by John Moakler | Feb 24, 2022 | Uncategorized
February 24, 2022
I also cover this In a YouTube video. Click here to watch!
If everything you knew to be true, was not true, when would you like to know?
Immediately of course! So that you can take corrective action A-S-A-P.
I want to help you reduce your tax bill. By the end of this blog, I hope to have given you a couple of ideas to consider to do that, and more importantly, stop making Revenue Canada one of your beneficiaries each month.
Let me ask you a question. Would it be amazing if you could be the beneficiary of your own Life Insurance Policy while you are still alive?
Really be honest – what do most people think you have to do to collect on life insurance?
Most people I ask say that you have to die.
What would you say if I told you that life insurance companies have never, ever paid any money to dead people?
Now if you think I want you to die, I don’t!
But what if I could show you how to use the living benefits of a Cash Value Life Insurance Policy to never lose any money, ever again?
And then – because it is designed to never lose any money – what if you could access that money to take advantage of investment opportunities as they present themselves? What if you could do all of this with little or no income tax liability?
(You can use this strategy to pay for long-term care… notice that I didn’t say nursing homes.)
DID YOU KNOW that by early January last year (2021), according to the National Institute on Aging at Ryerson University, retirement/nursing homes in Canada accounted for over 70% of the people who died from Covid-19.
Would you ever put someone you love into a nursing or retirement home if you didn’t have to?
Wouldn’t it be better to build value in a strategy, so that you could pay for care at home?
Wouldn’t it be wonderful if we could build up $300,000, $400,000, or even $500,000 of cash value in this strategy so you could be in control of situations like this?
Do you know what the best part is?
If you don’t ever need long-term care, then you haven’t wasted any money on the coverage.
Additionally, when you retire, we can supplement your retirement paycheque with tax-free income for the rest of your life.
And when you die, we will send whatever is left to your family, business, or charity – 100% tax-free.
If you want more information on how you can take advantage of this strategy, please send me an email at the address below and I’d be happy to send it to you.
Now, is there someone at Revenue Canada that you have decided you are so madly in love with that you want to leave them a bunch of your money?
Do you realize that if you have an RRSP, RRIF, or a LIRA and you have two or more non-spouse beneficiaries, then it is highly likely that the primary beneficiary of that money will be Revenue Canada?
Let me explain…
Under the current laws, there will never be any taxes owing when money moves between spouses. But when your spouse passes away and the children inherit, this type of money is 100% taxable on your spouse’s Terminal Tax Return. That means that over 50% of this money will be sent to Revenue Canada… and the remaining money will go to your children.
Let me give you an example.
Let’s say you have passed on, and your spouse has $500,000 in their RRSP or an RRIF and then they pass away. Over $250,000 will be paid to Revenue Canada and less than $250,000 will go to your children…
Are you okay with that?
If Revenue Canada takes over $250,000 in this example, haven’t you really just been a tax collector for Revenue Canada for all these years? Are you okay with Revenue Canada taking most of the gains you made on this money over your lifetime?
In other words: are you building a legacy for Revenue Canada, or are you building a legacy for your family and/or your business?
I know this is not fair, but there are strategies to eliminate Revenue Canada from your estate and from your spouse’s estate.
So let me ask you another question – would you prefer to pay your taxes when they are on sale now, or do you want to wait until you have to pay full price in the future?
What would be the most beneficial for you?
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Taking the tax deduction now on a small amount of money and build it into a large amount of money that Revenue Canada can tax at whatever level is deemed necessary in the future; or
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To pay your taxes now on a small amount of money and build it into a large amount of money that Revenue Canada could never get their hands on again?
If your answer to my question is option #2, then why are most Canadians doing option #1?
If you are planning to contribute to an RRSP right now, then you are doing option #1. But if you know that option #2 is more beneficial, why haven’t you considered doing option #2?
If you could establish a strategy, like option #2, that was most beneficial to you and your family, rather than Revenue Canada, then I would ask you: when would you like to get started?
Canada is now a global leader in two areas.
It is in the top 10 places in the world to retire – eighth to be exact.
It is also now a global leader in debt.
That dramatically increased debt will only increase the difficulty in providing the promised retiree benefits for Canadians.
