What Happens on death of a TFSA account holder?

February 22nd, 2017 Posted by homegrid 0 thoughts on “What Happens on death of a TFSA account holder?”
  • Tax-Free Savings Account started in 2009, and it still has a lot of questions from the general public. One area is always being misunderstood by TFSA account holder is on passing their TFSA money to the person they wish upon their death. In the real world, there are three options for you as a tax-free savings account holder:

( 1 )  Name a successor holder who becomes the account holder. ( only your spouse or common-law partner, as defined in the Income Tax Act    ( Canada ), can be a successor holder ).

( 2 )  Name a beneficiary or beneficiaries who receives the payout from the account in cash.

( 3 )  Name your estate to receive the payout in cash then distributed based on the terms of your will.

Tax Consequences of these three options:

( 1 )  The successor holder takes over the account and maintain  the TFSA status. Then, the new TFSA continues to grow tax-free in the hands of the success holder and either maintain the account separately or consolidate the TFSA with their  TFSA, if they so choose. No probate is needed.

( 2 )  A beneficiary or beneficiaries are deemed to receive the TFSA payout immediate after the account Holder’s death. Any subsequent capital gains, losses or income being taxable on that beneficiary or beneficiaries tax return. If you name  your spouse or common-law partner as the beneficiary, they may  still  be  able  to contribute an  amount equal to the value of the TFSA on your death to their TFSA if they do so by the end of the year following your death.  However, this quite often is being missed due to various reasons and any capital gains or income earned on the TFSA account after your death will still be taxable in their hands. No probate is needed.

( 3 )  When TFSA paid into your estate, then TFSA proceeds will be subject to probate. This may create additional cost  to  your estate since  some provinces will  charge higher probate fee over certain the amount of estate values.

Please discuss with your professional advisors to evaluate your situation on all three different options since everyone may have

unique family structures could alter the outcome of the option you choose. This article is only for reference and should not be considered as legal advice on your tax-free savings account.


Protect Yourself From Unexpected Medical Bills When Traveling

November 15th, 2016 Posted by Uncategorized 0 thoughts on “Protect Yourself From Unexpected Medical Bills When Traveling”

Before you leave on your next vacation, remember to review your travel insurance coverage. Just like anything else, planning ahead could reap rewards in the future – in this case, avoiding costly, unexpected medical bills.

Meet George. George is a 35-year-old Fraser Valley man from British Columbia who was taking his annual motorcycle road trip to the US with friends when he had to make a frightening stop on his motorcycle while in California. He was cruising through the northern part of the state when the motorcycle he was riding hit road debris and crashed. The road trip was cut short and the vertebrae in his spine were shattered.

Recovery involved many days in the California hospital for tests and two surgeries including the insertion of a steel rod to support his spine. He was transferred back to Vancouver where he underwent physiotherapy and continued his recovery.

When travelling outside of Canada, the cost of medical treatment can quickly add up and sometimes exceed coverage available to you through the provincial government and any supplementary health insurance plans.

Each province in Canada limits coverage for out-of-province and out-of-country medical costs for its residents – a traveller from BC is eligible for up to $75 Cdn/day for in-patient hospital care.

But consider this: one day in a USA hospital typically costs more than $2,500 Cdn/day and $10,000 Cdn/day in intensive care.

Thankfully due to the foresight of having purchased travel insurance, George’s claim of $1,040,700 was fully covered.


Preventing the unpreventable

Accidents and emergencies can happen anywhere, anytime. Have you ever contracted food poisoning or experienced chest pains in your hotel late at night? Have you done your homework to prepare for an emergency medical situation while travelling?

Emergencies that happen within Canada have the potential to be costly too. Reciprocal agreements between provinces provide a certain level of protection when travelling within Canada but there are many things that your provincial health coverage will not cover when travelling outside your home province.

Meet Margaret, a fun loving and adventurous 71-year-old Prince George, BC woman who flew to Halifax, Nova Scotia to visit friends. While on the Eastern Seaboard, she fell and broke her hip. As healthy as Margaret was, there was nothing that could have prevented this accidental fall.

