As your wealth grows, so too do the complexities associated with wealth. This is often the case for successful business owners, executives, large families and those enjoying or approaching retirement.
The wealth management process normally starts with a comprehensive, professionally prepared financial plan. With this calibre of financial plan, you can address all aspects of your financial affairs, including cash and debt management, tax and risk exposures, investment management, retirement planning and estate planning.
Retirement planning
With your retirement goals in mind, you should look at strategies above and beyond maximizing your RRSP or RRIF, including enhanced retirement plans such as Individual Pension Plans (IPPs) and Retirement Compensation Arrangements (RCAs), or tax-advantaged investment vehicles such as Tax-Free Savings Accounts (TFSAs). You should also consider insurance-based strategies utilizing tax-exempt life insurance, insured annuities, and segregated funds, and ways to structure your retirement income to enhance your after-tax retirement income.
Taxation issues
In consultation with your tax and legal advisors, you should consider strategies to manage or reduce your tax liabilities. These considerations include restructuring your personal and business assets, and legal ownership, holding companies, trusts and other strategies. It may also include income-splitting strategies to reduce your family's overall taxes, or tax-loss harvesting, tax-efficient asset allocation and tax-exempt investment vehicles.
Estate planning
A major focus of wealth management is on protecting your legacy to your family, while making it easier for them to settle your estate. Working with your tax, legal, insurance and trust experts, you should look at your overall estate plan, including major documents such as your Will, Powers of Attorney and Trusts. You should then consider insurance-based strategies to enhance and protect your estate value, and estate settlement services, which can especially useful when you have a more complex estate.
Insurance
Insurance is an indispensable and very flexible wealth-planning tool that not only covers the major "what-ifs" in life but can also help build and protect wealth during your lifetime and when your estate is settled. You should consider insurance to provide financial security for you and your family in case the unexpected happens, shelter your investment and estate assets from taxes and provide tax-free retirement income and tax-free death benefits.
Using debt wisely
Working with a credit specialist, you should assess your credit and lending needs to reduce or eliminate unnecessary debt, restructure your existing debt so that the interest is tax-deductible wherever possible and consider the use of "good debt," such as a spousal loan strategy or non-recourse mortgage to potentially reduce taxation.
Charitable giving
To help you make the most of your charitable giving, you should consider tax-effective giving strategies such as donating stocks in-kind and establishing family foundations.
This article was supplied by Colin MacAskill a vice-president and an investment advisor with RBC Dominion Securities Inc. the wealth management arm of the Royal Bank. Colin welcomes your calls on his direct line at 604-257-7455.
