Welcome to back to Novella Wealth! Hello, I'm Kinson. I'm Edmond. Hello, everyone. In previous episodes, we mentioned that you can make an appointment for a free retirement planning service worth $4,000. What does this free retirement planning service include? Mainly, it helps you understand your needs and how our services can assist you and give you a clear strategic plan to achieve your retirement goals. So, viewers, please remember to use this QR code to make a reservation for a free 45-minute consultation. What will we be talking about today? The five methods to help you avoid probate fees and asset value-added taxes. So, before we begin, remember to like, subscribe, and leave a comment below. Edmond, what do we need to do before we start the video? Of course, like, subscribe, and leave a comment below. Don't delay, let's get started on the video. But before that, what do we do, Edmond? Of course, like, subscribe, and leave a comment below. Let's not waste any more time and start the video. Many netizens will ask, "Does Canada have a lot of inheritance tax?" Canada does not have an inheritance tax, but there are probate fees, which are called probate fees in English, or capital gains tax. Is there any way to avoid it? Actually, there is. The first and simplest thing to do is to do a spousal rollover. The term in Chinese: "spousal asset transfer." If one of the couple passes away, their assets will be transferred to the other party. What assets should be paid attention to? For example, a primary residence, investment property, some joint accounts, such as bank accounts and stock accounts, other investment accounts and non-registered accounts. These assets can be jointly owned by the couple. In English, it is called "joint with right of survivorship." If the couple already has a joint account, the assets in it can be transferred to the other party without complex procedures. Moreover, there are registered accounts. Registered accounts cannot be jointly owned, but they can have a beneficiary. For example, RRSP, RRIF, and TFSA. When one of the spouses passes away, the assets can be transferred to the other spouse. The assets can be transferred without probate, without probate, which is relatively fast. Because if the probate process is required, it would take at least six months. There is also no certification fee required. And as Kinson mentioned earlier, the capital gains tax can also be deferred. However, it is not exempted but only postponed. It is deferred until both spouses have passed away and then must be paid. Secondly, one of the biggest benefits of Canada is that there is no capital gains tax on principal residences after they appreciate in value. Canada's and Vancouver's housing markets have seen significant increases in the past decade. If we own a principal residence, we don't have to pay capital gains tax if we make a profit. This is a huge advantage. It is usually best for a couple to jointly own a principal residence. So if the property is put in a life estate, when the husband passes away, the property will be transferred to the wife. When the wife passes away, it will be transferred to the husband. This can avoid capital gains tax and probate fees. Of course, if both parties have passed away, the property will be left to family members or charitable organizations. After the property is inherited through a will, probate fees must be paid. But the appreciation of the property is tax-exempt. So one of the best investment methods in Canada is owning a principal residence. Just received a message, a viewer is asking, "Edmond, I have a priceless tip." Earlier we talked about how a principal residence can exempt from capital gains tax. He says it's best for each spouse to have a principal residence, which means having two properties without paying capital gains tax. Actually, this is not a great idea. Because the two couples cannot live separately in two houses. Therefore, the two couples can only have one primary residence. So this is not a good investment strategy. The third is to use life insurance as a tool. Many people think that they need to buy life insurance. But that's not the case. However, life insurance plays an important role in financial planning, and it's a tool that can help us save taxes and time. It is a tool that can help us save taxes and time. When we pass away, we will have assets Such as investment properties, non-registered accounts, stock accounts Regardless of joint ownership And RRSP and RRIF are also important All of these may be subject to income tax or capital gains tax upon our passing. We have some cases with our clients Their assets are in these accounts which they don't need to use right now. We can slowly transfer this money into a permanent life insurance policy. When this person passes away, the death benefit of the life insurance policy is tax-free, without the need for probate process and probate fees, and the processing time is fast. Life insurance only requires a death certificate and the payout can be approved within two weeks. In other words, because insurance products can have beneficiaries, most products can waive probate fees. If you are unable to purchase insurance due to old age or poor health, what can you do? Is there a