After 30 days in hospital, she was able to return home; however, she needed the assistance of a medical escort. Without Emergency Excess Hospital/Medical Insurance, Margaret would have had to pay a total of $2945.95 out of pocket to cover the multiple ambulance trip costs, select prescriptions and medical supplies, her returned airfare back to BC and her escort’s hotel and airfare expenses.

Potential out-of-pocket medical costs

Each province covers hospital and medical expenses for treatment occurring in Canada, but coverage for these items vary by jurisdiction. In BC, you can visit the province’s Web site to see what is excluded from the BC Medical Services Plan at

Here is a sample of medical expenses, which you may be responsible for paying:

  • Pharmaceuticals or medical supplies
  • Ambulance and emergency transportation
  • Return of vehicle expenses – may involve air flight back to the destination to retrieve vehicle
  • Hotel for spouse so he/she may stay with you during an emergency
  • Bills from medical practitioners other than a physician – chiropractic, massage therapy, naturopathy, physical therapy


Travel insurance products like emergency excess hospital/medical insurance protects you from paying for medical and related expenses not covered by the BC Medical Services Plan or your employer group plan.

Do your homework!

Part of the homework is looking at the type of travel coverage you might already have and identifying what might be lacking in that coverage. Sometimes travel protection offered by your credit card provider or supplementary health insurance plan is not enough. It may not reimburse you for all types of unexpected medical expenses incurred while travelling. Do a little research or speak to a CF Canada Financial Advisor to find out what travel coverage you might need.



Why Is Now The Greatest Time To A Be Financial Advisor

November 1st, 2016 Posted by Uncategorized 0 thoughts on “Why Is Now The Greatest Time To A Be Financial Advisor”


Forbes magazine calls it, “a recession busting career”, INC lists it as a top career for entrepreneurs, Entrepreneur magazine calls it “one of the cheapest franchises you could ever own”. A career in financial advice is really beginning to make a huge turnaround in perception in the market place and everyone is taking notice.

Companies are expanding their adviser bases again, sites like Your Advice Career where you are part of a social network of potential advisers and actual recruiters are rising up as authorities in connecting people to the career in new and exciting and even highly technological ways. Younger generations are taking a keen interest in choosing this as a career for them.

So what gives?  How did this happen?  We thought this was a career where companies would hire anyone and throw anything at the wall and hope it sticks?

The fundamental shift began in 2008.  The career’s lowest point in decades. Consumer confidence in this industry was completely shattered by a select few greedy companies and executives who gamed a market that didn’t see it coming and shamed us all, regardless of whether we had sterling reputations with our clients.  I know it was the lowest point in my career.  My clients were furious with me even if they were making money on their investments because they thought they could have been making even more and it was my fault. It was a dark time.

But as they say, “out of darkness comes the light”. Born was the dawn of the compliance age and it continues to grow even more secure for clients today. In fact, client funds are so secure and protected now it would make Willy Loman want back into this industry.  While more of a challenge to place business quickly, it is all worth it. My clients are happier than ever, they are referring to me again, they understand their investment and insurance decisions better (more on this in a moment) and I am busier than ever myself.

It is also a day and age of abundant technology within the walls of the industry. If you told me even two years ago that mySalesforce CRM was going to connect me to my clients in deeper and uncharted ways, or that my Hearsay Social account was going to alert me to major life events of my clients right away so we could make appropriate and needed changes to their plans, or that I would be showing solutions on a 9.7″ touch screen, I would have laughed in your face. At that time I was lugging around my 10 pound Dell laptop and had a trunk full of paper life insurance applications and brochures first produced in 2001.

That is not to say the industry doesn’t have it’s challenges either. As I stated earlier, clients are more knowledgeable and connected than ever to their finances and what they could be doing with them. The advent of the Robo Adviser, put a scare in us until we realized that the Robo Adviser can’t build relationships and reacts via algorithm and not goals and dreams like a human adviser does. Look for the Robo adviser to peter out in this writers opinion.

