FINANCIAL
All Canadian adults should have a will , a power of attorney and a medical directive .
FINANCIAL
All Canadian adults should have a will , a power of attorney and a medical directive .
Typically , the child ( ren )’ s mother is the subscriber to the plan . However , anyone may gift money to her to add to an individual child or family plan . My preference is the family plan that is self-directed by the parent , providing maximum flexibility . The parent controls when and how much money is provided to the child when he or she becomes a post-secondary student . Contributions may be made to the plan on a child ’ s ( beneficiary ’ s ) behalf from ages 0 to 18 years . These may be monthly or lump sum contributions . The maximum contribution for each child to take full advantage of the 20 % grants is $ 2,500 per year and a lifetime total of $ 36,000 .
4 . Children or adults who are eligible for the Disability Tax Credit ( Canada Revenue Agency ) are also eligible to enrol in the Registered Disability Savings Plan ( RDSP ). There are significant federal grants available in this plan based on contributions . Growth is tax-free . Family or friends may gift money to the plan . The plan is owned by the individual or a representative ( parent ). Contributions may be made until the individual is 49 years of age . An RDSP is essentially an enhanced retirement savings plan .
5 . Another concept to support young family members is the funding of life insurance for children . Life insurance is most economical for the young and healthy . With child life insurance ( from 15 days of age ), a family has financial protection , and the child is assured to be eligible for life insurance as an adult ( up to five times the death benefit of the child policy ). As parents , we may wish to fund life insurance for young adult children . Young adults may not anticipate the need or value of life insurance . By assisting in this way , we are making a major contribution , although it may not be truly appreciated until later .
6 . The Tax-Free Savings Account ( TFSA ) is well worth consideration for estate planning . Each year we may add to our plans , which in 2017 have room for $ 52,000 . At death , our TFSA may roll over to our spouse ( or dependent child ) and continue to grow tax-free . Young adults may begin a plan at age 18 with the current annual maximum of $ 5,500 . A parent or grandparent may gift funds for a TFSA . The TFSA is owned by the young adult so we teach them to be financially responsible . A future home down payment would be a good savings goal for such a TFSA . Investment choices are many for a TFSA , similar to RRSP choices , including GICs , bonds , equities and so on . This is a great way for young adults to learn about investing . As retirees , we have many financial options to consider for ourselves and for our families . It may be very challenging to pass wealth on to the next generations in a tax efficient way that is respectful of needs and lifestyles . Thoughtful planning and open communication is key . Professional financial planners can assist with this . We should talk openly with our spouse , mature children and other beneficiaries about our estate plans . We may be surprised by the financial acumen of young family members and their mature attitude regarding finances ! �
Gerhard Sawatzky , BEd , MEd , is a Certified Financial Planner ® Professional , mutual funds representative , life insurance agent , and accident and sickness insurance agent in BC , AB and SK . Website : www . momentumcap . ca
news & views WINTER 2017 | 13