We've all read or heard about the unlucky family that is wiped out by a house fire and didn't have any fire insurance. All too often, people mistakenly believe that it won't happen to them. The reality is that bad things CAN happen and there is nothing that guarantees they will be immune from disaster. Insurance is simply an economical way to protect ourselves from the financial loss a tragedy can bring.
Joint ownership is used by millions for various reasons. When problems arise, they are usually unintentional and it can be too late to remedy them. For example:
Jane wants to avoid probate with as much of her estate as possible. She also wants her daughter, Sally, to have easy access to her cash at death to take care of last expenses. Jane thinks...she can do this by naming Sally on her bank accounts jointly.
On the surface, this looks like a quick and easy way to accomplish what she wants. It's what lies below the surface that can sink her financial ship.
Standard financial and tax planning advice for the past several decades for business owners has included the use of incorporation to both insulate Canadians from business risk and liability and for asset building and income cash flow planning.
His banker asked Trent what his net worth was for a loan he was applying for. He had trouble answering the question right away.
Quite simply, net worth is the difference between what you own and what you owe. But true net worth may not be quite that simple.
We've all heard that life has two certainties - death and taxes. You need to know the two often coincide. While Canada does not have an official death, estate or inheritance tax, there are some postponed taxes that become payable on death. There are other obligations that need to be taken into account as well. Without proper planning, an estate may have to face large and unexpected cash shortages. Consider:
The recent increases in the Bank of Canada and Federal Reserve prime rate in the past few months signal the end of historically low interest rates. According to a Bank of England study released in early 2016, current low interest rates are the lowest in 5000 years of recorded history*!
Media reports in July pointed to a Parliamentary Budget Office (PBO) report that warns the debt service ratio (the percentage of gross income needed to cover debt repayment costs) will move up by 3.5% by 2021 to 16.3% from the average of 12.9% seen between 1990 and 2017.