Never worry though, advisers are also even more prepared with more training than ever. Take for instance LIMRA, an industry staple for years, launching new and innovative training and resources for advisers to learn from or Hoopis University, the brainchild of industry icon Harry Hoopis, revolutionizing training with videos, activities and resources from top of the table industry advisers and management that I can view in my car in a clients driveway before going in. It truly is an incredible time.

When you think about it, what business can you start in today’s world that has this much support and innovation? It is only continuing, with companies battling for you, for talent, the training and support offerings continue to grow and innovation in the financial advice industry continues to out pace other industries ten-fold.

If you haven’t looked at becoming a financial adviser and getting into business for yourself, I highly recommend it.


What’s Next After Testamentary Trusts Change in 2016

August 25th, 2016 Posted by homegrid 0 thoughts on “What’s Next After Testamentary Trusts Change in 2016”


Effective from January 1st 2016, graduated-rate taxation will no longer apply to testamentary trusts (as well as grandfathered inter vivos trusts created prior to June 18, 1971). Instead, they’ll be taxed at the top rate. Graduated rates will still be available with certain beneficiaries eligible for the federal Disability Tax Credit.

However, the graduated-rate taxation will still apply for three years from the date of death. This means that if a client passes away and the estate assets aren’t distributed within three years, there will be a deemed taxation at the end of the year and all trust income from that date will be taxed at the top rate applicable in the province where the trust is residing.

These changes will remove the tax incentive of establishing a testamentary trust instead of an inter vivos trust, since they’ll all be subject to top-rate taxation. The use of inter vivos trusts, therefore, will likely increase. Specifically, alter ego and joint-partner trusts may become more popular because they have a number of attractive features.

Alter ego and joint partner trusts were first introduced in 2000 and are available to Canadian residents aged 65 and older. With an alter ego trust, the settlor is the only one entitled to trust capital and income before his or her death. With a joint-partner trust, the client and his or her spouse or common-law partner are entitled to receive all the trust’s income while alive and no one other than the client and his or her spouse or partner can be entitled to the capital until the death of the last surviving spouse.

These trusts differ significantly from other types of inter vivos trusts. For example, there’s no deemed disposition at fair market value when property is transferred to an alter ego or joint-partner trust. As a result, clients can create these trusts for their own benefit (as well as their spouses’ and partners’) and transfer property to them on a tax-deferred basis, avoiding a capital gains liability.

For most inter vivos trusts, assets are subject to a deemed disposition at fair market value on the trust’s 21st anniversary and every 21 years afterwards. Alter ego and joint-partner trusts aren’t subject to this rule. Instead, there’s a deemed disposition at the time of death, so there may be tax on accrued capital gains. In the case of a joint-partner trust, the deemed disposition happens on the death of the last surviving spouse (or partner). Resulting income tax occurs within the trust.


Here are five benefits of alter ego and joint-partner trusts:

  1. Minimize estate administration tax/probate fees: Alter ego and joint-partner trusts do not form part of a client’s assets on death because he or she is not the legal owner of those assets at that time. As a result, probate fees (or estate administration tax) are not payable on the value of trust assets on death. With the loss of graduated rates, clients will likely turn to alter ego and joint-partner trusts, which have positives that go beyond eliminating the expense, time delay, and frustration of probate procedures.
  2. Privacy: Unlike a will, which becomes a public document if probated, alter ego and joint-partner trusts allow client affairs to be kept private. This can be particularly valuable for high-net-worth individuals who wish to keep the value of assets as well as the recipients confidential.
  3. Protection against legal claims: Beneficiaries (or those who feel they should be beneficiaries) may challenge a will if they feel they have not been treated fairly. With an alter ego or joint-partner trust, there is no will to contest and therefore, little opportunity to challenge the distribution of assets. Therefore, alter ego and joint-partner trusts may allow clients to avoid dependant’s relief legislation by disinheriting close relatives who may otherwise obtain relief by challenging a will.
  4. Speedy distribution of assets: The probate process can be lengthy, causing the distribution of estate assets to take months, or even years. With an alter ego or joint-partner trust, trustees will already be the legal owners of the trust property and can proceed to distribute the assets soon after the client’s death.
  5. Effective management during incapacity: Alter ego and joint-partner trusts may eliminate the need for powers of attorney. If a client loses mental capacity, the trustee (or contingent trustee) will already have control of all decisions and can simply continue with her duties. This allows clients to maintain continuity in the management of trust assets.