Demographics, longevity, and illiquidity of the assets owned by Canadians will put more and more stress on Canadian retirees. We must build liquidity by using Tax-Free Savings Accounts and Cash Value Life Insurance so Canadians can have the retirements they deserve…
However, action must be taken soon. With debt ballooning and more people retiring we do not have enough liquid money to succeed. So take action now, before the debt tsunami threatens your retirement.
If you’d like to learn more about how you can implement a number of the strategies highlighted here, contact me at the coordinates below to apply to become my client. Thanks for reading and always remember: when we design financial plans for our clients, we make sure that your money outlives you in retirement.
For the best life insurance advice and information, subscribe to my YouTube Channel and hit the notifications bell to be notified when we post new videos. The channel allows me to share my passion for personal financial planning and I produce content that I would want to watch – and because of that, I promise to give you 110% effort in every video that I make.
By John Moakler, BMath, CFP, CLU
President and Senior Executive Financial Planner
Moakler Wealth Management
info@moaklerwealthmanagement.com
1 416 840 8544
by John Moakler | Feb 22, 2022 | Uncategorized
February 22, 2022
I also cover this in a YouTube video. Click here to watch!
Why are you giving away so much money to Revenue Canada in personal and corporate taxes?
By the end of this blog, I’ll have given you enough tips and tricks on financial planning mistakes for consideration, so you can stop making Ottawa one of your beneficiaries each month.
So often when my team is hired to build a financial and retirement plan for our clients, we uncover huge opportunities to save personal and corporate taxes.
The Ownership, Structure, and Features of your Risk Management Products are key to making sure you not only protect yourself and your family, but ensure that you are not throwing money away in taxes to put this coverage in place.
One client I am currently working with has nine Insurance Policies in place – from Life, Disability, and Critical Illness on himself, as well as his spouse and children. Seven out of the nine policies have either been designed with the wrong features, or there are ownership issues which is costing him extra money.
He has not one, but two Whole Life Policies on his life and he is spending $129K a year in premiums just for these two policies. The policies had been designed for a dead person! Not for someone who’s alive. During 2020 he came to me because he had this great opportunity to purchase a commercial building, but he was tapped out of cash. So he signed some paperwork so that I became the Agent of Record on his policies which allowed me to put in a formal request into the insurance companies to see how much cash value was available in his two most expensive policies. He was five years in and he had already handed over $600K in premiums… but there was only $25K in cash available inside the two policies.
It was designed totally wrong – he would not have access to the cash for at least another 10 years. He was vexed when I told him the news.
But I had a solution for him.
It required him to walk away from what he was currently doing and invest in a policy that would give him immediate access to cash. Now, by designing the policy correctly, he would write a cheque for $125K on a Monday and then he would have access to $110K of cash value inside that policy on a Tuesday – designed for while he is alive, and, of course, upon his passing to protect his family.
Too often I see policies that have been designed wrong. Take his Critical Illness policies on himself and his spouse, for instance: both are personally owned and he didn’t know that there was an option to make them corporately owned – this would have saved him 30% on the premiums. But it gets worse, it is a Term 75 with an ROP on death or surrender. But guess what? Again, it was designed wrong. The only way he could get his money back was to surrender the policies at age 75 or die.
He is 52-years-old and he had already been paying premiums for five years, so he still has to make another 23 years of premium payments to get his money back or die to get his money back… but then he would be dead! There was a missing feature in the design of the CI policy.
For those of you who have watched my two YouTube videos on Critical Illness and Split Dollar Critical Illness, you will know that you can add a feature called ROP 15+ years. This means that 15 years into the policy, as the owner of the policy, you now have choices. So, 15 years in, he would have been age 62 in my example, and he could surrender the policies at that time, while he’s still alive, and get 100% of his money back.
But no. I had to tell him he had to make another 23 years of payments or die to get the money back… a worse situation for his spouse. She does not have any employment income and she is age 40. She would have to make another 35 years of payments, or die to get her money back. And what happens if her husband dies first? Then she is on the hook to continue making those premium payments for another 35 years.
The whole thing was designed wrong. Both from a feature perspective and an ownership perspective, paying for the premiums personally means driving up your personal income taxes – making Ottawa happy, and you very unhappy.