solution? In addition to life insurance, insurance companies offer Segregated Funds Segregated Funds What is that, you ask? There are two types of investment accounts in Canada: non-registered accounts and registered accounts. The first is a non-registered account, and the second is a registered account. When investing in a non-registered account, there can be no designated beneficiaries. However, can investments in non-registered accounts be placed in Segregated Funds? Yes, they can. The benefit is that you can add a beneficiary. When you pass away, the money in this investment product will be given directly to the beneficiary. Completely exempt from probate fees. Most importantly, it saves time. Your beneficiary can receive this money quickly. What is the difference with a registered account? There is no difference in where a registered account is opened, because they all have beneficiaries. Insurance companies' Segregated Funds can have a
Contingent Beneficiary added. "Contingent Beneficiary" added. What is a Contingent Beneficiary? For example, Edmond and I are a married couple. I have an RRSP registered account, and the beneficiary is Edmond. If I pass away, all the assets will go to Edmond without paying probate fees, and because of spousal asset transfer, this money is exempt from paying capital gains tax. But have you ever thought what happens to this money if we both pass away in a plane crash? What happens to this money? What should we do? My beneficiary is you But who is your beneficiary? Maybe there isn't one In the end, it may have to go through your will and testament And go through the probate process But if I designate you as the beneficiary And then add a contingent beneficiary If we both pass away at the same time The money will go to a third-party contingent beneficiary The chance of all three of us passing away at the same time isn't very high. Kinson, for the Contingent Beneficiary Some people would write charitable organizations If I designate a charitable organization as the contingent beneficiary If we both pass away at the same time The money will be transferred directly to the charitable organization Simply put, it will become a Donation In Kind The money will be transferred directly to the charitable organization No need to pay capital gains tax Your donation will be increased significantly Your tax receipt will also be increased significantly Saving a lot of tax Of course, you can designate your grandchildren as contingent beneficiaries. So, if you put your money in the insurance company's guaranteed fund, this is also one of the benefits. The fifth option is very common: Trust. The process of setting up a trust is more complicated than other methods. The trust can be established during your lifetime or after your death. An Inter Vivos Trust is a trust established between living individuals. It is set up during one's lifetime. A Testamentary Trust is established after death and requires the assistance of a lawyer to set up. The cost of setting up a Testamentary Trust can be quite high. Generally, the settlor places assets into the trust. The trustee then manages those assets on behalf of the beneficiaries. During the settlor's lifetime, they still retain control. Why establish a trust? It's all about having a beneficiary feature. It can avoid the need for probate proceedings and fees. But we need to understand clearly Trusts are subject to annual taxation. Don't think that they are not subject to taxation. Another characteristic is confidentiality. Because of the beneficiary feature. Another unique feature of trusts is the 21-Year-Rule. Assets within the trust must be sold and re-established every 21 years. This makes the process more complicated. Of course, trusts occupy an important position in financial planning. However, the process is more complex. Trusts play an important role in financial planning. The only difference is that the process is more complicated. Edmond, today we mentioned 5 methods to effectively avoid probate fees. The first is joint ownership of most assets. The second is owning a self-occupied property. The third is life insurance. The fourth is insurance company's guaranteed funds. The fifth is establishing a trust. After listening to all of this, in short, is it best to put all assets in a place with a beneficiary? Or is it enough to have all assets jointly owned? Most of the time, it's correct. But we've seen cases where one spouse passes away, both of them have considerable retirement savings as well as government benefits. But when one spouse passes away, his RRSP and RRIF are transferred to the surviving spouse. The surviving spouse then says there's a problem that the government benefits have decreased. The conclusion I want to draw is that you need a professional financial advisor to understand your asset allocation in order to develop the best plan. You can scan this QR code and schedule an appointment with us to help you develop a retirement plan that gives you a clear retirement strategy. That's all for today's time. I hope you enjoyed our content. If you have any questions or suggestions for our videos, please leave a comment below. Finally, please remember to like, subscribe, and share our videos. Thank you all! BYE BYE.
