Say that a couple is struggling with a decision about whether to help their child purchase a home. The couple wonders, and worries, if the cash outlay will interfere with their retirement. We often help with this type of financial planning situation – when you must look to the future to make a decision today. In this case, the look to the future is estimating the amount that the couple needs to retire. With that projection, we can ultimately determine how much of a cash outlay the couple can afford.
Several routine financial planning items must be completed by December 31. For example, make any charitable donations that you wish to report on this year’s tax return. Contribute to a Registered Education Savings Plan (RESP) to trigger the annual Canada Education Savings Grant (CESG). If you turn 71 this year, you have until December 31 to make your final Registered Retirement Savings Plan (RRSP) contribution and terminate the plan.
Some situations, however, call for less-routine measures that must also be performed by year-end.
One factor drives many decisions behind naming a beneficiary for a Registered Retirement Savings Plan (RRSP) or Registered Retirement Income Fund (RRIF). When an individual passes away, remaining assets in the RRSP or RRIF are taxed as income at the marginal tax rate on the final return – unless the individual has named a “qualified beneficiary.” A qualified beneficiary is the spouse (or common-law partner), a financially dependent child or grandchild under age 18, or a financially dependent child or grandchild of any age with a physical or mental disability.
Many life decisions can be difficult, but when they involve a financial component, input from your lawyer, accountant or advisor could help in some way. Here are a few scenarios to illustrate how such input can make a difference.
College and university students may encounter credit card sales representatives on campus. Students can get their own card at age 18 in Alberta, Saskatchewan, Manitoba, Ontario, Quebec and Prince Edward Island, and at 19 in other provinces. If your child follows these guidelines, hopefully the card won’t be seen as free money.
Assante advisory services are offered through Assante Capital Management Ltd. and Assante Financial Management Ltd. Assante Capital Management Ltd. is a Member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada.
The services described may not be applicable or available with respect to all clients. Services and products may be provided by an Assante advisor or through affiliated or non-affiliated third parties. Some services and products may not be available through all Assante advisors. Services may change without notice.