Stages of your Wealth Planning

Your tax planning and wealth management needs evolve over time. As you progress in life, so do your tax and wealth management needs; and the tax planning will need to be integrated into your overall wealth strategy. We like to categorize your wealth management into stages or the “Age Stages” as we call them. The stages are as follows:

1. Starting Out In Life - age 20 to 35:
2. The Family stage - age 35 to 45:
3. The Wealth Generation stage - age 45 to 65:
4. The Cash Flow stage - over age 65:
5. Wealth Transfer / Estate Planning Stage - all ages:

What stage are you in? Each stage has its own special needs that tend to be applicable to a certain age group. These are just guidelines, but based on our experience certain financial characteristics are present in each stage. The accountants and financial planners at GTA Wealth will be able to integrate your specific needs into a solution.

Starting Out In Life

In the Beginning stage, you may have recently finished school and starting your first job. You will most likely have debt from school. You will also be renting and are considering the most efficient pathway to home ownership. Retirement planning may not be at the forefront but in the background of the planning. Obtaining work experience, determining where to buy a house, postponing the purchase of a residence until your career stabilizes will be your financial focus. The tax preparation. can be straightforward; however, your tuition will need to be properly taken care of on your tax return. Saving for a home and paying off debt will be the priority, as well as, obtaining some good financial habits. GTA Wealth can assist with the tax preparation, cash flow analysis and finding you a mortgage for the first home.

The Family Stage

The Family stage involves your career blossoming and making more money. The student debt will be paid off; you have acquired a home; you have a partner in your life, and may have children. Your planning needs will become more complex at this stage. You will have more needs that will need to be addressed and some disposable income to start the investing process. You will have acquired a home and a great mortgage will be a concern; this will be your largest debt. As a result of your higher earnings, you will start to consider your options relating to education planning, retirement planning, debt management and investment options.

Your children will increase your attention to risk management. You will need to address the possible loss of income from death, illness and disability. risk management. is an important concept regardless of whether you have children or not; however, clients tend to get more serious about the income protection when the kids arrive.

The Wealth Generation Stage Stage

The Wealth Generation stage occurs when you are at the peak of your earning potential. You have accumulated some wealth, have opportunities to invest, and have disposable income. At this stage you need professional help with tax planning, investment planning, estate planning and insurance planning. You may have large contribution room available in your government savings plans and you should start maximizing your retirement savings plans (Rsp’s) and your tax free savings plans (Tfsa’s). Your children may be at university and you need cash flow to pay for the education (RESP’s).

Real estate ownership is probably on the investment menu. You may have purchased property outside of Canada resulting in a more complicated taxsituation. You may be self employed at this point. Some employers tend to provide employees severance packages to leave; it can be expensive for employers to keep the experienced employee when younger employees can be less expensive. Self employment can raise many tax and financial planning issues and requires professional help. You are at the height of your earning life cycle and will need assistance with tax planning. and investment planning. Your job may require substantial travel and emigration and immigration planning will be essential. If you are in the United States for more than six months, you may have a tax obligation.. If you have a corporation at this point, you will most likely have excess cash in your corporation and professional investment counselling will be required.

You may want to upgrade your current insurance coverages. As you age, it is difficult to obtain more insurance. Insurance planning. may be applicable for business reasons and / or estate planning purposes.

The Cash Flow Stage

The Cash Flow stage occurs when you are retired. You aren’t working anymore or you may be working part time; the kids have left the nest and you are enjoying your free time. However, you need to manage your assets and you need to generate sufficient cash flow to live. You need to reduce your risk exposure, preserve your capital, and review your estate plan.

Some of the cash may come from a company pension plan, old age security (OAS), Canada Pension Plan (CPP), RSP’s, annuities, retirement income funds (RRIF’s), rental income etc. You may want to consider options to reduce the OAS clawback. Once your income exceeds a certain level you will be required to repay some or all of the OAS. Tax planning will be a necessity at this stage to minimize your tax. The tax planning will be required for your current situation and planning of your estate.