There are some drawbacks that clients must consider if they’re considering alter ego or joint-partner trusts. The main ones are:

  1. Capital gains on death: Since alter ego and joint-partner trusts are considered inter vivo trusts, they’re taxed at the highest marginal rate. On the client’s death (in the case of an alter ego trust) or on the death of the last surviving spouse (in the case of a joint-partner trust), there’s a deemed disposition at fair market value of all trust assets. The tax liability occurs within the trust at the top rate. Therefore, if the client (or his or her spouse) is not subject to the top rate at the time of death, there will be higher taxes payable as a result of holding the assets in the trust.
  2. Increased costs: There are costs associated with establishing these trusts, as well as ongoing costs such as trustee fees, accounting and legal work and the preparation of annual income tax filings. These costs should be compared to probate savings, as well as to the value of any other benefits.
  3. Impact on charitable donations: Canadians are entitled to claim a charitable donation tax credit in the year of death for donations up to 100% of net income. If donations exceed this limit, the excess may be carried back and claimed on the return the year prior to death. Although an alter ego or joint-partner trust can make charitable donations, it is not permitted to carry back the donations to the previous year. In addition, there are special requirements that must be met for the trust to qualify for donation tax credits.

Review it with your financial planner when it comes to your family estate planning on using trusts as a tool. It’s important to understand the pros and cons on using it prior to taking any action.


Taking your CPP benefit now or later?

August 25th, 2016 Posted by homegrid 0 thoughts on “Taking your CPP benefit now or later?”

A lot of people are unsure when the best time to apply for their CPP benefit is. While it is a client’s personal responsibility to be as informed as possible before committing to a certain insurance product, it is understandable if the multitude of products can be confusing. People who are serious about making long-term financial plans that are reliable and reasonable benefit from paying less taxes and an overall decreased financial burden.

Many experts support the “bird in the hand” approach with regards to government pensions. However, at CF Canada Financial we advise our clients to proceed with caution with CPP early because it can have a huge impact on how much they end up getting.

The average payout from CPP is less than the maximum Old Age Security payout ( $573.37 – between July – September 2016 )  In 2015 alone less than 10% of people on CPP got the maximum of $1,092.50 a month  ( Between July – September 2016 )  What is the reason behind this?

First and foremost, a huge factor is not having contributed enough to draw the maximum. To get the max from CPP a person must have contributed the max for 39.5 years between the ages of 18 and 67. The CPP formula allows about seven of the lowest-paid years to be dropped. But if an individual plans on going back to school, staying home with children, or earning less than the year’s maximum pensionable earnings (YMPE), which is $54,900 for 2016, they may fall short of the maximum, which will affect their CPP cheques.

Another reason people receive less than the maximum is because they take their benefits before the age of 65.

Did you know that when you take your CPP early, the amount you receive is reduced based on you age? New rules and regulations have come into effect that reduce your payout by 36% if you take it before the age of 60 in 2016.

Holding off taking your benefits means you’ll be able to avoid this reduction and can even result in an increase of benefits of up to 42%. In this case, the difference between taking them out at age 60 or at age 70 would mean 78% increase in income.

It is important to keep in mind that in the event of unforeseen circumstances of unfortunate events, unless there is a surviving spouse your CPP benefit will be gone forever.

Given all the background information and associated rules and regulations CPP is not a subject to be taken lightly. We advise clients to seek out as much information as possible before deciding on what is best for them based on their contributions, the importance of that money in the long run and their life expectancy. Give us a call today and one of our financial advisor will be happy to discuss matters further.