The Three Question Fact Find (Part Three)


Part 3 of 3 (For Families)

The third and final question for the family market turns the focus off yourself and on to the people that will be left behind when you die.  If you haven’t been tracking through the first two posts in this series take a minute now to review where we’ve come from.

Question One – Do you have any Debt?  Blog and video.

Question Two – Do you have a plan to sustainably protect and grow your assets?  Blog and video.

 

Question Three – Where do you want your money to go after you die?

 

This one seems obvious.  The answers I receive most often focus around some version of “my family”, occasionally people will name a favourite charity.  That’s all well and good and I never take issue with any answer people might give, it’s your money after all and whatever legacy you choose to leave is up to you.  The answer I have never received however is; “I want to leave a large percentage of my life savings to the government.”  The sad fact is that without proper planning that’s exactly what’s going to happen.

When it comes to your final estate your money will essentially be in one of four buckets.  Registered Investments (RRSP/ RRIF), Non-Registered Investments, Real Estate and Cash.  If you are married or in a common law relationship all your assets can transfer to the surviving spouse relatively smoothly and tax free.  If however, you are unmarried, your spouse has predeceased you or you wish to transfer a portion of your assets to anyone other than your spouse on your passing, the government has stipulated some rules in terms of who can get what and whether or not there will be any taxes to pay first.

Quick disclaimer:  I am neither an accountant, nor a lawyer so be sure to consult an expert in those fields first before you make any final decisions.

For the sake of argument let’s assume you have limited cash and your real estate is your primary residence.  Let’s also assume that your non-registered investments are in the form of common stocks and your registered investments are in the form of mutual funds.

So, what happens when you die?

First, the executor of your estate will want to sell your house.  No problem, the proceeds of that sale transfer to your heirs tax-free.  It’s been said that your home is the only tax shelter you can live in.  If there is any additional property, like a cottage or a rental home then those would generate a capital gains inclusion but that is beyond the scope of this article.

Next, the executor will want to liquidate the rest of your assets and transfer the resulting cash to your heirs.  This is where it can get sticky and the government can really mess with what ultimately ends up in the hands of your heirs.

Your stocks will be sold at whatever the market rate is on that day.  This will result in either a capital loss or a capital gain.  Either way 50% will be considered income (or loss) on your final tax return.  Depending on how long you’ve held the stock this could result in a significant increase to your annual income in your final year of life.  Consider what a few shares of Amazon were worth even just 5 years ago vs today?  The mutual funds in the RRSP/RRIF will also be sold but because you received a tax credit when you originally bought those investments 100% of the value of those assets will be added to your income regardless of whether they have gone up or down.

Now consider this, as of this writing income over approximately $215,000 in any given year is taxed in Ontario at 46.16%.  It doesn’t take long for an individual with a $75,000 annual income and $150,000 in assets when they die to end up paying in excess of $100,000 or more in income tax on their final estate.

Have you picked your jaw up off the floor yet?

Now, there is a way we can fix that, or at least make somebody else pay the government so your heirs receive more of your estate.  By using life insurance to create a fifth bucket of money you can transfer a portion of your assets to a participating, (tax advantaged) life insurance policy while you are living.  Thereby reducing the taxable value of your estate and generating a payout to your heirs that is completely tax-free.  In most cases we can offset a large portion, if not all, of the income tax that will come due on your final estate and preserve your wealth for the next generation.

This tactic works best when your assets are evenly distributed between registered and non-registered money so that the act of transferring funds to life insurance does not attract income tax while you are living.  If that is not possible and you have to pull money from an RRSP to fund the life insurance policy, it’s still better to pay the tax gradually, while you are living, than to generate a massive tax bill on your final estate.  This tactic also works well in the situation of a blended family when you are trying to make sure assets accumulated prior to the second marriage remain with the children of the first marriage.

Of course, this is just one possible scenario, there are many others.  The bottom line is, where do you want your money to go after you die?

For more information or help with your financial plan contact:  lauren.sheil@f55f.com or simply leave a comment below.

Take Action


A brief introduction to my new marketing message.

Hi gang.  I just wanted to take a few minutes to write a quick note about my new marketing message.