Fast-forward to the end of this particular client’s story, which I presented and received approval from his accountant; it left just the nine existing policies in place, but changed how he paid for them. I could save him $13,400 a year in premiums and over the next 15 years I would have saved him $215,000 that he was overpaying to the insurance companies.
Now, just by correcting these two Whole Life Policies and putting the correct one in place, I was saving him $10K a year in premiums, AND I was giving him immediate access to cash inside the policy. So now he could fulfill his goal of purchasing that commercial property.
If you’ve made it this far through my blog, I ask you two questions: do your insurance policies have the correct features in place? And have they been designed for while you are alive, or upon your death?
If your answers are “no” or “I don’t know,” then I highly recommend that you contact me via the information at the very bottom of this blog and apply to become my client.
Your Financial Planner owes a duty to you to make sure that they put a plan in place to protect you and your family. It has to be aligned with your goals in life and not just because they want to make a big commission.
By designing the Whole Life Policy properly – meaning the client would have immediate access to cash inside the policy while they are alive – means I am paid much differently. However, it is what’s in the best interest of the client, which is what’s most important.
Another client example
This client has a corporation and wants to purchase rental real estate, however, rules are in place that won’t allow him to own the properties inside his existing corporation. So, what was he doing to purchase this rental real estate before he met me?
He was taking the money out of the corporation, paying personal taxes at a 40% rate, only to then have the money to purchase the properties. The math is, he was keeping 60 cents on the dollar, but the remaining 40 cents was being paid in taxes. This is money he would never see again, only making Ottawa richer.
I thought this was the wrong way to do this. So I spoke to his accountant, only to find out that it was the accountant who recommended that he purchase the properties this way! So the reasonable solution was for him to interview for a new accountant that knew what they were doing.
Now that the new accountant is in place, we are able to purchase that rental real estate in a separate real estate holding company AND we have access to 99 cents on the dollar instead of the 60 cents result he was doing before. Even better under this new structure, we are able to set up a Family Trust to protect the assets and implement some estate planning at the same time.
Thanks for reading and always remember: when we design financial plans for our clients, we make sure that your money outlives you in retirement.
For the best life insurance advice and information, subscribe to my YouTube Channel and hit the notifications bell to be notified when we post new videos. The channel allows me to share my passion for personal financial planning and I produce content that I would want to watch – and because of that, I promise to give you 110% effort in every video that I make.
By John Moakler, BMath, CFP, CLU
President and Senior Executive Financial Planner
Moakler Wealth Management
info@moaklerwealthmanagement.com
1 416 840 8544
by John Moakler | Feb 17, 2022 | Uncategorized
February 17, 2022
I also cover this in a YouTube video. Click here to watch!
If you were diagnosed with cancer, do you have all of the necessary pieces of the puzzle in place to protect you and your family?
In sharing my personal journey through cancer with you, by the end of this blog, you will have all of the necessary information needed to develop your own plan if life throws you this curveball.
I love my life, and I am living my dreams.
I’m financially free, which means I can have fun and do whatever I want, whenever I want.
Like refereeing volleyball both nationally and internationally, meeting interesting people like Prince Harry – who, fortunately, I met referring sitting volleyball at the Invictus Games in 2017.
I have 3 amazing children who have all graduated from university and are starting their own careers and lives.
I have been lucky in business; I was a part of a successful startup High Tech software company and in 2003 we sold it to IBM (in New York) for just over $76M US.
A year later, in 2004, I joined a large Mutual Fund company and I built a book of 350+ clients with over $80M in Assets Under Management. And, in the span of 10 years, I was awarded the “Financial Planner of the Year” Distinction Award 7 times.
However, in 2013 I came to the realization that I had too many “conflicts of interest” in my practice. I could only offer one type of Mutual Fund platform and I could only recommend insurance products from one or two insurance companies. It was my clients who helped me in making the strategic decision to leave that practice, and in 2014, I started my own company – Moakler Wealth Management.
I help people to live their dreams and I love what I do. But it wasn’t always this way.
In June of 2010, I had just finished completing my Certified Financial Planner (CFP) and Chartered Life Underwriter (CLU) designations. I was ready for my next great adventure.
But 6 months later, in December of 2010, I was diagnosed with cancer. It was Osteosarcoma, the same cancer that Terry Fox had.
