Protecting Your Registered Assets

Tax-deferral and tax-sheltering opportunities have decreased over recent years. So it's little wonder that Canadians have enthusiastically embraced the idea of registered retirement savings programs. But, what happens to these assets at the time of death?

Registered funds are often taxed as a lump sum in the final tax return of the deceased, and are subject to the normal legal and probate costs connected with estate administration. This can result in a reduction in the estate value for your heirs -- not likely what you have in mind.

Now, while there is no way to avoid paying the tax liability on registered assets, there is a way to prepare for it. By ensuring that your taxes are paid in the most economical way possible, your beneficiaries will receive the maximum benefit from your good intentions.

A very effective and economical way of maximizing your estate is through the use of life insurance plans that pay out when the tax liability is due. Innovative products are available that are particularly well-suited to providing benefits when estate taxes are payable.

Could you personally benefit from an estate-preservation plan? If you answer affirmatively to the following investor profile questions, the answer is probably "yes":

• Do you already look upon your possessions as your legacy?
• Are you receiving an income from an RRSP, RRIF or other retirement plan that you are re-investing for inheritance or for undefined future needs?
• Are you past middle age, but under age 80?
• Is your future retirement lifestyle well planned for?
• Is your investment aim long-term safety of capital through high-grade investments?

If this approach makes sense to you, don't wait too long to put an estate-preservation plan into place. Procrastination is not profitable! Of every dollar in an RRSP, RRIF or RPP, 45 cents or more can eventually end up in the government's tax coffers. Waiting can increase the risk of significant estate reduction.

Use our Find An AdvisorOpens a new window in your browser. tool to locate a CIBC Wood Gundy Investment Advisor near you and take the first step to achieving the financial future you want.