The Buckets Approach Longest Time Horizon Medium Time Horizon (3-5 Years) Shortest Time Horizon Immediate Needs (Next 12 months) (1-3 Years) (5+ Years) Tax Planning Tax Planning Strategies Capital Gains vs Dividends vs Interest Income Generating the most tax efficient cash flow Tax Planning Strategies Capital Gains vs Dividends vs Interest Income • Should be a function not just of tax implications, but also TIME HORIZON • Interest Income (i.e Bonds) serves a purpose – lower volatility for shorter-term cash flow needs, BUT taxed at higher level • Cash has no volatility & no tax! Tax Planning Strategies STYLUS Value with Income & Wealth Protection Funds • Capital gains distributions • Lower interest & dividend income • year comparison: net of taxes vs “generic” funds FUND Pre-Tax Performance STYLUS Value with Income 10% STYLUS Wealth Protection 4.2% FUND (median of Canadian mutual funds) Pre-Tax Performance Dividend Income Fund 4% Balanced Fund 3% Interest Income Dividend Income Capital Gains 6% 5% 4% 3% 2% 1% 0% Tax Profile F und P Weal th ed Balanc S ST YL U und r it Value w dF Dividen S ST YL U 10% 8% 6% 4% 2% 0% After Tax Return: STYLUS Funds vs “Generic” Funds F und P Weal th ed Balanc S ST YL U und r it Value w dF Dividen S ST YL U Wealth Transfer Trusts • • • • Moving existing non-registered accounts into Trust STYLUS can manage Trusts Income sharing with family Creating an investment plan – understanding the time horizon & objectives Wealth Transfer Strategies Are there other ways to transfer wealth and help my children? • Gifting: Contribute to a child’s RRSP / TFSA, non-registered account, grandchild RESP • Put the tax in the hands of the children • Education: STYLUS presentations, personal financial & investment plan, educating them on your plan • Account minimum for children of existing clients: $100,000 Estate Planning Estate Planning Strategies How Do I Lower My Probate Taxes? Joint Accounts • Consolidating individual investment accounts into Joint account • Move accounts at Book Cost – i.e no tax triggered Summary Setting & Communicating Objectives Have you agreed on your objectives with your spouse? Do your children / beneficiaries know your objectives? Do your “affiliated professionals” know your objectives? Finances Your Plan… REVIEW MY PLAN? JVX Your life will change Your PLAN needs to be dynamic and be monitored STYLUS will help monitor your plan to ensure that you stay on target We hope you enjoyed our presentation! Rick, Brennan, Julianna, Matteo, Maciek, Mario & Fiona [...]... $17,790 each TFSA $0 $0 $2,778 $0 JOINT ACCOUNT Tax Payable $24,513 $35,580 Planning Trap Total net worth: $4 million 50% 50% House RRSP Where are you going to get $100,000 if you need it immediately? Tax Planning Tax Planning Strategies Capital Gains vs Dividends vs Interest Income Generating the most tax efficient cash flow Tax Planning Strategies Capital Gains vs Dividends vs Interest Income • Should... cash flow needs, BUT taxed at higher level • Cash has no volatility & no tax! Tax Planning Strategies STYLUS Value with Income & Wealth Protection Funds • Capital gains distributions • Lower interest & dividend income • 5 year comparison: net of taxes vs “generic” funds FUND Pre-Tax Performance STYLUS Value with Income 10% STYLUS Wealth Protection 4.2% FUND (median of Canadian mutual funds) Pre-Tax Performance... Investment Planning: STYLUS Funds Momentum U.S Blended Equity Growth Value with Income Wealth Protection Time Horizon Cash Flow Optimization Cash Flow Optimization Investible Assets Required cash flow Cash Flow Optimization Tax Deferred Investment Accounts: RRSP & RRIF DECISION #1: Contributions • How much to contribute? • When to stop contributing? Plan Ahead! Cash Flow Optimization Read your STYLUS newsletters!... • Partial RRIF conversion from RRSP • $2,000 per year withdrawn tax-free via Pension Income Tax Credit • SUGGESTION: Roll that money into a TFSA (i.e move from taxable to non-taxable) • Benefit to estate planning RRIF TFS A Cash Flow Optimization Tax Deferred Investment Accounts: RRSP & RRIF DECISION #3: Structure of Withdrawals • How do I start withdrawing money to support my cash flow requirements?... RRSP/RRIF? • How much will you need? Timing and amount determines investment planning Cash Flow Optimization RRSP Rule of Thumb RRSPs are most efficient when your tax rate at withdrawal is lower than when you contributed Cash Flow Optimization Preparing For RRSP Withdrawals Setting up a Bucket-ed investment plan Cash Flow Optimization: STYLUS Funds “I don’t need any money from my RRSP for 10+ years” Tolerance... Wealth Protection Time Horizon Cash Flow Optimization: STYLUS Funds “I don’t need any money from my RRSP for 10 years and prefer a lower volatility profile” Tolerance for Volatility RRSP Case Study: Client #2 FUND ALLOCATIONS Momentum 25% U.S Blended Equity 50% Growth Value with Income Wealth Protection Time Horizon 25% Cash Flow Optimization: STYLUS Funds “I will start drawing from my RRSP in 3 years... per year” Tolerance for Volatility RRSP Case Study: Client #3 FUND ALLOCATIONS Momentum 25% U.S Blended Equity 30% Growth Value with Income Wealth Protection Time Horizon 25% 20% Cash Flow Optimization: STYLUS Funds “I will start drawing from my RRSP next year at 5% per year” Tolerance for Volatility RRSP Case Study: Client #4 FUND ALLOCATIONS Momentum 20% U.S Blended Equity 30% Growth Value with Income... Balanced Fund 3% Interest Income Dividend Income Capital Gains 6% 5% 4% 3% 2% 1% 0% Tax Profile F und P Weal th ed Balanc S ST YL U und r it Value w dF Dividen S ST YL U 10% 8% 6% 4% 2% 0% After Tax Return: STYLUS Funds vs “Generic” Funds F und P Weal th ed Balanc S ST YL U und r it Value w dF Dividen S ST YL U ... taxed the same! Investment Planning Investment Planning At STYLUS we incorporate two important factors into your investment plan: • • TIME HORIZON PERSONALITY Investment Planning: Investment Time... Financial Planning Current Financial Picture Snapshot Personal Balance Sheet: Assets What are your assets? (Net of Liabilities) • • • • • Cash Taxable investments Registered investments Real Estate. ..Agenda Financial & Investment Planning Cash Flow Optimization Tax Planning Wealth Transfer Making Plans Financial Plan Ensuring your cash flow meets