Talk about a life event. When I heard the word ‘cancer,’ all sorts of things went through my mind. Panic, fear, worries for my family, and my finances are just the shortlist.
It was all too real, but I stayed positive.
I started chemotherapy in February of 2011 and then received treatments every 3 weeks after that for 3 months. In May 2011 I had surgery, but the tests came back inconclusive. So it was 2 more rounds of chemo, another surgery, and lots of being in and out of hospitals. I was thankful for the expertise of the doctors, surgeons, nurses, and many others who took care of me at that time.
By September of 2011, I was told that I was cancer-free.
I was lucky. I had the knowledge and the insight to have Life Insurance in place should something happen to me that my family would be taken care of. I had Disability Insurance in place too, but it didn’t payout – because I didn’t have a disability, I had cancer. However, I did have a Critical Illness Policy that paid out.
With these necessary funds in place, I was able to take the time to deal with my cancer and fight it. It’s now been 10 years of being cancer-free! And while I continue to be monitored, I am not going anywhere.
After my treatments, I continued my practice; what I saw through the years in my own company was that over 90% of the people I met did not have a written financial plan! I simply could not imagine someone going through what I went through with financial worries.
And it gets worse.
A shocking eight to ten MILLION Canadians will be entering into retirement, but they do not have a clue if their money will outlive them – or, worse yet, if they will outlive their money and need to turn to the government for assistance in order to survive.
That is why I decided to write a book in 2015 to help my fellow Canadians.
My best-selling book is called “Heal Thy Wealth” – How Doctors Are Misdiagnosing Their Own Financial Health And What They Can Do About It.
Life will always throw us constant curveballs – so you need to make sure that when you hit a speedbump (like I did), you have your seatbelt on. The truth is, your life can change in an instant, but if we put the necessary bumper guards in place for you and your family, we can make sure that panic doesn’t set it.
If you would like to learn more about how you can incorporate the same strategies that I am using for my family, contact me at the coordinates below to apply to become my client.
For the best life insurance advice and information, subscribe to my YouTube Channel and hit the notifications bell to be notified when we post new videos. The channel allows me to share my passion for personal financial planning and I produce content that I would want to watch – and because of that, I promise to give you 110% effort in every video that I make.
By John Moakler, BMath, CFP, CLU
President and Senior Executive Financial Planner
Moakler Wealth Management
info@moaklerwealthmanagement.com
1 416 840 8544
by John Moakler | Feb 8, 2022 | Uncategorized
February 8, 2022
DID YOU KNOW – that despite advisors having a regulatory obligation to inquire about their clients’ debt, they are not legally required to advise their clients to divert their money towards paying off that debt?
It’s the sad truth! Because chances are, if you’re a #doctor or #dentist practicing in Canada, you have high levels of debt you want to shrug off your shoulders. So how do I help my clients in a way that will bring them out of debt and actually allow them the opportunity to make MORE MONEY in the long run?
Find the answer in my recent interview with the Globe and Mail, linked here!
https://tgam.ca/32VuDBk
#doctors
#dentists
#HealThyWealth
by John Moakler | May 19, 2021 | Uncategorized
May 19, 2021
I also cover this subject in a YouTube video. Click here to watch!
This blog will explain what is a “Split-Dollar Critical Illness” policy and more importantly why EVERY incorporated business owner, who is insurable, should have this policy as part of the Bumper Guard protection around them and their family members.
When we design Critical Illness (CI) policies for our clients, we design what I call a “guaranteed policy”. What this means is that you are either going to get a CI and the policy will pay out, or if you do not get a CI, then you can ask 100% of your money back…tax-free. This feature is called Return Of Premium and Canada is one of the last countries in the world still offering a Return Of Premium feature.
In Canada, while only 5% of Canadians have Critical Illness coverage, fully 85% of Canadians worry about getting a Critical Illness, and 58% of Canadians have admitted they would be in financial trouble if they were diagosed with a Critical Illness.
How do you determine how much coverage you need to put into place? For most men who contract a CI, their recovery period is around 12 to 18 months, and for most females the recovery period is around 18 months. So, you need to take a look at what your net annual paycheque is after taxes and then multiply it by 1.5. So, if your net annual income is $200,000 per year then you will need at least $300K of Critical Illness insurance coverage.
