Insured Tax & Wealth Transfer

Insured Tax & Wealth Transfer

What if you funded the tax bill with insurance? Yes, Insurance is the most effective way, as the proceeds arrive tax-free and can help you transfer more wealth to your family.

Again, there are many different ways to do this. If done inside a corporate account, you can get additional tax advantages using corporate tools such as corporate tax bracket, capital dividend account, small business deductions, etc.

So, insurance is almost a required solution if you plan to transfer wealth to the next generation.

So, let’s talk about taxes. Most people build up significant wealth in various assets such as 401(k), RRSP (for Canadians), Real estate, businesses, etc., and most of these asset classes trigger a “tax liability” upon death while transferring your wealth to the next generation. Where will that money come from to pay the tax bill (quite significant, depending on your asset value and all the tax deferral you enjoyed)? Your beneficiary must liquidate some of your assets to pay for this.

Benjamin Franklin said it the best:

In this world, nothing can be said to be certain except death and taxes.