In actual fact I‘ve been communicating this message to my clients for about a year now and just finally wrote it down in the form of a flyer that I leave behind with all of my meetings.  The message is direct and leaves the perspective client with no doubt about I expect from them. 

During all my meetings I stress the importance of taking action.  It is all fine and good to plan but planning is useless without action. 

Take Action Today That Your Future Self Will Thank You For

And what actions do I expect you to take?  It’s all laid out in the flyer I leave behind.  The flyer asks three questions:

  1. Do you have any debt?
    1. If I could show you a way to reduce the interest paid on all your debts, free up cash flow and be debt free years sooner, would that be a conversation worth having?
  2. Do you have a plan to protect and grow your assets?
    1. If I could show you a way to protect your assets from market volatility and other unexpected losses, without sacrificing growth, would that be a conversation worth having?
  3. Where do you want your money to go after you die?
    1. If I could show you a way to significantly reduce the taxes owing on your estate and increase the amount of money available for the people and causes you care about, without effecting your lifestyle now, would that be a conversation worth having?

Financial planning and growing wealth is simple (not easy).  It involves reducing and eventually eliminating debt, building and protecting wealth and leaving a legacy.  With a few simple changes to your lifestyle and thinking today you can make a significant impact on your life moving forward and well into the future, but you must take action.  The longer you wait, the harder it becomes and the fewer options you have available to you. 

So there you have it, my straight forward, no bullshit marketing message: 

Take Action Today That Your Future Self Will Thank You For

Check out the links to the flyer above and get in touch to start taking action for your future self…

Re-launch of Financial Coaching Service – Part One


“Back in 2005 I was a financial basket case!”

Coming sometime in the last week of October (exact dates haven’t been worked out yet) I am re-launching the “6 Steps to Financial Freedom – Financial Coaching Program”.

About 18 months ago I wrote a series of posts on this blog called “The 6 Steps to Financial Freedom” where I laid out what I believe are the most important things everyone must do if they hope to gain a life of financial security. Out of that series came the e-booklet “6 Steps to Financial Freedom – The Meekonomists Guide to Getting Out Of Debt, Building Wealth and Leaving a Legacy” and a clear focus on what it is I hope to accomplish with this site, my financial practice and indeed all of my writing.

It was through that blog series that I also began to develop my mission statement.

The Meekonomics Project exists to: Help people reconcile their relationships with God and Money, To Teach people to live Debt Free, Build Wealth and Leave a Legacy.

The animated video above is the first in a series designed to introduce you to the newly revised and re-packaged “6 Steps to Financial Freedom Coaching Program”, go back and watch it now if you haven’t already.

Next week I will release the second video in which I will go into more detail about what each of the 6 Steps are and how you too can live a debt free life while building wealth and planning for a lasting legacy. The following week I will release the final video where I will explain how to join me for some group interactive coaching on-line and possibly become a one-on-one coaching student.

Stay tuned! If you haven’t already done so, please watch the video now and send me a comment either in the comment stream below, on YouTube or directly via email at themeekonomicsproject@gmail.com

I love comments!  I read and respond to each and every one.

And if you would like your own copy of the 6 Steps e-book put, “E-Book Request” in the subject line of your e-mail and I’ll make sure you get a copy within 24 hours.

See you soon – Lauren!

Leaving a Legacy of Justice


Justice without love will always fall short of what needs to be done. It will never be as good as it should be. Justice without love will never do justice to justice, nor will love without justice ever do justice to love; Dallas Willard – Knowing Christ Today

justice

One of my stated goals when I first started writing was to help people better understand the “character” of God and the true calling of a Christ-follower. Over the years my writing has evolved and I have become more focused on the financial stewardship aspects of how that gets worked out but my passion and overall desire still includes all aspects of God’s character.

I was recently reminded of one of those aspects during in a Sunday service in which I heard noted international speaker and author Eugene Cho (www.eugenecho.com) speak on the subject of Justice and Compassion.

Eugene Cho is the author of “Overrated; Are We More In Love with the Idea of Changing the World than Actually Changing the World?” and founder of One Day’s Wages, a program that seeks to have westerners donate one day’s wages to support development programs around the world. This past Sunday, while I sat and listened to Cho speak I was also reminded of the words of the late Dallas Willard, quoted above.

