Objective: To design strategies for tax deferral and investment diversification through the provision of adequate insurance coverage at the least cost without sacrificing future insurance needs.

One of the most effective ways to demonstrate the importance of proper tax and estate planning is by example. For instance, it is your intention that your children will one day own the family cottage. Let’s take a look at what it could cost them …

1. Initial purchase price of cottage: $50,000
2. Value in 40 years at 6% annual growth=$514,000
3. Less purchase price
4. Capital gain=$464,000
5. Taxable capital gain at 50%=$232,000
6. Income tax payable at 50%=$116,000

Can your children afford the gift?