If your parents / grandparents are seniors

If you yourself are a senior ...

Having retired, your main concerns are probably to ensure comfortable life conditions for yourself (and your spouse if you have one), while living healthily (or not), and maybe to 'leave a legacy' to your family and/or favourite cause/charity, when you pass away. It would perhaps be even more important to get satisfaction and enjoyment from actually seeing the positive effects of one's gift on the lives of those you want to help (a new program or asset purchased in an organization, a grandchild making successful strides in life, etc.).

First, you should learn about long term care insurance, a relatively new product in Canada. Given the status of and trends in our health care system, you probably owe yourself to think about this product before you start seriously thinking of your heirs. If you are not older than 65, you can also consider another nontraditional product, critical illness insurance.

On the estate planning side, it is important to be aware of chances for longevity. It is just a piece of statistics, of course, but you should keep in mind that 50% of 65 years old males of today will live up to age 78, and 10% will live up to age 91. For women, the respective ages are 84 and 96. In other words, seniors today have to plan for longer term than their parents’ generation did. There are serious consequences of this for investments: many people with GICs should consider various asset-allocation strategies. Segregated funds can be of interest too. Mainly for affluent people, universal life insurance provides an investment vehicle that is superior to taxable investment accounts.

Some people want to avoid taxes at death by giving away their assets while living. The right basic approach probably is that one is still better off by keeping control of his or her assets as long as being able to. Fortunately, one usually has good opportunities for both eating and keeping the pie, so to speak. Various applications of universal life insurance, and the special rules of charitable giving provide these opportunities. There are costs, but the various tax advantages in many cases abundantly compensate for them. There are solutions even if you are uninsurable because of poor health.

To stay with the pie analogy, you do not have to distribute it between family and charity at each other's expense; instead, due to the tax-treatment of charitable giving, and the tax aspects of insurance, you can increase the pie, and give abundantly to both.


Talking about (and with!) your parents

If you have elderly /grand/parents, it may bring both responsibilities / difficulties, and more positive challenges to you. On the negative side, I refer to the frequent need for providing exhausting and ever-costlier long-term care services, for increasingly long periods. On the positive side, even if it sounds cruel, and at least in a strictly financial sense, time is on your side. I refer to the chance of inheritances in the coming decades. The two sides are usually closely linked, in various ways. Even if you feel that your own life has things more important now than thinking of long term care insurance, you should probably familiarize yourself with that. You may even consider buying this protection for your parents, to make sure the family will be able to cover the costs of long term care if / when that need arises, ... and/or to protect the value of retirement assets or future inheritance that may have to be spent otherwise on long term care services.


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Another aspect of how the intergenerational wealth transfer works is dealing with tax-issues and investments. Since you and your own children are possible/probable future heirs, it is in your interest to try to ensure that their estate grows nicely, and changes hands in a most tax-efficient way. If it is important for them as well, and if they are willing and able to deal with these issues, you might want to explore various insurance products, mainly segregated funds, and the broad area of universal life insurance applications with them. You should also be aware of the great new tax advantages of planned / charitable giving.


These web pages are for information purposes only. The information contained and presented, while based on and obtained from sources we believe to be reliable, is not guaranteed either as to its accuracy or completeness. The content of these web pages is solely the work of the author, Laszlo Kramar.

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