The Paris Independent
26
November 11, 2023
F I N A N C I A L M AT T E R S For example, if you wanted to leave your business to your oldest child (who now runs it for you), how would your other children feel about their smaller inheritance? What if you had a couple of large assets — such as your home and a vacation property — but three or more kids? This could make a fair distribution of your overall estate practically impossible. Apart from the fact that these situations result in an estate plan that is unfairly distributed, they could also lead to litigation issues after you’re gone. Even if you clearly stated your wishes in your will, your surviving children could contest it if they feel it’s unfair. You could avoid this situation by taking out a permanent life insurance policy and naming as beneficiaries those children who are not due to receive one of your major assets. There’s also the added benefit that life insurance doesn’t become part of your estate or even your will. This means that it can’t be contested and the proceeds are tax free, so it won’t adversely affect how you distribute the rest of your estate. Build a bigger nest egg When you have enough money to fund your retirement but want to grow more wealth to pass on to the next generation, permanent life insurance can be used as a useful investment tool. Participating life insurance includes an investment component that allows you to grow your money on a tax-free basis, as long as the funds remain within the policy. If you were to grow your money in a regular investment product, your estate would pay tax on its earnings, but money earned within an insurance policy is paid out tax free upon death. It’s an effective way of reducing your final tax bill by shifting a portion of your assets into a tax-free insurance policy.
Get advice on life insurance that’s right for you An IG Advisor will consider how life insurance would fit in with your entire financial plan. They’ll weigh up your estate planning needs and work out whether life insurance will help you to distribute your assets in a fairer way, provide you with tax savings or leave a larger legacy. If you do not have an IG Advisor, reach out to Jacob today!
Written and published by IG Wealth Management as a general source of information only. Not intended as a solicitation to buy or sell specific investments, or to provide tax, legal or investment advice. Seek advice on your specific circumstances from an IG Wealth Management Consultant. Insurance products and services distributed through I.G. Insurance Services Inc. (in Québec, a Financial Services Firm). Insurance license sponsored by The Canada Life Assurance Company (outside of Québec).