What it all comes down to is this – God is Love.

Love is not a character trait of God, it is his essence. The character traits that are natural manifestations of God’s Love are things like Justice, Grace, Mercy and Compassion. While my focus is on financial stewardship the end result of what I hope to teach people is a more effective use of their resources in order to show the world the essence and character of God. The final point of our mission here at The Meekonomics Project is to teach people to leave a legacy. For a Christ-follower that legacy should include justice, mercy and compassion because that is what reflects not only the character but the essence of God.

Every human on the planet is an infinitely valuable image bearer of the divine. Justice and compassion begin with looking people in the eye and seeing the image of God in them. When you do that you will see love and be moved by a desire for compassion and justice. I promise.

But it will also be uncomfortable because when you look a homeless person, or a disabled person or just someone who is different from you in the eye you will inevitably be confronted with the next question; what are you going to do about it?

At the Meekonomics Project we want to help you answer that question. Our complete mission statement reads;

We are here to help people reconcile their relationships with God and Money through Education and Empowerment; to teach them to live Debt Free, Build Wealth and Leave a Legacy.

You can’t take it with you, so you may as well give it all away!

For more information on the Meekonomics Project and our financial planning, consulting and philanthropic services write to; themeekonomicsproject@gmail.com or buy the book “Meekonomics; How to Inherit the Earth and Live Life to the Fullest in God’s Economy” at www.themeekonomicsproject.com/products

 

Leave a Legacy


Six Steps to Financial Freedom, Step Six

Congratulations, you’ve arrived at the end of the road. Welcome!  Thanks for sticking with me for the past six weeks.

legacy

For every big and exciting goal people set in their lives there are two essential questions that we must ask, how and why? So far throughout these six steps I’ve shown you a lot of “how” and a few small “whys”.

Get out of debt so that you can relax and build wealth; regulate risk so that you don’t have to worry about the unexpected, etc. But when you get to the end of the process, step six is the biggest “why” of all. Steps one through five ultimately lead us here; leave a legacy.

Why?

Because you can’t take it with you.  If you’re not careful, everything you worked for will be lost the moment you take your final breath.  Proper legacy planning allows you to reach out from the grave and direct how your hard earned assets will be spent long after you’re gone.

There are only three things you can do with your wealth. You can; save it, spend it, or leave it. The problem is you can only save it for so long and if you don’t spend it or leave it effectively there is a fourth option that comes into play, the government will take it.

In the world of legacy planning it’s that forth option that we want to avoid at all costs so we work backwards from there. If you follow the first five steps effectively you will die with money left over, that’s a fact. There is an interesting little wrinkle in the tax law called a “deemed disposition”, is means that when you die all of your assets are deemed to have been sold 5 minutes before you pass, all of your assets are then counted in your income on your final tax return. If you have even a modest amount of savings all of your assets calculated as income in one year automatically place you in the highest tax bracket in the country. Depending on the province you live in that will be about 45%, so the government will take almost half! We can usually avoid that with a well structured Life Insurance contract, see step five,  but what about making a lasting contribution to society as a whole?

Here are 3 other ideas for leaving a lasting legacy.

1 – Name a charity as the beneficiary of your Life Insurance, RRSP/RRIF or Annuity. This will provide a lump sum donation and create a nice tax deduction on your final return.

2 – Set up a charitable family trust to administer your investment accounts after you are gone and dole out money to your favourite causes in smaller, more sustainable and longer term amounts over time. If managed well, with a decent endowment to begin with a family trust could last for generations.

3 – Start now by collaterally assigning Life Insurance and other income sources and allowing the named charitable organizations to take control of the asset while you are still living. In this case you can exert influence over how the money is spent directly and see the results of your philanthropy with your own eyes.

Of course none of this should prevent you from continuing to support a worthy cause with cash while you are living. Philanthropy is all about stewardship and there is no greater joy than knowing that the work you have done to build wealth will benefit those who are less fortunate.

From everyone who has been given much, much will be demanded; and from the one who has been entrusted with much, much more will be asked. [Luke 12:48]

For more information on Legacy Planning and effective philanthropy write to:  themeekonomicsproject@gmail.com