Money Management Planning
Along with the protection offered through insurance, and the goal setting provided by investment choices, money management strategies can help manage savings on a daily basis.
From mortgage payments to tax savings, a strategy for managing money effectively involves a consideration of individual contexts.
- Tax Planning
- Succession Planning
- Financial Planning for Business Owners
- Business Succession Planning
No one likes taxes. But the advice of a financial professional can help with the selection of products and services that help ease the burden.
Charitable contributions, life insurance policies and investment products purchased through products like 401(k) Retirement plans or 592 Qualified Tuition Plans can all be useful tools in an effective tax strategy. It is important to design a tax plan that fits one’s personal needs.
Choose from a variety of products and services, such as:
- Income-splitting for spouses or common-law couples.
- Charitable donations, which benefits important not-for-profit work and allows donors to maximize tax credits.
- Life insurance products that build tax-advantaged capital for retirement.
- Investment products that provide for tax benefits, such as those purchased through 401(k) Retirement Plans or 529 Qualified Tuition Plans.
Preparing for succession after death is a difficult issue to discuss, but it is also an important part of any comprehensive financial plan.
A financial professional can help individuals and their loved ones approach succession planning in a constructive manner that ensures they avoid problems and are well cared for in the event of death. The process involves two main considerations: life insurance and preparing a will.
Life insurance can ease the financial burden and provide resources for loved ones in the event of death. A lump-sum payment can be used for mortgage costs or to supplement lost income, helping successors during a difficult period. Financial resources and stability can make it easier to cope with the loss of a loved one.
A written will provides a means to guide loved ones through the succession process. By naming executors and providing instructions on the distribution of an estate, surviving loved ones avoid having to guess the wishes of the deceased. Rather than state law determining how assets are to be divide -- a situation that can result in lengthy court proceeding -- a clear, carefully considered written will provides clear instructions to successors.
Buying a home can be an exciting purchase—but it is also a big decision that will have a major impact on financial planning. Whether for a one-bedroom condominium or a five-bedroom house, a well-planned mortgage strategy must fit its owner’s unique needs and other financial responsibilities. Assessing all the costs involved -- from taxes to renovation -- can help determine whether taking out a mortgage makes sense.
Business owners face unique challenges and opportunities in terms of financial planning. It takes hard work and careful planning to develop ideas into a successful business. Continue that tradition by choosing a financial planning strategy that takes advantage of your unique situation.
For business owners who are considering moving to self-employment, a comprehensive plan can help with the adjustment from a situation where a previous employer might have provided benefits, such as health or life insurance or a company pension. Life and disability insurance can be difficult to purchase at first, since many insurers want two years of tax results. As well, self-employed people can gain tax write-offs for some health insurance premiums.
For new business owners, a financial professional can help negotiate a bank loan or line of credit to help fund office space, materials and other business investments. Explore options to most effectively secure these start-up expenses.
Tax planning is another important component of a strong business strategy. Depending on the specific business, consideration may include paying wages or collecting GST. Business owners also need to pay CPP and EI, and possibly make quarterly tax installments. As well, they can take advantage of capital cost allowances on equipment such as computers or vehicles, and business expenses such as advertising, salaries, or travel.
After working hard to develop a business, it is important to also enjoy the results. Many entrepreneurs spend years of focused effort building up a business, but then fail to consider how to make the transition to retirement. A financial planner can offer expert advice in how to plan an effective business succession strategy.
For family businesses, a formal management succession strategy can help ensure a business stays in the family over generations. Depending on the level of involvement of family members, alternative bequests can help make decisions with those who do, and those who not, want to continue being involved in the family business.
Entrepreneurs can work to turn equity in the business into capital that can be used to fund retirement. Business owners can design tax-effective retirement strategies, such as using life insurance policies, paying business founders a salary, or arranging for an heir or heirs to slowly buy up ownership shares.
Life insurance is a consideration when planning business succession. If the founder is nearing the end of his or her life, a well-planned life insurance policy can help successors transition into business owners. Upon death, successors face estate taxes on business values of more than $500,000—with the tax-free amount potentially offset by any capital business losses the owner declared during his or her lifetime. Life insurance is one way that successors can cover the remaining amounts.
Smaller businesses may not need to pay estate taxes, but can still benefit from a plan that ensures an equal legacy for their successors. A financial advisor can help entrepreneurs plan an inheritance that is fairly distributed among all loved ones.
Partnerships have special considerations and should be structured with buy/sell agreements to allow the business to continue in the event of the death or disability of a partner.