At this stage, you most likely have significant assets - RSP’s, RRIF’s, non-registered investments, rental property, cottage etc. The tax preparation should be done by a professional. Estate planning will be an issue that you will require professional help - tax accountant, financial advisor and lawyer. GTA Wealth has an experienced multidisciplinary team of tax accountants, financial advisors and lawyers that can give the high quality help needed with estate planning.

Health issues and elder care issues will need to addressed. Long term care insurance coverage should be considered to provide cash flow for years that you may need attendant care.

The Wealth Transfer / Estate Planning Stage

This is a very important piece of your financial planning puzzle. This section refers to transferring your assets to the next generation in an efficient and effective manner. A key to this process is the preparation of a will. This is your communication piece after you are gone.

Estate planning can help reduce taxes and help you organize your affairs. The will, an important document regardless of your age, is not just for “old” people. At different stages of your life, different issues will be more important.

Some of the more common issues with estate planning are as follows:

• Organization:  This is a big one.  With a proper will you will be able to designate the executor / executrix to manage your affairs after you are gone.  Without the executor, you will spend much time and money dealing with the courts.  This will be a stressful time for the heirs and not having a will makes this time more stressful.
• Tax planning:  This can be the largest tax bill of your life.  When you pass away, certain assets are “deemed” to be disposed by the tax man.  Consequently, your estate could be left with a huge tax bill.  If you have a business, own a cottage, significant assets in your Rsp’s etc. seek professional help to reduce this tax bill.  In some situations, there may be US tax implications as well.  Probate fee can also be considered in this planning.
• Children planning:  In your will you can designate who will be the guardians of your children.  Without the planning, the children may be placed under the guardianship of someone that many not have been chosen otherwise
• Financial planning:  Life insurance is a great planning tool.  It provides tax free cash to the beneficiaries.  This can be used to pay a large tax bill, take care of the kids etc.
• Reduced stress: Without a will, you don’t have an executor / executrix to manage the affairs of the deceased.  The court will appoint someone to do manage the estate.  This can result in a significant time delay and frustration for the surviving family.  If planning had taken place, steps can be taken to expedite the transfer of the assets to the beneficiaries.
• Beneficiary planning:  With proper planning, the individual can plan on who receives what assets.  This can also be done in a tax efficient manner to keep more money in your beneficiaries’ hands and less in the government hands.
• Fee planning:  Dying without a will is expensive.  It is more economical to pay for a will while you are living, rather than pay the legal fees and court costs to deal with this after death.
• Probate fee planning:  Probate is the legal process where the estate of the deceased is administered.  The probate process attracts different fees and complexity in each province.  In Ontario, probate fees are levied on the value of the assets in the estate.  Hence, planning to reduce these fees should be reviewed.

Estate planning can help reduce taxes and help you organize your affairs. The will, an important document regardless of your age, is not just for “old” people. At different stages of your life, different issues will be more important.

What stage of the Wealth Management Precess are you in?

Each stage of the wealth management process has specific needs. The financial advisers at GTA Wealth are experts at tailoring solutions perfectly customized for your requirements whatever stage of the wealth management process you are in. GTA Wealth has a proven track record of helping our clients maximize their wealth potential and achieving their financial goals and dreams.

What stage of the wealth management process are you in? There is no time to waste; you and your family's future and security depends on proper management of your financial affairs whatever your income bracket. GTA Wealth Management offers a free financial needs analysis; so why not take the opportunity to allow the financial advisors at GTA Wealth Management to guide you on your road to financial independence and success. If you don’t succeed, we don’t succeed. You can count on GTA Wealth.

Contact or call GTA Wealth Management toll free 1 855 GTA WLTH (855 482 9584) to accelerate your ride to financial independence. A professional wealth management financial advisor is ready to serve your wealth management, tax return and planning needs. GTA Wealth Management Inc.has three convenient locations in Mississauga, Toronto and Markham to serve you.

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