For high-net-worth Canadians, financial planning takes a turn when it becomes somewhat different.
You have enough money to spend and not have to worry about if you will have enough when you’ll retire.
Rather you might wonder:
- How does our wealth add up?
- What are we doing to keep loved ones safe?
- How much is too much and what is good enough?
- How to make retirement more convenient?
- How things can be made secure, helping families, and be a legacy.
In situations like this, working with an Edmonton financial planner can prove very beneficial.
Retirement planning with more than income in mind
Planning for high-net-worth families is not so straightforward as picking a required withdrawal rate.
There are multiple sources of income, such as registered investments, non-registered investments, investments in corporations, pension investments, rental income, income from selling a business or income from family trusts. Each of them could have varying tax consequences, timing and estate planning opportunities.
It’s not just about building a retirement income. The ultimate aim is to generate income in a way that compliments your lifestyle, allows you to make necessary tax decisions without unnecessary tax burden, and give you a flexible choice in decision making – one that helps you to make sound choices year after year.
That might include:
- Structuring withdrawals from RRSP, RRIF, TFSAs and non-registered interest.
- Clawback on Old Age Security (OAS): It depends on planning for it.
- Managing retirement income together with the assets that come packed in when they leave.
- Choosing personal versus business accounts to fund. When to use their own versus the business’s funds.
- Designing action steps for the surviving spouse that minimize taxes. Making decisions about the surviving spouse that minimize taxes.
- Allocating money for trips, childcare, showing up at medical appointments, or for future needs.
However, it is the numbers that count. However, the feeling is important too.
A healthy cozy retirement plan should get you a better night’s sleep. It must allow you to take pleasure without obtaining worried all the time that what you do today can put strain afterward.
Legacy planning starts with family conversations
Legacy planning can start with the legal and tax aspects; however, it should not stop there.
For many families, the larger questions are more personal:
- What would be the right way to treat our kids fairly, when their life might be rather different?
- Help our children now, or leave more later?
- Curtin has come up with a simple solution: If one child is involved in the family business, and another is not, what do you do?
- How do we provide support for grandchildren while avoid generating an attitude of “entitlement”?
- How to teach people to manage their money responsibly when inheritance is involved?
They aren’t necessarily simple chats. They can be emotional, particularly when they are in the business ownership, blended family, charitable giving, cottage, farm, or at risk beneficiaries realms.
An experienced financial planner can assist with the process to make it easy. This could involve consulting with your accountant, legal counsel, and others to make sure your investment planning, tax planning, estate planning, insurance planning and business planning all work together to accomplish the same goal.
It’s not to shoot for all answers in one. It is to assist your family to forge a way ahead without additional confusion, undue expectation, and unknowns.
Protecting wealth across generations
A strong need for asset growth is a common interest among high-net-worth families. Preservation is equally crucial as they near their retirement.
But don’t overdo it. It’s about careful considerations on risk, taxes, estate planning and family continuity.
This may include:
- Re-checking if your investment plan meets your retirement goals
- Consider using insurance to support estate liquidity or planning.
- The planning of capital gain on cottages, rental properties or securities in business.
- Addressing your coordination of wills, powers of attorney, trust and beneficiary designations
- Planning for the tax consequences of transferring assets to the next generation(s)
- To make a plan for your gifts while alive or through your estate
Tiny choices make a big impact in the long run. The sequence of the funds, how the property is titled, or when the gift is made can have an impact on the amount of wealth your spouse, children, grandchildren, or preferred causes have.
Giving with purpose
Philanthropy is a part of the legacy in some families.
Consider donating to a hospital, local charity, university, faith community, or cause that has had an impact on your life! Giving to charity can be very personal and purposeful, and can also be part of broader financial planning.
This can range from the simple act of owning securities that are benefactors of a particular charity to creating a Donor Advised Fund, the use of a charity as a beneficiary upon death, the structuring of giving via a life insurance policy, or even the structuring of giving during retirement years.
The best strategy will vary based on your family, your tax situation, your income requirements and what kind of impact you want to make.
Why the right planning relationship matters
Choosing an Edmonton financial planner is one part a technical decision and one part an emotional one: For high-net-worth families, the relationship itself matters (of course).
You need someone that can really listen, ask meaningful questions, collaborate with other providers, and communicate a recommendation in non-jargon terms. Additionally, you should find someone who appreciates wealth and the connection to family, identity, responsibility, generosity, and at times, difficult decisions.
Ideally your plan will make you think, you can make this happen!
A better one will help you take action with it.
Retirement and legacy planning don’t need to be discrete conversations. They are connected. Earning money today can either increase your wealth tomorrow or decrease it. How you take care of your family today can affect your estate in the future. Giving can manifest itself over a lifetime of values.
The key to plan strategically for the next chapter is for families who have worked toward ccsuccess to have a plan that helps your money support your life, your family, and your legacy.
Read Next: Selling a Family Property: Steps for a Smooth Transition