In order to implement a Split-Dollar Critical Illness policy you MUST have a corporation and you MUST be insurable.
A Split-Dollar Critical Illness policy is a concept whereby both the client/insured and his/her corporation own an interest in a critical illness policy. When structured properly, these policies have a number of unique advantages for shareholders of Canadian-Controlled Corporations.
With a Split-Dollar Critical Illness policy the potion of the policy premium allocated to “pure” coverage is paid for by your corporation and the portion of the policy premium allocated to the Return Of Premium (ROP) associated with death, expiry, or surrender is paid for by the shareholder. If you contract one of the 25+ covered critical illnesses listed in your policy, and live for at least 30 days, then the policy will pay out the benefit. If, however, you have qualified to surrender the policy and ask for 100% of your money back, you would get both the corporately paid portion of the premiums as well as the personal paid portion of the premiums 100% tax free, personally.
This would allow you to pay much of the costs of the premium corporately at a much lower corporate tax rate, but if you remain healthy for a period of time, generally until you stop working or the coverage expires, you can have 100% of all premiums paid, repaid to you personally. So, this is a great strategy for getting money out of the corporation tax-free and at the same time protecting you and your family in case you are diagnosed with a CI.
The policies we design usually also come with a feature called “Best Doctors” services which means you have access to some of the best doctors in the world, who will help you to understand your medical condition and the treatment options available to you, so you can make an informed decision about your healthcare.
So how does a Split-Dollar CI policy work? The company receives a tax-free lump-sum benefit in the event the shareholder (who is the insured) is diagnosed with one of the covered critical illnesses listed in the contract. If this happens then we would recommend opening up a Health Spending Account (HSA) in order to take the money out of the corporation tax-free. In the event the shareholder (who is the insured) is not diagnosed with a critical illness and does not make a claim, then the shareholder would need to wait until the surrender clause kicks in and then they can surrender the policy and ask for 100% of all premiums paid, repaid to you personally tax-free.
Who benefits from a Split-Dollar Critical Illness Policy?
The company is protected against financial loss and is provided liquidity in the event a shareholder is diagnosed with a critical illness and needs to take time to recover.
A shareholder will benefit if they remain healthy and do not develop a critical illness and do not make a claim, they just wait for the surrender clause to kick in and they can collapse the policy and ask for 100% of the premiums paid back.
Let’s look at a case study:
Mike, age 40, applies for $750,000 of critical illness coverage with a Return of Premium benefit upon surrender after 15+ years. His company drafts a Letter of Directions and/or a Shared Ownership Agreement, which stipulates that the corporation owns and is the beneficiary of the $750,000 CI benefit while Mike owns and pays for the Return of Premium benefit.
The total annual premium for the policy is $33,880 and the corporation would pay $18,040 annually and Mike would pay for the ROP benefits of $15,840. After the 15+ year surrender clause kicks in, Mike can determine whether or not he wants to continue with the coverage or to collapse the policy. If he were to collapse the policy, he would receive $508,200 tax-free, which would equate to the premiums paid both by the corporation as well as him personally over that time period. Also, if Mike were to suddenly pass away, the ROP on death clause would kick in and again Mike’s estate or his beneficiaries would receive all of the money paid into the policy up until his death, tax-free.
At the start of this blog I indicated that we design “guaranteed” CI policies for our clients – so they are either going to get a covered Critical Illness and the policy will pay out, or once the surrender clause kicks in, you can ask for 100% of your money back. You can’t ask for more guaranteed than that.
If you’d like to get more information on the Split-Dollar Critical Illness Strategy, and how you can incorporate it into your own personalized financial and retirement plan, contact me at the coordinates below to apply to become my client.
Thanks for reading and always remember: when we design financial plans for our clients, we make sure that your money outlives you in retirement.
For the best life insurance advice and information, subscribe to my YouTube Channel and hit the notifications bell to be notified when we post new videos. The channel allows me to share my passion for personal financial planning and I produce content that I would want to watch – and because of that, I promise to give you 110% effort in every video that I make.
By John Moakler, BMath, CFP, CLU
President and Senior Executive Financial Planner
Moakler Wealth Management
info@moaklerwealthmanagement.com
1 416 840 8544
